By Aniket Deb
Logistics for MSMEs: The supply shock that initiated in China early in 2020, followed by the global economic shutdown, resulted in a massive turmoil across supply chains worldwide. With trade restrictions on one hand and stuck shipments and delayed deliveries on the other, the MSMEs were among the most dramatically hit by the pandemic. According to a recent report by the Indian Chamber of Commerce (ICC), the sector lost nearly Rs 50,000 crore due to the lockdown. This chain of events also created a bullwhip effect that impacted the financial resources, inventory, warehousing, supply, and production capabilities of India’s fragile MSMEs, which are often cited as the backbone of the Indian Economy. While several challenges existed for these enterprises even before the pandemic, the viral outbreak reiterated the complexities of the conventional supply chains.
However, on the flip side, the pandemic proved to be a catalyst ushering in a new world order, which has rendered the supply chain industry an opportunity to transition from the current state of fragility to resilience. In fact, KPMG’s recent Outlook Survey revealed that nearly 65 per cent of CEOs in India feel the need to reinvent their present supply chains systems.
This underscores the critical role that intelligent automation solutions can play in enabling MSMEs to withstand the supply chain volatilities and address stakeholder concerns. Firstly, MSMEs need to increase real-time visibility of overall supply chain operations. Access to real-time data with regards to production, transportation, and consumption helps in gaining insights into how resources are being utilized. Second, the insights gained help in better communication. Since all stakeholders in the supply chain would be more aware of each other’s requirements, they can respond to disruptions with better coordination. This further gives them the ability to flexibly scale their resources depending on demand. Third, MSMEs need to adapt to shifting customer preferences. Only by harnessing digital technologies, would they be able to offer better services to their stakeholders.
Though the use of technology by MSMEs is increasing, the rate of adoption is just 12 per cent. This is where plug-and-play technologies that operate on cloud platforms have a major role to play. We can see several such technologies in action, addressing each of the requirements of MSMEs:
The application of cloud technologies
Cloud technologies have the ability to process big data and present information to all stakeholders on a common platform. By accessing services such as e-commerce markets, or automating payments, enterprises will gain access to real-time data pertaining to procurement, manufacturing, and payments. This data will help MSMEs discover their customer’s pain points, as well as their preferences. In essence, using cloud-based automation solutions, MSMEs will be able to formulate the right KPIs, and develop a digital transformation strategy aimed at customer convenience.
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Automating the inventory and warehouse
Real-time monitoring of inventory and warehouse operations is a crucial component of preventing wastage of resources and preventing loss of revenue. For example, real-time monitoring will enable a manufacturer to automate the replenishment process and accommodate any fluctuations in supply and demand. With the application of Industry 4.0 technologies in factories and warehouses, such as the Internet-of-Things (IoT), manufacturers would be able to oversee each process with accuracy and convenience. This would enable them to make better, faster, and more informed decisions.
Transparency of data – Building visibility
Minor discrepancies in supply chain networks can cascade into confusion for all stakeholders. To prevent this, stakeholders must have real-time visibility over each other’s requirements. Using AI, intelligent tools such as a common dashboard gives vendors access to the consumption patterns of their customers. Depending on a surge or reduction in demand, the entire supply chain can be alerted to modify its supply of materials to the manufacturer. Not only does this remove the hassles of inaccurate forecasts and delays in purchase orders (POs), it also helps in eliminating waste from the entire supply chain.
As we go forward, continued support from the government along with technology and automation will help MSMEs revive themselves and ensure resilience in the post-pandemic world. Additionally, supply chain automation is going to be vital to ensuring customer satisfaction, optimizing resources, eliminating waste, and building a sustainable business amidst the fast-changing global supply chains.
Aniket Deb is the Co-founder and CEO at Bizongo. Views expressed are the author’s own.
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