How can MSMEs become interested in quality matters?

In principle, quality infrastructure (QI) services serve all companies, regardless of size. Multinationals and large national companies usually have certified quality management systems and regularly use QI services.

Many micro, small and medium-sized enterprises (MSMEs), however, face challenges concerning quality management and quality infrastructure usage:

  • MSMEs often operate in local markets where customers do not demand formalised quality tools, such as certification.
  • In developing countries, the degree of the informality of MSMEs is very high, so they regularly ignore even the safety, health, and environmental protection regulations, and the government is less rigid in enforcing them. 
  • The level of education of small-scale entrepreneurs is usually lower than that of larger enterprises.
  • In addition, the customers’ education level in informal markets is usually lower than in formal markets.
  • The required quality standards in informal markets can often be met without QI services, or quality shortcomings can be dealt with through price reductions.
  • Low prices and low production volume mean higher quality assurance costs than larger enterprises would bear.

To convince SMEs to use QI services, they must understand that the costs of quality defects are usually far higher than those of quality assurance and quality management. [1] There is a considerable need for information sharing here, especially in developing countries, which could be addressed through awareness-raising measures by the development cooperation. [2]

So far, conformity assessment rarely plays a role for MSMEs, especially in the case of the products of micro-enterprises. However, QI services could become important even for this part of the enterprise sector by reducing the costs of addressing the consequences of quality defects, increasing productivity, and supporting innovation, even among SMEs. Examples are manifold, e.g.,

  • Standards for community products (Thailand) [3];
  • Calibrated scales of an agricultural cooperative in Bolivia allow a trustworthy reconciliation of purchase quantities with sales quantities, thus reducing conflicts within the cooperative (Bolivia). [4]
  • Certification of handmade artisan products in Colombia [5];
  • Certified handicraft products in Central America (GIZ Central America) [6].

An essential tool to reduce the costs of SMEs for quality management and conformity assessment is group certification, such as that offered by GlobalGap for small producers. [7] 

The organic certification community has also introduced a group certification system called Participatory Guarantee System (PGS). The PGS is a locally focused quality assurance system and an affordable alternative to third-party certification. The PGS has been developed to guarantee organic integrity in transparent, short supply chains such as farmers’ markets, gate sales or home deliveries. The PGS is recognised in many countries where the organic market is still in its initial development, as well as in the USA, Japan, and other developed countries. In 2021, the International Federation of Organic Agriculture Movements (IFOAM) counted 235 PGS initiatives in 77 countries, with 1.1 million producers certified. [8]

For QI institutions, approaching SMEs is often costly and providing services is not always profitable. SME promotion projects can help strengthen a quality culture in SMEs and introduce them to the quality infrastructure. Here, the cooperation of QI bodies with SME support institutions and programmes is helpful.

Note:

This article is co-authored with Alexis Valqui  as part of the internal knowledge management of the PTB International Cooperation Group. We thank PTB for permission to translate and publish in English.

References

[1] Is quality really free, QI4D post

[2] https://artesaniasdecolombia.com.co/PortalAC/C_proyectos/sello-de-calidad-hecho-a-mano_1487

[3] Lerdkasemphol, C. et all (2016) Determinants of the certified Thai community product standard of small and micro-community enterprise groups in Samut Sakhon Province, Thailand, International Journal of Agricultural Technology 2016 Vol. 12(7.2):1785-1795

[4] IBMETRO, IBNORCA and PTB (2012) Informe 1er taller cadena productiva textiles camélidos bajo la metodología Calidena (Report of the 1st workshop of the camelid textile production chain under the Calidena methodology.), workshop report

[5] ISO 9001:2015 for Small Enterprises – What to do?, https://www.iso.org/news/2016/11/Ref2138.html

[6] AGEXPORT (2016), Comisión de Artesanías y aliados estratégicos fortalecerán la cadena de valor artesanal (The Crafts Commission and strategic allies will strengthen the craft value chain.), press notice

[7] GLOBALG.A.P. (2016) Group Certification, Video

[8] FIBL & IFOAM 2021. Organics International. The World of Organic Agriculture. Bonn.

This entry was posted in Conformity assessment, Quality culture, Quality Infrastructure, SME by Dr. Ulrich Harmes-Liedtke. Bookmark the permalink.

About Dr. Ulrich Harmes-Liedtke

Dr Ulrich Harmes-Liedtke is a global expert in the field of international economic development cooperation. With more than 25 years of consulting experience, he is active in all phases of a project and program development (preparation, implementation, monitoring, and evaluation) and collaborates with various implementing organizations and development banks (German Development Cooperation - GIZ and PTB -, Inter-American Development Bank, European Union and United Nations). He has consulting experience in Africa, Asia, Europe, Latin America and the Caribbean. Dr.Harmes-Liedtke is an experienced trainer and process consultant. He works with groups and teams to reflect on their situation and to then formulate change projects to improve their reality. He enables dialogue, facilitates and designs workshops, processes, and sense-making processes. He is certified in facilitation, mediation, and communication techniques which allow him to deal with sensitive, diverse, and even conflict situations. He supports systemic economic development in various roles: • As an expert and trainer in international trade, national quality policies, industrial policy, clusters, and global value chains • As a process consultant in designing and leading diagnostic processes that result in change, adaptation, and improvement • As a facilitator of dialogue, workshops, training, and sense-making processes • As a transdisciplinary researcher in the field of systemic economic development Born 1965, Ph.D. in political science and economics (Bremen 1999), MA in economics (Diplom-Volkswirt) (Hamburg 1991). German nationality.

1 thought on “How can MSMEs become interested in quality matters?

  1. In several productive chains, for the MSMEs in Latin America it is very important to have associative schemes such as those mentioned, I hope that they can be reinforced in the short term.

    Like

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