SMEs struggle in global supply chains: Building national trade resilience

In Short:
– Bronwyn Reid highlights challenges SMEs face in global supply chains, including unclear requirements and limited capacity.
– Trust and ESG compliance are critical for SMEs, requiring large companies to simplify their demands for better relationships.

Bronwyn Reid from Small Company, Big Business highlights the challenges that small and medium-sized enterprises (SMEs) face within global supply chains and emphasizes the importance of building national trade resilience.

Reid identifies a “gap effect” in the relationship between large firms and SMEs, consisting of three key disconnects. Large companies often impose stringent requirements on SMEs, which may lack the resources to meet them, resulting in unclear expectations and frequent changes. Many SMEs struggle to keep up due to limited capacity and staffing constraints.

Significant potential

She stresses that national trade resilience depends on the depth of supply chains, not just cost efficiency. Shallow supply chains are vulnerable, as demonstrated during the disruptions caused by COVID-19. In Australia, the economic relationship between large companies and SMEs is valued at around $500 billion, highlighting significant potential to strengthen these partnerships.

Trust has become a critical factor in supply chain relationships, alongside delivery times and pricing. According to the Edelman Trust Barometer, 78% of people trust their employers, while only 64% trust businesses more broadly. Environmental, Social, and Governance (ESG) compliance has also become essential, but SMEs face challenges navigating complex and shifting requirements. Reid advises SME owners to simplify their approach to ESG, while urging large companies to adjust their expectations to better support smaller partners.