Global supply chains – How to become a player | BDC.ca
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How small businesses can join global supply chains

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When Armand Afilalo finished his MBA many years ago, his plan didn't include a career as an entrepreneur.

But that was before Afilalo, from a perch as a vice president of a Big 5 Canadian bank, spotted a trend that changed his life.

"Many multinationals were boosting their competitiveness by integrating themselves into global supply chains, in particular by outsourcing production to small and medium-sized enterprises," Afilalo says.

"So when the opportunity arose to invest in MEP Technologies, one important selling point was how well the company was positioned to profit from this trend."

Afilalo's acquisition of MEP Technologies—a Laval, Quebec, company that he has headed for over two decades—proved to be the right move.

Since he got on board, the high-precision metal product manufacturer and designer—which supplies the semi-conductor, industrial and electronics sectors—grew from 13 employees to more than 300. Most of its work comes from sales to multinationals based in the U.S. and Mexico.

A win-win situation for both big and small companies

MEP Technologies is far from the only entrepreneur-led Canadian business that's been profiting by selling to multinational corporations.

"Many people still don't realize how important the emergence of global supply chains has been in fuelling the growth of small and medium-sized business," says Jérôme Nycz, Executive Vice President, BDC Capital.

As Nycz explains, this trend is a win-win situation for both big and small companies. Working with SME suppliers offers productivity gains, increased innovation and access to new markets for large multinationals, while SMEs can increase their revenues and scale up their operations.

Specialize, add value and partner

BDC research has shown that Canadian SMEs can best tap into global supply chains by supplying multinationals with niche products and services to increase efficiency, productivity and innovative capacity.

Afilalo has long used these approaches almost instinctively.

For example, MEP Technologies cooperates closely with its customers in areas ranging from training programs to data access. The idea is that the supplier and multinational customer work as a unit. "There's no secret," says Afilalo. "Our customers expect us to be the best at what we do. That doesn't mean we need to be the cheapest. However, we do have to add the most value for the dollars that we charge."

"A big part of our success relates to the fact that multinational companies boost their efficiency by dealing with us," says Afilalo. "So in the long run, if our customers need to be even more productive, that should be a good thing for us, too."

Another way that MEP Technologies has stood out is in its focus on quality. "We were the first company in our sector to be ISO certified. Back then, hardly anyone knew what that meant. But for our customers, it was important," says Afilalo. "Still, we haven't rested on our laurels. We are continuously upgrading and streamlining our processes to stay ahead of the game."

Getting on the radar of big players

One of the biggest challenges SMEs face in breaking into global supply chains is getting a foot in the door for the first time.

"Our research shows that small companies have a lot of trouble simply getting on the radar of multinational corporations," says Karen Kastner, BDC's Vice President, Partner and Government Relations. "In many cases, corporate gatekeepers bar access to decision-makers, and e-mails and phone calls simply go unreturned."

She advises entrepreneurs to adopt marketing strategies that are more targeted than traditional "cold call" approaches. They include the following:

  • Finding the right fit between the needs of multinationals and the products or services your business supplies
  • Participating in trade shows, industry conferences and other informal networking venues
  • Cooperating with other small and medium-sized businesses through joint bids, information sharing and shared R&D investments
  • Getting in at a lower level (such as the second or third tier in the supply chain) and building up from there

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