Supply chain management - SMEs approach

The supply chain management is implemented in various business functions. Most of the originators of supply chain are the large organizations. The objectives of supply chain implementation are the cost reduction that yielded the higher profits, good partnership management, etc. The negotiation is the part of supply chain activity. The large organization has more negotiation over their small supplier but it is opposed to the SMEs. In this paper, we studied the characteristics of SMEs, negotiation power, customer business function, driving force, etc. We also proposed the Vertical Chain Management (VCM), which it is the management model across the SMEs with their suppliers. The objective is to achieve the ultimate benefits for win-win situation. The vertical chain management started from the SMEs group combination, identification the material and suppliers, supplier performance management, negotiation for win-win and continuous improve the supplier performance. For the further research, we proposed the same model in managing the customer.