Entering the corporate supply chain boosts small businesses

January 29, 2013 at 10:45 am

Although the needs and challenges of small businesses and large corporations are often divergent, they can in fact work together in ways that strengthen both types of businesses. An article in the Business Journal reports that large corporations can help to develop small businesses by encouraging their participation in the corporate supply chain. Large businesses need inputs and services  and often small firms can fulfill these needs. With a little help to overcome barriers and some mentoring, small businesses can achieve greater growth and success as a part of a corporate supply chain.

The Business Journal points to a report by the Center for an Urban Future, which looks at 200 small businesses in the U.S. and their experience as suppliers to corporations. The study found that small business suppliers experience significant growth in revenue and jobs. Businesses that supply large corporations saw their employment increase by 164 percent.  On the other side, building relationships with small firms is also good for the corporations, both in terms of social responsibility, but because it helps to diversify their supplier base.

The challenge is that many small business lack the necessary information to access supplier opportunities, and even when they are aware of them, often the process is prohibitively cumbersome. But, by creating a more supportive environment, in which corporations provide mentorship and ease of access (by streamlining applications and making information more readily available), more small businesses could take advantage of such opportunities. Lenders also play a role, as access to affordable capital is critical for small businesses to both develop their capacity to process orders and to be able to fulfill them.

The important thing about this article is that it highlights the potential for collaboration between businesses of all sizes. Too often, tangible economic development solutions get lost amid the political rhetoric about small and large businesses. Here are examples of how businesses of all sizes can work together on the ground, each playing a key role. Big corporations and small businesses don’t have to be opposed to one another. By recognizing their interconnectedness, each can help to strengthen the other, create jobs, generate growth, and support our economy.

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Entry filed under: Economic Development, Economy, Jobs & Employment, Small Business. Tags: , , , , .

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