How do small businesses benefit from supply chain solutions?
The supply chains are the vital connecting link between the point of origin and the end customers. The traditional supply chains worked in silos which inherently limited the efficiencies and profit maximization opportunities. The recent technological advancement in the supply chain domain has increasingly become a medium for delivery of customer experiences. The advent of e-commerce has in a way fueled the opportunity for new technology adoption and infuse efficiencies across supply chains.
*As per the world bank estimates the small and medium businesses (SMBs) account for the larger pie of the business in developing economies and contribute 40 percent of GDP, 90% of net job growth in developing nations making them critical part of economic engines. **India has approximately 6.34 crore MSMEs. The Indian MSMEs sector contributes about 29% towards the GDP through its national and international trade. The MSMEs contribute around 6.11% of the manufacturing GDP and 33.4% of India's manufacturing output, 24.63% of the GDP from service activities. They have been able to provide employment to around 120 million and contribute around 45% of the overall exports from India.
The digital enabled supply chains provide relevant solutions, deliver personalized products and seamless experience to create a competitive edge. Hence, the modern supply chains are interconnected, fluid, resilient, intelligent and self-learning. The pursuit would be to create supply chains with predictive operations capability.
Leveraging scalable technology solutions of large logistics corps
The pandemic has tested the supply chains to the core of their resilience and also has allowed to repurpose them. The adoption of a technology-based solution by SMBs of an integrated supply chain has become increasingly urgent. The SMBs generally are on weak technological base, limited use of information and technology and skilled manpower constrains. A host of new technologies such as big data analytics, cloud computing, AI, IOT, Blockchain, Robotics, 3D Printing based solutions have been adopted globally across supply chains which have created enormous business value. These solutions should be democratized to small and medium businesses (SMBs) by the big tech at an affordable and an innovative price structure. A global IT services firm understands this challenge, thus providing a value-based pricing structure with no upfront cost involved to SMBs for its sales platform and is compensated only on successful generation of business.
The SMBs can draw immense benefits from the optimized supply chains and technology platforms deployed by the large corporations with massive physical assets to meet the fluid demands, address time constrains and expand their market reach.
Raw material flow management
The supply chains maintain the flow of goods, always striving for shorter time frames to deliver the product to the end customer. The entire process requires many variables to be managed and ensure that supply chain operates at maximum efficiency.
For example, the continuous supply of the right quality of materials is one such variable to be considered. The other variables could be fluctuation in demand, inventory space availability, selecting best and lower cost transit route for goods. Any fluctuation in any of the variable could imbalance the efficiencies across the supply chain.
Lean inventory management
The SMBs dependent on supply chains of large corporations benefit immensely from its continuous optimization through technology and robust physical infrastructure allowing them to develop lean inventory and on-demand supply chains. The SMBs can leverage these strengths to maintain right amounts of product available while avoiding stock-outs and excess inventory. It allows SMBs to hold right amount of inventory to meet fluid demands and do away with unwanted warehouse space allowing a scalable operation with smaller footprint contributing to cost savings and prudent capital deployment.
Liability and risk pooling
The supply chain of large corporations through their up-to-date technology deployments aid SMBs with end-to-end planning activities. They deal with various risk factors such as maintaining product quality, supplier relationships, predicting risks and mitigating them through various measures such as insurance policies, innovative work processes, meeting safety standards, reducing time delays etc. which if ignored, affect the bottom line of the SMBs.
Supply chain solutions– Your growth drivers, no more your cost centers
The SMBs dependent on robust supply chains receive substantial cost savings through reduction in transportation costs, reducing order to delivery cycle time, reducing/rationalizing supplier base, reducing warehouse costs, expanding width and depth of product distribution and expanding markets. The innovative supply chain solutions allow a small business to maintain flexibility of production volume, deploy buffer capacity and offer broad product lines.
Institutional support for capacity building of SMBs
The rebalancing of the global supply chain has increased the pressure on Indian SMBs for technology adoption, upgrading/acquiring new skills, and reinventing processes for supply chain efficiencies. An enormous combined capacity-building effort from government and large private-sector corporations is required on a sustainable basis to improve, upgrade and align these SMBs up to the standards of global supply chains.
One such effort has been initiated in March 2021 by Walmart under its programme called Vriddhi in the state of Uttar Pradesh. It has launched an e-institute to facilitate SMBs in granting access to skills and competencies across online and offline platforms such as Flipkart's marketplace and Walmart's global supply chain. The company stated that this new e-institute will benefit 50,000 SMBs across the country to expand domestically and globally. Source ibef.org
To address the manpower issues of the SMBs, Ministry of MSME has launched MSME SAMPARK (http://sampark.msme.gov.in/) in 2018, the MSME Sampark portal is a digital platform wherein jobseekers (students or trainees of MSME Technology Centres) and recruiters can register themselves for mutually beneficial interactions. Source ibef.org
In March 2021, the Ministry of MSME, through the Development Commissioner (DC-MSME), implemented the Technology Centre Systems Programme (TCSP) to establish 15 new technology centres (TC). The centres provide assistance to the industry, predominantly MSMEs in the general engineering, automotive, fragrance and flavour and ESDM (electronic, system, design and manufacturing) sectors. Source ibef.org
*https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/solutions/products+and+services/advisory/farmer+and+sme+training & ibef.org
**cii.in
https://www.cii.in/Sectors.aspx?enc=prvePUj2bdMtgTmvPwvisYH+5EnGjyGXO9hLECvTuNuXK6QP3tp4gPGuPr/xpT2f