5 effective workarounds for MSMEs to improve their supply chains
Large or small, MSMEs need a powerful and robust supply chain to successfully operate, grow and transform their business. An efficient supply chain is essential for better inventory turns, resource optimization, and increased overall system speed and agility. It is also essential to serve customers in the best possible way and to establish long-term relationships.
Currently, when businesses of all shapes and sizes have taken the brunt of COVID-induced disruptions, the role of the supply chain becomes critical.
From manufacturing to global logistics up to last mile deliverybusinesses are under pressure from heightened uncertainty, sluggish demand and a fragile global business environment.
In these difficult times, it is very important to take care of the entire supply chain of the organization to ensure smooth operations and mitigate possible risks.
Here are five simple but very critical metrics that MSMEs can use to improve their supply chains and stay on top of their game.
The first step is to specify the right key performance indicators (KPIs). In the supply chain, there are a multitude of key performance indicators such as cost, inventory lead time, speed, customer satisfaction, overall complaint rate, etc.
The MSME should specify its KPIs, subject to the business and long-term strategy. It is important to assign each KPI a weight score. What may be very important for one company may not be essential for another. Also, cost and resource optimization is crucial, but not as much as customer service.
However, for a commodity-based business, this may not be the priority. (Or maybe, it depends!) Having the right KPIs (and weightings) in place can help effectively plan and deploy a supply chain that is aligned with long-term business goals.
Set up an integrated platform
Even in an MSME, several functions operate simultaneously. It is important to develop a unified system that can integrate many individual functions such as production, operations, marketing and logistics into one system.
A unified system will ensure a real-time and seamless flow of data between functions and help the business get a complete view rather than working in silos.
It must be understood that silos and silo work are detrimental to an efficient supply chain. The greater the transparency, the greater the synchronization and symmetry in terms of supply chain.
Working with predictive analytics
Analyzing consumer preferences and accurately forecasting demand is paramount in the supply chain as it helps in better planning. Demand forecasting helps in better inventory management, both for raw materials and finished products. Therefore, this will enable MSMEs to avoid both stock-outs and overstocking, thereby optimizing costs. It could also help to understand any changes in consumer behavior.
Forging Mutually Beneficial Partnerships
Identifying credible partners, including logistics resources and raw material suppliers, can be very helpful in the long run. Having the right partners and engaging them in open and candid communication can help reduce uncertainty and strengthen your supply chain on many levels. While dealing with partners, it is also imperative to know their concerns so that a mutually beneficial and lasting relationship can be forged.
Avoid unreliable partners as this will add to the challenges. The reliability and credibility of your partner are essential!
Take up the HR challenge
In MSMEs, the supply chain function always takes a back seat to other functions such as accounting and finance, marketing, operations, etc. Most of the time, there won’t be a budget for a specialized supply chain team.
However, in my experience, this is not a good idea, as it affects the business. As small as it is, it is always prudent to have a specialized supply chain team in place. This will not only help with operational compatibility, but will also help in the future scaling of the organization.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)