The MIT GeneSys project is led by Josué C. Velázquez Martínez from the MIT Center for Transportation and Logistics. This project intends to contribute to the survival and growth of small businesses by improving their operations and supply chain management decisions. The objective is to provide a framework of managerial insights aimed at increasing productivity and survival rate of micro and small firms, specifically in developing countries.
Over the last four years, the MIT
MIT GeneSys started in 2016 with the aim of contributing to small business growth specifically in developing countries. The objective of the project is to provide a framework for managerial insights for micro and small firms by answering the following research questions:
- What is the level of adoption of general business practices, supply chain practices, and lean practices?
- How much time does the decision maker spend in conducting different supply chain activities and how does he organize his time?
- What are the factors that may influence the level of adoption of the aforementioned practices (firm size, the gender of manager, type of firm, service vs. manufacturing, general manager educational level, general manager years of experience, time-management habits, among others)?
The chart shows the comparative productivity performance (%) of Micro, Small and Medium enterprises versus Large enterprises.
Between 2000 and 2014,
According to OECD’s report “Perspectives on Global Development”, the productivity level in many developing counties is far below the average among OECD countries. In terms of total factor productivity, all countries are below 30% relative to levels in the United States. The income levels in those countries can only catch up with the developed economies by increasing productivity. The following chart shows the comparative productivity performance (%) of Micro, Small and Medium enterprises versus Large enterprises. If we contrast the figures for Peru and Germany, we can see that the gap in the productivity level of Micro and Large Firms is 95% in Peru compared to 5% in Germany.
The lack of productivity in developing economies derives from the poor performance of Micro and Small Firms. While these companies generate the majority of jobs, only a fraction survives and develops into a high-growth firm. In many cases, this occurs due to the lack of managerial quality and Supply Chain Management expertise (purchasing, inventory management, demand planning, production planning, etc.).
We have designed a comprehensive methodology to better understand the specificities of small firms in terms of
Company Profile: includes demographic and profile information about the manager and the company (years of existence, number of employees, sector, level of education & gender of the decision maker, etc.).
Supply Chain Management (SCM) Practices: The lack of supply chain expertise is one of the main reasons why micro and small firms fail to develop into a high-growth company. This suggests that improvements in supply chain processes are vital for increasing the survival rate of small businesses.
Lean Practices: Lean principles refer to a business improvement philosophy that aims at eliminating waste and increasing efficiency in a company. This philosophy is often considered a strategy for large companies, but small businesses can also benefit from adopting lean principles.
Business Practices: The efficient implementation of business practices contribute to improving the performance of a small business.
Behavioral Operations: aims at measuring the managerial quality of the decision makers in small firms.
Using this methodology, our work aims to:
- Study the performance of micro and small firms to understand the causes of inefficiencies due to the lack of managerial quality and poor supply chain management performance (e.g. inventory management, production, procurement, etc.),
- Characterize the companies under study based on common features (e.g. sector, type of product, life cycle, size, etc.) and assess the level of the development and adoption of supply chain processes and business practices,
- Build a set of Supply Chain best practices for the micro and small businesses (i.e. Supply Chain Levers) that require minimum changes in their business (i.e. easily adaptable, user-friendly, etc.) with maximum impact in the key indicators (i.e. survival rate, sales growth, and productivity).
To do so, we are conducting the study for small companies with the following steps:
The data collection process is designed to gather primary information about the business processes and the micro or small firm’s principal decision makers. Analysts “immerse” into the company to understand the day-to-day activities. The data is collected through surveys, interviews and analysts’ observation at the firms’ workplace.
We have developed a mobile application, the MIT GeneSys App, to facilitate the data collection process. On the app, questions are organized in different sections, each one related to one dimension of the
If you want to know more about Data Collection and our methodology, view our Data Collection Guidelines 5.0.
We are studying and mapping the key business and supply chain processes of the company (e.g. suppliers, internal chain, customers, etc.)
Using the results of the two previous stages, we are evaluating the productivity of the company in terms of different proxies such as labor efficiency, Output/Input, growth and/or survival.
Using the outcome of the previous stages, we are providing a report that contains the causes we find of survival of small firms the appropriate body of knowledge of Management and SCM practices that improves survival and productivity.
We have organized 15+ workshops in different cities with managers of small firms. Each workshop had the following objectives:
- To understand the context of the small firms by “listening” what the managers have to say about their lack of productivity and risks of survival.
- To present the project to facilitate the field study and data collection.
- To train the managers with the fundamentals of business and SCM practices.
Join us December 4, 2020 for MIT GeneSys Fest 2020: Helping micro and small firms (MSE’s) in Latin America mitigate the impact of the Covid-19 crisis
Mediante esta iniciativa, el equipo de GeneSys, liderado por el Dr. Josué Velázquez, comparte estrategias y acciones específicas de gestión de suministros y operaciones para que las micro y pequeñas empresas incrementen sus posibilidades de supervivencia durante...
¿Cómo sobrevivir al Coronavirus con mejores prácticas de gestión de suministros? La crisis del Covid-19 ha comenzado a afectar severamente a los países de América Latina, específicamente a las micro y pequeñas empresas que representan el 99% de los negocios en la...
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