How MSMEs can leverage data analytics in logistics to optimize operations, reduce costs

Technology for MSMEs: The MSME movement is focused on expansion. They have the biggest challenge in terms of achieving growth because of their inability to provide the product to the appropriate person at the appropriate time.

April 8, 2023 16:00 IST

logistics, supply chain management, saas, data analytics, fleet management, digital logistics

By embracing data analytics and staying ahead of the curve, MSMEs in India can achieve sustainable growth and make significant contributions to the logistics and supply chain industry.

By Zaiba Sarang

Technology for MSMEs: Micro, small, and medium-sized businesses (MSMEs) in India play a crucial role in the logistics and supply chain industry which is one of the country’s fastest-growing industries. However, the sector’s expansion raises new concerns: Effective supply chain management is a major obstacle that may be resolved with the use of data analytics.

Supply chain management for MSMEs now leans heavily on data analytics. Data analytics tools and approaches help MSMEs understand their supply chain processes, identify opportunities for improvement, and make more informed decisions. In 2022, the size of the global logistics market reached over $9.96 trillion and is expected to expand at a CAGR of 6.3 per cent between 2023 and 2028, reaching a valuation of almost $14.37 trillion by 2028.

MSME bottlenecks choking growth

The MSME movement is focused on expansion. They have the biggest challenge in terms of achieving growth because of their inability to provide the product to the appropriate person at the appropriate time. The frequent occurrence of fake orders is one of the most significant difficulties that the sector faces today.

Also read: Explained: How digitisation is uncomplicating logistics for MSME exporters

When it comes to the e-commerce business, there are a few merchants that ship fake orders. In the same manner, when an MSME obtains an order via a marketing platform, the end consumer could declare, “I never purchased this” or, “I don’t want it now.” This results in other problems for the e-commerce company, including their merchandise becoming stranded, having to pay for transportation, and the possibility of their packages getting abandoned.

There have also been instances where the consumer requests a package but the shipping is not fulfilled due to logistical issues. This is where the customer is not able to get the product, and at the same time, the e-commerce vendor is not capable of completing the commitment, resulting in a shocking experience where the customer may lose trust and never place another order again.

Software-as-a-service (SaaS) platforms that are dynamic in such cases are providing apt solutions to these ordeals. Third-party logistics companies, which are powered by technology at their core, are committing to data analytics and providing a smooth road for the logistics issues that MSMEs are facing. There are ingenious tools that are programmed to automate the order confirmation process. These tech innovations can determine whether or not the customer really intends to buy the goods, as well as determine whether or not the address that was provided is valid. This allows MSMEs to raise their delivery rate and increase satisfaction for their sellers.

Also read: How blockchain can solve logistics-related challenges for MSMEs

Age of data analytics

In today’s competitive business landscape, data analytics has become a critical factor in decision-making for MSMEs. With the emergence of new SaaS platforms in logistics and courier companies adapting to data analytics, businesses can access valuable data points that were previously not visible. This availability of data provides clarity on various matrices such as identifying efficient courier partners, assessing pin code performance, determining regions with higher orders, and obtaining pricing comparison for the same.

Additionally, logistics and supply chain management can help MSMEs better understand their customers’ needs and preferences. By analyzing data from sales and marketing channels, MSMEs can make better decisions about inventory levels, products offered, and marketing strategies. This can lead to happier customers and improved customer loyalty, which is crucial for MSMEs to succeed in the long run.

Partnering with third party logistics providers for logistics and supply chain management services can be especially beneficial for MSMEs, as these providers have the resources and expertise needed to help them succeed in the rapidly evolving logistics industry. In conclusion, MSMEs in India can leverage advanced technologies and expertise in logistics and supply chain management to optimize their operations, reduce costs, improve customer satisfaction, and stay competitive in the market.

Data Analytics for sustainable growth

The logistics and supply chain industry is evolving rapidly, and MSMEs in India must keep up with the pace to remain competitive. Fortunately, data analytics has emerged as a powerful tool to optimize supply chain operations. MSMEs can leverage advanced technologies and expertise to better understand their customers’ needs, improve inventory management, and streamline logistics and supply chain processes. By embracing data analytics and staying ahead of the curve, MSMEs in India can achieve sustainable growth and make significant contributions to the logistics and supply chain industry.

Zaiba Sarang is the co-founder of iThink Logistics. Views expressed are the author’s own.