MSMEs in services sector: A white paper on Wednesday focusing on the critical need for efficient measurement and productivity improvement within the services economy proposed the extension of the MSME Competitive (Lean) Scheme by the government to the services sector. The whitepaper was developed by Kaizen Institute — a global organisation offering lean consulting services for business performance improvement and growth, based on lean methodologies.
The proposal suggested implementation of the scheme in two phases: first phase focusing largely on manufacturing MSMEs and second phase pulling in services sector MSMEs.
“With the recent revision of the scheme in March 2023, there is an increased focus on the MSMEs engaged in manufacturing. This recommendation seeks to underline the need for inclusion of the services sector, given the sector’s enormous contribution to the country’s GDP and exports and its potential to attract foreign investment and provide large-scale employment,” the paper noted.
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The revamped MSME Competitive (LEAN) scheme was introduced by the government in March this year to make handholding and consulting more affordable for MSMEs who intend to adopt measures to reduce wastages in their manufacturing process.
With an increased subsidy limit to 90 per cent from earlier 80 per cent on implementation cost of the consultant fees for MSMEs and stage-wise segregation of the implementation of lean manufacturing techniques, the scheme “has the potential to become a national movement and it aims to provide a roadmap to global competitiveness for the MSMEs of India,” MSME Minister Narayan Rane had during the launch of the scheme.
Under the scheme, MSMEs are offered handholding towards the implementation of lean tools at three levels – basic, intermediate, and advanced. Completion of each stage is verified through an end-term assessment or assessment by the scheme’s implementation agencies like the National Productivity Council and Quality Council of India along with MSME –DFOs (Development and Facilitation Offices).
According to the whitepaper, over the years, there has been an increase in the number of MSMEs operating in the services sector with a key focus on industries such as hospitality & tourism, banking & financial services, healthcare & logistics. Hence, “Extension of this scheme to the services sector will enable corresponding MSMEs to enhance customer satisfaction, streamline processes, reduce waste, plan efficiently, reduce costs, improve productivity, improve operational efficiency and foster a culture of continual improvement.”
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For this, the paper suggested the implementation of five Kaizen principles – Know your Customer (Knowledge of knowing who you are selling to in order to create value), Let it Flow (achieving zero waste), Go to Gemba (importance of leadership understanding what is happening at every level of the organisation), Empower People (organising teams, setting goals and offering tools to achieve them) and Be Transparent (tracking performance and improvement with real data).
“Adopting Kaizen methodologies, MSMEs in the services sector can become more competitive, drive growth, and contribute to the overall development of the services economy in India,” the whitepaper read.
“Despite its roots in manufacturing, Kaizen has proven to be highly effective when applied to the services sector. Organizations within this sector have reaped the benefits of its principles and techniques, fostering a culture of continuous improvement driven by employees. This approach has led to significant improvements in overall efficiency and effectiveness across diverse areas such as banking and finance, healthcare, hospitality and tourism, as well as warehousing, logistics, and distribution,” said Vinod Grover, Managing Director – South Asia & Africa at Kaizen Institute.