How automation can contribute to better sourcing of raw materials for MSMEs

November 16, 2021 7:15 PM

Transforming MSMEs into “smart manufacturing” units is the need of the hour, as connected devices and sensors offer granular visibility that can drive better decision-making capabilities for businesses.

The business ecosystem has been dynamic with changing government policies and COVID-19. (Image: Reuters)

By Akash Kishore

The MSMEs in India contribute to almost half of the industrial output and a fifth of the GDP to the Indian economy, notwithstanding the hurdles they face in the business. The government initiatives Aatma Nirbhar Bharat and Make in India have encouraged these MSMEs to expand and flourish.

Technology and Automation

Today, technology is the key element for the survival and growth of the business. The usage of technology at all levels is aiding the creation of a level playing field for all companies, big or small. Technology has created an edge for industries and allowed them to grow business exponentially. It plays a pivotal role in making customer demands hassle-free, automating the production line and in supply chain management. The technology can be extended to customer acquisition and relationship management and marketing. MSMEs, therefore, need to up-skill themselves to scale and grow their business. The six crore MSMEs widely use technology like automation, but even that is at a very low rate of 12 per cent. It hinders their ability to compete and survive in the changing market conditions.

Automation in MSME

Automation, to put it simply, allows tasks to happen automatically. A staggering number of tasks across many industry verticals are repetitive and can be easily automated. It is not to replace human labour but to augment it by offloading repetitive mundane tasks to machines. While it may raise alarm bells, especially in a human resource-intensive country like ours, it brings different advantages: improved production rate, efficient and optimised resources, consistent output, superior quality, better visibility and overall reduced cost of operations.

Automation had its major uptick in manufacturing. However, the focus has been towards fixed or hard automation instead of programmable and flexible automation. Since then, automation has evolved, especially with artificial intelligence and machine learning. It helps make processes more agile, resilient and optimised. Today, automation has touched all aspects of the industry like supply chain management, automotive, construction, datacentres, oil and gas, chemical industry, mining, harbour, food & beverages and power management.

Hindrance in the adoption of automation

While automation has its benefits, certain aspects of automation are the primary hindrance to adoption by MSME. The upfront investment, lack of knowledge and skills top this list. A lot of MSMEs face dilemmas regarding what scale of automation they should adopt. It depends upon a “step-by-step approach” wherein companies can plan the cash flow, upskill and realise investment.

The business ecosystem has been dynamic with changing government policies and COVID-19. COVID-19 has been an eye-opener as organisations have realised the fragility of the ecosystem with the sudden lockdowns and resultant economic downturn. It has also forced MSMEs to rethink future-proof technologies like integrated automation. Integrated automation ensures that the end-to-end business process is automatically driven across physical boundaries and seamlessly expanded into new-age digital channels.

Benefit of Integrated Automation in the sourcing of raw material

Take, for example, the procurement of raw materials in any business. The complex process involves managing a large number of documents, suppliers and other elements. It is also prone to inefficiencies creeping in and certain vital details being missed. Integrated automation in raw material with AI / ML-enabled technology can dramatically transform communication and collaboration by reducing and consolidating communication channels. It can optimise stock management and vendor management. IoT-enabled integrated automation and visibility of capacities in real-time will help sourcing of material in JIT (Just in Time) methodology, thereby improving the overall bottom line.

The digitally-enabled automation platform will help the quick discovery of multiple aspects like price, quantity, quality and lead time for any raw material across physical borders. There are dozens of MSMEs that have started adopting these systems.

Moreover, this is only the beginning. With time, this automation will become more advanced and a lot more capable, with the end goal of not replacing humans but rather empowering them like the next tool in your toolbox.

Transforming MSMEs into “smart manufacturing” units is the need of the hour, as connected devices and sensors offer granular visibility that can drive better decision-making capabilities for businesses.

It is expected that Industry 4.0 will be fuelled with new-age business models that are driven by real-time data analysed by AI and ML and feed into the digitally-enabled automated process of MSMEs. It will result in production efficiency, lower time to market and most importantly, better customer service.

(The author is Founder and Director, Dhatu Online. Views expressed are personal.)

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