Relevance: GS-3 : Indian Economy and issues relating to planning, mobilization, of resources, growth, development ,Supply Chain Management.

Key Phrases: Robust Supply Chain, Inventory Turn Around, Key Performance Indicators ,Optimum Utilisation , Synchronisation, Sustained Customer Engagement , Inventory Management , OverStaking , Partner Reliability and Credibility

Context:

• 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.

Ways in Which Indian MSMEs can Strengthen Their Supply Chains :

1. Lay Down Key Performance Indicators:
   • The initial step involves specifying appropriate key performance indicators (KPI). 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 the top priorities. Though cost and resource optimization are also crucial, these do not matter as much to the business goals as the quality of customer service.
   • However, for a commodity-based business, the order of performance priorities may differ (or perhaps not).
2. 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, a custom dashboard is created 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.
3. 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,SAP analytics tool is used and it has givens 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.
4. 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.
5. Address the Human Resource Challenge:
   • 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, it has 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 meet the consumer requirements at both the institutional and individual level.
   • It has also helped streamline the manufacturing. Supply chains are vital, regardless of size.

Conclusion:

• 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.

Source : Live-Mint

Mains Question :

Q. At a time when businesses are suffering from the whiplash of covid induced disruptions, the role of supply chain efficiency becomes critical. Discuss the ways in which MSMEs can strengthen their supply chains.