Indian MSME’s contribute almost half of the industrial output and a fifth of the GDP to the India economy, in spite of their small size and the hurdles they face in their business. Moreover, they are also the largest employment generators in the country, being responsible for the livelihoods of thousands of families across the country. As such, they need to be encouraged and supported both by the government as well as large organisations to keep their operations running.
The key element that’s going to be vital for them to survive and grow their business is technology. Today the usage of technology at all levels is aiding the creation of a level playing field for all companies be it big or small. The role of technology, however, is not limited just to automate the production line or in supply change management. It is also being used extensively in customer acquisition and relationship management, marketing and acquiring new customers across the globe. MSME’s therefore need to up skill themselves and their employees to take advantage of the numerous advantages technology offers, to scale and grow their business, such as;
Streamlining their production process
Most of the MSME’s work with strict production and delivery deadlines, in case they supply essential components to larger corporations. Their entire business is therefore dependent on maintaining a timely production and delivery cycle, for which they, in turn, need to source raw materials well in advance. Stocking too huge a quantity of raw materials would result in blocking funds, while not maintaining adequate stocks could hamper the production process.
This is the area, that technology could play a crucial role by ensuring and managing a just-in-time procurement and production cycle. The advent of latest technologies such as AI and Machine Learning can even help predict the customer demand cycle, helping MSMEs plan their production accordingly.
Accessibility to Finance
This is the primary area, that technology is beneficial to MSMEs especially when they are looking for quick finance for their short term requirements. Earlier MSMEs had to collect all their financial documents and visit the banks for their finance requirements. This invariably meant spending hour’s filling in loan application forms and explaining to bank managers their business models and the need for finance. More often than not, there would be a delay in procuring the funds leading to lost opportunities or even losses.
Today, the entire modality of applying for a loan has changed, thanks to the deployment of the latest technologies by many fintech companies. The entire loan application process has been streamlined and can be completed by an MSME, within minutes from his office or home using his smart phone or laptop. Once he submits his documents, the credit scores of the MSME can be checked with online credit rating bureaus to check his credit history, enabling the fintech companies to decide if they should lend funds or not to the MSME. This entire process can be completed within a few minutes from start to finish, based on which the MSME is updated on his loan status. If the loan is granted, then the funds are transferred within a few minutes to the MSME.
This helps the MSME plan his cash flow and meet his financial commitments well in time, and as per market needs.
Grow his business
While earlier the operations of MSMEs were limited to their neighborhood and few contracted clients, MSMEs can today target their entire city, country and even the whole world if they want for their products and services. The arrival and setup of various e-commerce platforms across the country, have given MSMEs an additional avenue to sell the goods and services to all the corners with relative ease and comfort.
Not only is this helping MSMEs reach out to a larger base of customers, but also understand the potential market for other goods and services which they can gradually add to their existing inventory. Customer feedback, returns, and reviews are now received within minutes, helping MSMEs take corrective action against any manufacturing defects and resolve complaints for better customer satisfaction.
The times are changing and those MSMEs who welcome technology as their partner will be the first to gain and be profitable in these challenging and competitive times. Technology will not only help them build new customers and retain old ones but also help them get quicker access to finance to meet their production requirements in line with customer needs.