THE EFFECT OF SUPPLY CHAIN COOPERATION ON THE STRATEGY OF SMES IN HUNGARY

Abstract

Purpose
This study aims to examine how Supply Chain Management (SCM) affect the creation and
modification of the strategy of Hungarian Small and Medium Enterprises (SMEs).
Design/methodology/approach
After a detailed literature review, we set up our hypothesis: SMEs don’t pay enough
attention to their strategies. This is increasingly true of dealing with important factors such
as 1.) Supply Chain cooperation or 2.) Digitalisation. For data collection,we conducted a
question-based survey. The questions were directed towards the conformity of the
companies' “Strategy”, their (external) “Supply Chain” and their readiness on
“Digitalisation”. In total, 273 valid responses were collected from Hungarian SMEs, with
focus on the highly industrialised North-Western region of the country. The survey was
answered by executives of companies of the production-, commerce- and service sectors.
The methodology applied for analysis of the data acquired was empirical analysis (SPSS).
In the current paper we highlight how far the cooperation with other SC members will
influence the creation/modification of the strategy of these companies.
Findings
Results of the study showed that nearly 50% of Hungarian SMEs have not changed their
company strategy in the past three years. (Rearranging their organizational structure has
been their lowest priority). However, SMEs that modify their company strategy more
frequently (every year or every other year), usually use the pull system rather than the
push system. It is true for both, the Supplier's and the Customer's side. They also use upto-date management tools e.g. VMI or postponement more frequently.
Value
This research shows a backlog of supply chain practices' implementation in Hungarian
SMEs. Strategic decision makers should be aware of the challenges SMEs are facing when
cooperating vertically or horizontally with other SC member companies. International
research benchmarks show that an appropriate strategy change has high impact on the
company’s performance.
Research limitations/implications
We are aware of the limitations of our research. For example, we didn't distinguish between
SMEs acting in the FMCG sector vs. industrial goods sector. The unique structure of the SME sector in Hungary makes benchmarking results also uncertain. As a next step we
would also need to fine-tune the given chain’s dominance influencing factor.
Practical Contribution
Findings of this study can be used by strategic-level management in SMEs to better
understand what tools their company could use in SCM operation, and whether they need
to reiterate their strategy to fit the market’s needs in the age of globalisation and time
based economy.