This Policy Note delves into possible approaches the government and small and medium enterprises (SMEs) can adopt to enhance the business performance and competitiveness of Philippine SMEs, with emphasis on the supply chain integration. It identifies three main dimensions of supply chain integration, namely, internal, customer, and supplier integration. While all kinds of integration are important, it finds that particular attention should be given to internal integration given that both customer integration and supplier integration work through it. This implies that the impact of external integration (customer and supplier) on business performance and competitiveness will only take effect if the internal integration is in place. To aid SMEs in terms of strengthening their internal integration, this study recommends the provision of support for human capital development (e.g., education, training, consultation, coaching) that will enhance the SMEs' application of management skills, such as the generation of effective operational and production plans and functional coordination. It also calls for the education of SMEs on the use of information systems that will aid in the integration of various internal processes and for the government to invest in technologies to facilitate such integration.
