Transform Your SME's Operations: The Path to Global Competitiveness

Around 96% of companies in Portugal are Small and Medium-sized Enterprises (SMEs), but few take advantage of the potential of modernizing operations to grow and compete globally.

The factors of production that exist in Portugal and their impact on the final product are, in the end and to a large extent, what determines the attractiveness of new entrepreneurship, as well as the competitiveness and ability to export the national product.

The rise in the price of processed raw materials and the growing difficulty in anticipating the dynamics of demand have a transversal effect on the entire industry, particularly the national one; what does not affect our companies in a transversal way is the regional and national ecosystem where Portuguese products and services are produced and transformed, as well as the level of skills and innovation in the operations existing in each company.

Operations are thus shaped by these two dimensions: the first, which covers the factors of production existing in the context in which the organization operates and in which it processes its products (prices of raw materials, energy, import and export logistics, taxation, etc.), and which also includes the tools and infrastructures that determine the diversity and competitiveness of the national and regional industrial ecosystem; and the second dimension, that of operations management skills, the fundamental know-how, which is closely linked to process, method and innovation.  

For now, let's just focus on this second lever of competitiveness, namely the contribution of good management and good engineering and, in particular, the development of skills in the area of operations across the board in our SMEs.

In a business context that is constantly and rapidly evolving, innovation in operations is a vital element in the success of any micro-economy.

In Portugal, in the three-year period 2020-2022, around 44.7% of companies carried out some kind of innovation activity, whether at product or process level. However, compared to the 2018-2020 period, all sectors recorded a decrease in business innovation, with the exception of the accommodation and catering sector, whose indicator grew by 1.9%, which is why Greater Lisbon recorded the highest percentage of innovative companies (around 50% of the total). The sector that saw the biggest decrease was agriculture and fisheries, with -5.3% in the development of innovation activities.

In the same three-year period 2020-2022, only 22.6% of companies introduced product innovations (new or improved), and this increase was mainly due to companies with 250 people or more, mostly in the information and communication and financial and insurance sectors.

Non-innovative companies justify not having innovated because they don't feel the need to (28%) or because they don't have the necessary resources (16%). These worrying ratios are based on the latest Community Innovation Survey 2022, published by INE.

Innovation and continuous improvement in operations management in Portugal must always be present, regardless of the size of the company or the sector in which it operates.

The fall in national innovation rates is also intrinsically linked to the need for training, reinforcing the importance of initiatives that seek to improve skills in organizations in order to reverse this scenario.

SMEs represent the backbone of our economy, and today these companies face challenges in managing more demanding and complex operations, in constantly optimizing processes and products, in order to compete in the markets where they already operate and to be able to expand.

Training to boost business must be a priority for our business fabric.

The success of the operations of our small and medium-sized enterprises, whether private or public entities, defines an ecosystem, capable or not of attracting and enabling national entrepreneurship.

It is the behavior of companies and their integrated performance that determine a country's competitiveness.

Cooperation in innovation activities in operations, namely with suppliers, clients, universities, research institutes or consultants, is a lever to be strengthened.

We need to empower our organizations with better operational skills, not just to survive, but to thrive in an increasingly dynamic and demanding context, so that the process of national transformation of innovative products and services is more efficient and effective.

Portugal is rich in examples of scientific development, but we now need to be equally rich in transforming innovative ideas into successful operations; we need to know how to manage resources and how to transform them into innovative products and services. To this end, it is crucial that SMEs invest in developing skills that will strengthen their operations.

Operations Management training is a direct investment in the competitiveness of any SME. May the power of good operations management be with us... here in Portugal.