Just like big organizations, MSMEs also need a powerful and robust supply chain to operate, grow, and transform their business successfully. An efficient supply chain is pivotal for better inventory turnaround, optimizing resources, and bringing increased speed and agility to the overall system. They are also critical in serving customers in the best possible way and building long-term relationships with them.
Currently, when businesses across shapes and sizes have suffered the whiplash of COVID-induced disruptions, the role of the supply chain further becomes critical. From production to the overall logistics to the last-mile delivery, businesses are reeling under the pressure of increased uncertainty, muted demand, and a fragile overall business environment. During such challenging times, it is very important to take care of the overall supply chain of the organization to ensure seamless operations and mitigate possible risks.
In the analysis that follows are five simple, yet very critical parameters, across which MSMEs can enhance their supply chain and stay top of their game:-
Lay Down the KPIs - The initial step connotes specifying the right Key Performance Indicators (KPIs). In the supply chain, there is a host of KPIs such as costing, inventory turnaround time, speed, customer satisfaction, the overall rate of complaints, etc. Subject to the business and the long-term strategy, an MSME should specify its KPIs.
Also, it is important to give each KPI a weightage score. What might be very important for one business might not be essential for the other.
Setting up the right KPIs (and the weightage) can help in effectively planning and deploying a supply chain that is in sync with the long-term objectives of the business.
An Integrated Platform - Even in an MSME, multiple functions operate simultaneously. It is important to develop a unified system that can integrate numerous individual functions such as production, operation, marketing, and logistics across a single system. A unified system will ensure a real-time and seamless flow of data across functions and help the business get a complete view rather than working in silos. It should be understood that silos and compartmentalized working are detrimental to an effective supply chain. The greater the transparency, the higher the synchronization and symmetry in terms of the supply chain.
Predictive Analytics of Demand - Analyzing consumer preferences and forecasting demand accurately is paramount in the supply chain, as it helps in better planning. Demand forecasting aids in better inventory management, both for the raw materials as well as finished products. Consequently, it will enable MSMEs to avoid both stockouts and overstocking thereby optimizing their costs. Also, it might also help in understanding any shift in consumer behavior.
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Forge Mutually Beneficial Partnerships - Identifying credible 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 in lowering uncertainty and strengthen your supply chain multi-folds. While dealing with partners, it is important to know about 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 exaggerate the challenges. Reliability and credibility in your partner are a must!
Address the Human Resource Challenge - In MSMEs, the supply chain function always takes the backseat, when compared to other functions such as accounting & finance, marketing, operations, etc. Mostly, there would not be a budget for a specialized supply chain team. However, in my experience, this is not a good idea, as it affects the business. No matter how small, 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 the future scaling up of the organization.