MIT GeneSys

Background

Between 2000 and 2014, average Gross Domestic Product (GDP) growth in Latin America and the Caribbean amounted to over 3% per year. The region as a whole grew by only 1% in 2014, well below the 5% growth rates seen in the mid-2000s. In most Latin American economies, raising productivity growth is key to closing the large gap in living standards in relation to advanced economies.

The situation is not only valid for Latin American countries but also for most of the developing countries.

According to the `Perspectives on Global Development` report of OECD, the productivity level in many developing counties is far below the average level of OECD countries. In addition, in terms of total factor productivity, all countries are under 30% of the productivity level of USA. The income levels in those countries can only catch up with the advanced economies with the effort of increasing productivity. 

The main source of the lack of productivity in developing economies is explained by the poor performance of the Micro and Small firms in these countries. While these companies account for the majority of jobs, only a fraction survives and develops into a high-growth firm due to the lack of managerial quality and Supply Chain Management (SCM) expertise, i.e. purchasing, inventory management, demand & production planning, etc. The following chart shows the comparative productivity performance (%) of Micro, Small and Medium enterprises versus Large enterprises.

The productivity of Micro, Small and Medium Enterprises vs Large

Motivation

MIT GeneSys started in 2016 with the aim of contributing to small business growth specifically in the 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)?

Over the last two years, the MIT GeneSys Lab developed a comprehensive methodology, a pilot and the current version of a mobile app  that provides a detailed and comprehensive assessment of the potential of survival of small firms. 

Methodology of GeneSys Project

Using this methodology, our work would aim to:

1. Study the performance of the 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.),
2. 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,
3. 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:

1. Workshops. 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.
2. Data Collection. Using mobile technology and the GeneSys App, we are gathering primary data through questioning and observation of the business processes and decision makers within a micro/small company.
3. Supply Chain Mapping. We are studying and mapping the key business and supply chain processes of the company (e.g. suppliers, internal chain, customers, etc.)
4. Assessment. 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.
5. Recommendations. 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.

If you want to know more about Data Collection and our methodology, please click here "Data Collection Guidelines 5.0"

Coming soon

Research Team

Academic Partners

Government Partners

Testimonials

Coming soon

 How to Engage

 We are looking for government/companies to engage with us on:

1. Funding this research project with the aim of increasing the productivity of micro and small firms in developing countries.
2. Connecting our group with micro and small firms interested in taking part of the project.
3. Providing data from micro and small companies.

If you wish to collaborate, contact us at the following address, genesys-app@mit.edu