By- Debarshi Dutta, CEO and CO-Founder – December 23, 2022
Micro, small and medium industries, or MSMEs despite being termed so, plays a very large role in the Indian economy, at 29% of the GDP to be precise. SMEs too, contribute significantly to the GDP landscape. With an employment share of 40%, this sector is providing a means of livelihood to an estimated 80 million people across the country, through low-skilled jobs that collectively yield 45% of the Indian manufacturing output. However, those are not the key identifiers of this fast-moving sector. It is, in fact, that a majority of ventures working under its wide umbrella are unorganised, hurdled by a credit crunch that further limits the scope of growth.
So, when we look deeper, “why does a section of the economy that drives 40% of domestic exports is facing the slump?”, the answer, rhetorically, falls back on operations that elucidate efficiency.
To dissect the problem at hand, India is moving towards automation and digitisation, wherein the unstructured MSMEs fall out of the circuit. The first and foremost solution, thus, is a strategy that fulfils the distributor’s demands and resists the supply shock. Or simply put, build a robust end-to-end supply chain management system.
An understanding of what supply chain management is all about
By definition, supply chain management is an operative supply module, complete with logistical, financial, and technological support, that helps in capacity building, meeting the demands of automation of transfers, and packaging support.
This is an integrated module of streamlining freight and forwarding it via a single channel that converges as a solution for multiple problems. We are talking about a smart system that has the bandwidth to run through various nodes, depending on the size and capacity of the enterprise, to simulate speedy, safe, and sabotage-free end-to-end transfers.
The next BIG thing!
And that being said, a supply chain management system that works as an end-to-end system is just half of what the world is looking forward to. While an end-to-end solution does work on dissolving the hindrance ahead of the scalability of a business, micro and small enterprises need to think bigger. The industry is moving lightning fast, at the speed of 5G, demanding a room for adaptation as much as elasticity.
The big innovation today is, to no one’s surprise – a digital supply chain. When the world is at your fingertips to browse and discover, it compulsively needs to be a touch away when it comes to movement and tracking too. The industry needs to tap on a future, and it starts on an e-clectic note!
The A, B, C of an e-supply chain system
The need of a digitally-powered system was first felt when the Covid-19 pandemic caught on the world like a wild-fire, burning all physical and social contact. What the world feared as a major set-back to the landscape of global business, soon became a strength for India.
The country’s digital infrastructure developed exponentially during the era of lockdowns, syndicating a digital world for all the world’s shenanigans. And business was not far behind. In-came an indigenous concept Vocal for Local, that was popularised by Digital India, giving a chance to the MSME sector to stand as tall as its deep roots. As per a Local Circles report, 8% of MSMEs and start-ups witnessed a growth between 100-500% in their sales through online channels in FY20-21.
Beyond this too, businesses across sectors saw the potential e-markets, e-commerce which slowly led to the rise of an e-supply chain too. This was about convenience, which could provide easy management and easier monitoring.
Opening the capital clog
Another solution that came to the foreground with digital end-to-end supply chains was financial respites. What the end-to-end supply chain brought was a system of financing that transacted a sense of order into a sector as unconsolidated and disoriented as the MSMEs. Systematic supply chain management meant an audit of data and a consistent flow of accurate financial and business data, that could help lenders better understand the liquidity and profitability of the ventures which lead to the opening of more financial doors than one.
Lenders, NBFCs, banks, angel investors, and venture capitalists made a climactic entrance to the play of things and it linked more than just demand and supply for the small venture. It linked a future of possibilities, growth, and development that has the potential to sustain the Indian economy, efficiently and independently.