MIT LIFT Lab
MIT Low Income Firms Transformation (LIFT) Lab, led by Josué C. Velázquez Martínez from the MIT Center for Transportation and Logistics, is a new research lab founded in 2022 aimed at alleviating poverty in developing countries and LIFTing the life of the bottom billion by helping poor and low-income communities and providing them with opportunities to grow. This initiative contributes to the survival and growth of micro and small enterprises (MSEs), specifically by improving their supply chain management (SCM) capabilities.
By using descriptive and inferential statistical analysis, utilizing standard methods as well as sophisticated machine learning techniques, our projects are based on empirical research with real data from MSEs, including large-scale analysis and field interventions. The information used for our studies is based on primary data collected via immersion, shadowing and observation, which significantly increases the quality and impact of the analysis. We aim to develop a comprehensive model-based theory grounded in the data and the context, so the findings can be used in the future when conditions change.
MIT LIFT Lab grew out of the MIT GeneSys project, which began in 2016 with the aim of contributing to small business growth specifically in 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)?
The MIT LIFT Lab, aims to alleviating poverty in developing countries and LIFTing the life of the bottom billion by helping poor and low-income communities and providing them with opportunities to grow.
In developing regions, Micro and Small Enterprises (MSEs) are a crucial component of the economy. MSEs are the source of income to millions of families and the source of goods and services to the bottom billion. In Latin America and the Caribbean, MSEs represent 99% of the companies, contributing to 47% of the employment in the region (ECLAC, 2020).
However, MSEs struggle to survive. The mortality rate of MSEs in developing countries is estimated to be over 30% annually during their first five years of operations (McKenzie, D., & Paffhausen, A., 2018). This is mainly explained by their productivity gap with respect to larger firms. For example, large Mexican companies have exhibited significant productivity growth (almost 6%) while the productivity of micro, small, and medium sized companies have decreased almost 7% annually (Remes, J. ,2014).
Moreover, since the outbreak of the COVID-19 pandemic, the world has been pushed to a recession, and the economic damage is mounting across all countries, with a severe impact in Latin America and the Caribbean. It is estimated that the economic crisis derived from the pandemic has affected more than 60% of the MSEs across the globe, causing the definite closure of ~2.7 million MSEs in Latin America (CEPAL, 2021).
Therefore, the primary goal at MIT LIFT Lab is to contribute to the survival and growth of Micro and Small Enterprises (MSEs) by improving their supply chain management (SCM) capabilities.
Our lab focuses on the following topics:
- Improving survival rate and productivity of MSEs, especially following the Covid-19 crisis
- Tailoring specific SCM capabilities to each MSE’s context, including prioritizing processes and methods in order to improve productivity
- Improving MSE’s cash availability, and financial performance, that is, via helping define the right product/service composition
- Helping MSE’s prioritize key SKUs, customers and suppliers
- Defining and developing appropriate levels of technology to support long term MSEs growth, including e-commerce, track & trace, digital procurement, customer segmentation, etc.
The MIT LIFT Lab is across ten countries in Latin America. We have strengthened our collaboration with 20+ partner universities in Mexico, Guatemala, Colombia, Ecuador, Peru, Chile, Brazil, Uruguay, Bolivia, and Argentina. Each year, hundreds of students, faculty members, and research collaborators collect primary data on the field and provide practical recommendations to the MSEs based on our methodology.
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