ERP systems have a limited number of analytical capabilities primarily aimed at transactional data generated. The forecasts from these may not be very accurate considering the complex nature of business and unpredictable external factors like weather patterns, price, and economic volatility. This calls for Supply Chain Analytics (SCA), which promises several benefits like improved decision-making, customer engagement, adaptability, and cost reduction due to better inventory visibility and accurate demand forecasts and thereby transforming supply chains to value chains. SCA render supply chains with actionable intelligence using advanced capabilities like dashboards, pattern & trend analysis, drill-down views, forecasts, knowledge base, scenario & what-if analysis, simulation, and optimization capabilities. Several companies like SAS, Genpact, and Capgemini are offering SCAs solutions to companies across all verticals. The ERP world leader, SAP, has its in-house Business Objects analytics solution.
Supply Chain Analytics for MSME clusters
- This article highlights the wide-ranging benefits of supply chain analytics for MSMEs and their clusters. It also provides recommendations for MSMEs to adopt this advanced digital technology.
- Indian MSMEs are steadily moving towards technology adoption and usage. MSME’s software deployment is primarily restricted to stand-alone packages for finance, HR manufacturing, or payroll. Video-conferencing and messenger services are also being widely used. There has been a visible digital shift in channels for communication, marketing, payments, hiring, and other business verticals.
- MSMEs have steadily adopted digital payment systems. However, there is a significant digital divide between big industry and MSME. Most of the MSMEs fall into the group of low digitalization and low data-driven companies.
- SCA is available in the application areas such as inventory management, procurement planning, demand shaping, demand forecasting, distribution planning & management, production planning, Customer Relationship Management (CRM), and fleet and route sizing and optimization.
- SCA helps MSMEs to capture and analyze internal and external data, which has become an enormous asset. SCA provides access to historical data, which can be used to generate insights. simulate and forecast future scenarios. The ability to capture, collate, analyze, and infer the external data concerning competition, dynamic market conditions, market demand, and customer preferences helps the MSME to pivot their plans on distribution channels and strategies. It prepares the ground for them to exploit Omni-channel distribution avenues, which has now become the industry norm.
- SCA provides MSMEs better visibility, transparency, and integration into their distribution network that includes distribution channels, inventory, logistics, invoicing, and payment, and also ensure efficient delivery of products to their customers. The ability to track the physical logistical movement of goods puts the MSME on a stronger wicket to satisfy customers' expectations as also reduce costs.
- SCA can be used in various stages of marketing customer segmentation to do demographic-based targeting, analyzing customer behavior, and designing new products, market mix modeling to analyze the effectiveness of their advertising, and customer feedback analysis to improve their existing products and services.
- A significant number of MSME units in the auto ancillary sector who are supporting large manufacturers such as Tata Motors, Mahindra and Mahindra, Hyundai & Ford are very technology-savvy, and some of them have also adopted SCA.
- India has now emerged as the 3rd largest ecosystem and destination for startups, with the number of unicorns breaching the 100 marks. It is heartening to note that several startups are now offering solutions for MSMEs. Pickrr provides end-to-end logistics solutions using SCA. Pickrr is a virtual shipping partner for the full shipping needs of MSME. Another B2B platform using SCA, Magma, supports capacity utilization and operations for the MSME.
- However, some of the organizational challenges faced by MSMEs towards SCA adoption include lack of awareness, trained human resources, financial resources & working capital and top management support. Technical issues point out the existence of legacy systems in the MSME and integrating these with SCA, as also infrastructure requirements and compatibility issues.
Recommendations for Adoption of Supply Chain Analytics for MSMEs
- In terms of procurement of advanced ICT technologies, a cluster-based approach can reduce the Total Cost of Ownership (TCO) for the MSMEs. An added advantage is that most of the MSME clusters are well-organized. To cite an example, CODISSIA, Coimbatore District Small Industries Association, boasts more than 2000 members in 43 sectors. A world-class trade Fair Complex as an industrial and exhibition venue and incubation center for defense are some of the achievements of this cluster. Likewise, there are many similar success stories Pan-India. Another cluster representing the pump, foundry, and motor sectors in the Coimbatore region is the Southern India Engineering Manufacturers' Association (SIEMA) that has 300 members.
- SCA packages can be sold as a cloud-based solution to the MSME. This would reduce the TCO as the MSME need not procure expensive servers, hardware, and/or infrastructure to host the software package. Exploring open-source supply chain packages such as OpenBoxes and Odoo for analytics capabilities may be a good option.
- SCA packages, either as part of comprehensive supply chain solutions or ERP packages, can have modules that would permit MSMEs to choose specific capabilities as per their need. And this can be scalable, providing the opportunity for the MSME to top up step by step and migrate rather than change their existing legacy systems in one go. This flexibility and choice would be indeed a boon.
- Considering the rapid growth of digital technologies, regular upskilling, and training programs for employees in MSMEs are absolutely necessary. Their domain knowledge, coupled with their expertise in analytics and the link, would be an excellent combination.
- Awareness needs to be built from top to bottom of the organizations such that not only the top management but employees at all levels also champion the adoption of SCA. This awareness would also propel top management to make the necessary investments toward procurement of SCA and other digital technologies. Data management and associated policies must also be formulated and communicated to all stakeholders.
No doubt, there is a considerable benefit to adopting SCA for MSMEs. Using these recommendations, the next plans are afoot to develop a framework on the factors that affect the adoption of supply chain analytics in MSMEs and measure their contribution and impact in organizational performance of MSMEs.
About the Author
Dr. Prashant R. Nair is working as Head, Internal Quality Assurance Cell (IQAC) & Computer Science & Engineering (CSE) professor at Amrita Vishwa Vidyapeetham, Coimbatore. He is connected to innovation & entrepreneurship ecosystem in India as regional mentor of change of Atal Innovation Mission (AIM) and DST-Amrita Technology Enabling Center (TEC) fellow.