PremiumThe supply-chain function tends to take a backseat to other functions in many MSMEs but this is inadvisable in normal times and perilous in times of sudden disruptions and high uncertainty
| Listen to this article |
Just like big organizations, Micro, Small and Medium Enterprises (MSMEs) also need powerful and robust supply chains to operate, grow and transform their businesses successfully. An efficient supply chain is pivotal for better inventory turnaround, optimization of business resources and enhancing the speed and agility of the overall system. It is also of critical importance in serving customers in the best possible way and building long-term relationships with them.
At a time when businesses across shapes and sizes have suffered the whiplash of covid induced disruptions, the role of supply chain efficiency is all the more critical. From production and logistics to last-mile delivery, businesses are reeling under the pressure of increased uncertainty, muted demand and a fragile business environment on the whole. In such challenging times, in order to ensure seamless operations and mitigate assorted risks, it is very important to take care of one’s supply chains from end to end.
The analysis that follows will offer five simple yet critical ways in which Indian MSMEs can strengthen their supply chains and stay top of their game.
Lay down key performance indicators: The initial step involves specifying appropriate KPIs, or key performance indicators. In any supply chain, a host of KPIs can be identified, such as costs, inventory turnaround time, speed, customer satisfaction, the overall rate of complaints, etc. Subject to the business and its long-term strategy, an MSME should specify KPIs to be worked upon. In this exercise, it is important to give each KPI a weightage score. What might be very important for one business might not be essential to another. For instance, at Rosemoore, which is a lifestyle consumer brand, customer satisfaction and sustained customer engagement are our top priorities. Though cost and resource optimization are also crucial, these do not matter as much to our business goals as the quality of customer service. However, for a commodity-based business, the order of performance priorities may differ (or perhaps not).
Use an integrated platform: Even in an MSME, multiple functions operate simultaneously. It is thus important to develop a unified system that can integrate numerous individual functions such as production, other business operations, marketing and logistics under a single dashboard. A unified system will ensure a real-time and seamless flow of data across functions and help the business leadership get a complete view, rather than having to go silo by silo. It should be understood that compartmentalized work operations are detrimental to an effective supply chain. The greater its transparency, the better the synchronization of all elements in the chain.
At Rosemoore, we have created a custom dashboard that shows all the required real-time data on stock-keeping-unit-wise sales, levels of inventory, orders under process, discounts, etc. Access to it is shared with all relevant decision makers within the organization. This has been beneficial for us, as it keeps us all on the same page and offers no scope for confusion.
Use predictive analytics for demand: Analysing consumer preferences and forecasting demand accurately is paramount for supply chain efficiency, as it aids better planning. Scrutinizing past trends can reveal a lot about the future and improve decision-making. At Rosemoore, we use an SAP analytics tool and it has given us results with almost 90% accuracy. Demand forecasting has supported superior inventory management of raw materials as well as finished products. This has enabled us to avoid both stock-outs and overstocking, thereby optimizing related costs. Also, it helps detect any shift in consumer behaviour.
Forge partnerships that are mutually beneficial: Identifying reliable partners, including logistic resources and raw material suppliers, can be very helpful in the longer run. Having the right partners and engaging them in open and frank communication can help lower business uncertainty and strengthen one’s supply chain multifold. While dealing with partners, it is important to understand their concerns as well, so that a mutually beneficial and sustainable relationship can be forged. Also, one should always avoid unreliable partners, as that will exacerbate one’s challenges. Partner reliability and credibility can go a long way and the value of these relationships must never be underestimated.
Address the human resource challenge: In MSMEs, the supply-chain function tends to take a backseat compared to other functions such as accounting and finance, marketing, operations, etc. Mostly, even a budget would not exist for a specialized supply chain team. However, in my experience, this is not a good idea, as it could affect the business adversely. No matter how small the set-up, it is always prudent to have a specialized supply chain team in place. This would not just help in operational compatibility, but will also be instrumental in scaling up the business in time to come.
Since Rosemoore’s inception, we have had a dedicated supply chain team. Initially, it was just a two-member team, but has now grown to a strength of six members. Having a dedicated team has helped us meet our consumer requirements at both the institutional and individual level. It has also helped us streamline our manufacturing. Supply chains are vital, regardless of size.
Ridhima Kansal is director, Rosemoore