5 effective workarounds for MSMEs to improvise their supply chain
Just like large organizations, MSMEs also 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. They are also essential to serve customers in the best possible way and build long-term relationships with them.
Currently, when businesses of all shapes and sizes have taken the brunt of COVID-induced disruptions, the role of the supply chain becomes even more critical. From production to global logistics to last-mile delivery, businesses 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 organization’s overall supply chain to ensure smooth operations and mitigate possible risks.
In the analysis that follows, there are five simple, yet very critical parameters through which MSMEs can improve their supply chain and stay on top of their game:-
Define KPIs – The first step is to specify the right key performance indicators (KPIs). In the supply chain, there are a host of key performance indicators such as cost, inventory turnaround time, speed, customer satisfaction, overall complaint rate, and more. Depending on the activity and the long-term strategy, an MSME must specify its KPIs.
Additionally, it is important to assign each KPI a weight score. What may be very important for one company may not be essential for another.
Having the right KPIs in place (and weighting) can help plan and effectively deploy a supply chain in line with long-term business goals.
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.
Predictive demand analysis – 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 allow MSMEs to avoid both stock-outs and overstocking, thereby optimizing their costs. Furthermore, it could also help to understand any changes in consumer behavior.
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Forging Mutually Beneficial Partnerships – Identifying credible partners, including logistics resources and raw material suppliers, can be very useful in the longer term. Having the right partners and engaging them in open and candid communication can help reduce uncertainty and strengthen your supply chain on many levels. When dealing with partners, it is also important to know their concerns so that a mutually beneficial and lasting relationship can be forged. Also, always avoid unreliable partners as this exaggerates the challenges. The reliability and credibility of your partner are essential!
Meeting the human resources challenge – In MSMEs, the supply chain function always takes second place, compared to other functions such as accounting and finance, marketing, operations, etc. Most of the time, there would be no budget for a specialist 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 would not only help with operational compatibility, but would also help with the future scaling of the organization.