By Amit Maheshwari
Logistics for MSMEs: The growth story of the Indian economy has seen the Micro, Small and Medium Enterprises (MSME) sector playing an indispensable role. However, while the global supply chain is constantly evolving, many MSMEs have yet to embrace digitalisation. This is critical as advances in technology, specifically, automation can save materials and energy while also improving the quality and accuracy of business processes.
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In the logistics and supply chain management industries, SaaS, or software as a service, has been a breakthrough. According to the report Logistics Ease Across Different States (LEADS) (Index) 2021 the logistics sector contributes significantly to the economy and makes India globally competitive. It accounts for approximately 13-14 per cent of the Indian economy and is expected to grow at a CAGR of 15-20 per cent. A strong logistics management system is essential for the smooth operation of supply chain operations.
SaaS solutions play an important role in modern logistics management. Its relevance has expanded from streamlining business processes to ensuring transparency in the supply chain. Companies can now outsource various functions to the cloud, opening up new potential areas for use of these functions.
In a study conducted by Oxford Economics on SMEs worldwide, one-third identified the major threat for SMEs today as competition from firms with enhanced technology and capabilities. The ability to compete is the most significant benefit that SaaS can provide to SMEs. When it comes to acquiring customers and gaining market share, smaller players are frequently left behind by larger players due to their inability to accomplish scale. SaaS solutions can help businesses grow by allowing them to scale their operations while reducing IT costs, infrastructure overheads, and costs associated with operations and warehouse management.
Some of the ways SaaS helps in supply chain management are:
Improving workflow: Logistics SaaS can help improve the workflow. For instance, repetitive processes such as paperwork or record-keeping can be quickly automated. This allows employees to focus on more important tasks that require human interaction.
Managing supply chain finances: Generating cash flows from goods in transit or warehouses has proven to be a major challenge for both buyers and suppliers. SaaS provides solutions where SMEs can pay only for the resources used. As a result, SaaS-based solutions can be extremely beneficial in this context.
Improving data analysis: SaaS solutions make data capture simple and allow interpretation of the captured data by way of analytics that is incorporated into the solution. This assists SMEs in pacing up their operations as well as competing with larger enterprises while avoiding obsolescence due to technological agnosticism.
Increasing Supply Chain Transparency: To keep operations under direct supervision, businesses must have real-time insight into various logistics processes and data. And a reliable logistics SaaS solution can help SMEs achieve this by allowing monitoring of the processes as they happen.
Managing change and creating awareness among the suppliers is the most difficult challenge to SaaS adoption. The benefits of SaaS are poorly understood in the SME ecosystem. There are concerns about the privacy and security of information. Add to that the market’s diversity, which makes the situation even more difficult.
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The situation is changing, but at a much slower pace than the global market. The government has launched several initiatives to educate SMEs to address the digital skill gap, such as the ‘National Manufacturing Competitiveness Programme,’ which motivates SMEs to adopt information and communication technology and applications. All of these measures are expected to result in a networking effect, increasing the knowledge and acceptability of SaaS applications in SMEs.
Amit Maheshwari is the Founder and MD of Softlink Global. Views expressed are the author’s own.