Five Ways Small Businesses Build Strong Supply Chains
Just like large organizations, micro, small and medium-sized enterprises (MSMEs) also need powerful and robust supply chains to successfully operate, grow and transform their businesses. An efficient supply chain is essential for better inventory turns, optimizing business resources, and improving overall system speed and agility. It is also of crucial importance to serve customers in the best possible way and build long-term relationships with them.
At a time when businesses of all shapes and sizes have taken the brunt of covid-induced disruption, the role of supply chain efficiency is all the more critical. From production and logistics to last-mile delivery, businesses are under pressure from heightened uncertainty, sluggish demand and an overall fragile business environment. In these difficult times, in order to ensure smooth operations and mitigate various risks, it is very important to take care of its end-to-end supply chains.
The following analysis will offer five simple but essential ways Indian MSMEs can strengthen their supply chains and stay on top of their game.
Define key performance indicators: The first step is to specify the appropriate KPIs, or key performance indicators. In any supply chain, a multitude of KPIs can be identified, such as cost, inventory turnaround time, speed, customer satisfaction, overall complaint rate, etc. Subject to the business and its long-term strategy, an BEMP should specify KPIs. to work. In this exercise, it is important to assign each KPI a weight score. What may be very important for one company may not be essential for another. For example, at Rosemoore, which is a consumer lifestyle brand, customer satisfaction and sustained engagement are our top priorities. While cost and resource optimization is also crucial, it is not as important to our business goals as the quality of customer service. However, for a commodity-based business, the order of performance priorities may (or may not) differ.
Use an integrated platform: Even in an MSME, several functions work simultaneously. It is therefore important to develop a unified system that can integrate many individual functions such as production, other business operations, marketing and logistics under a single dashboard. A unified system will ensure a real-time, seamless flow of data between functions and help business management get a complete view, rather than having to go silo by silo. It must be understood that siled work operations are detrimental to an efficient supply chain. The greater its transparency, the better the synchronization of all elements of the chain.
At Rosemoore, we’ve created a custom dashboard that displays all the required real-time data on sales by SKU, inventory levels, open orders, discounts, and more. Access to it is shared with all the decision-makers concerned. within the organization. This has been beneficial to us as it keeps us all on the same page and offers no opportunity for confusion.
Use predictive analytics for demand: Analyzing consumer preferences and accurately forecasting demand is paramount to supply chain efficiency as it facilitates better planning. Examining past trends can reveal a lot about the future and improve decision making. At Rosemoore we use an SAP analysis tool and it has given us results with almost 90% accuracy. Demand forecasting supported superior inventory management of raw materials as well as finished goods. This allowed us to avoid both stock-outs and overstocks, thus optimizing the associated costs. In addition, it helps to detect any changes in consumer behavior.
Forging Mutually Beneficial Partnerships: Identifying reliable partners, including logistics resources and raw material suppliers, can be very helpful in the long run. Having the right partners and engaging them in open and candid communication can help reduce business uncertainty and strengthen your supply chain on many levels. When dealing with partners, it is also important to understand their concerns, so that a mutually beneficial and lasting relationship can be forged. Also, one should always avoid unreliable partners as this will exacerbate one’s challenges. The reliability and credibility of partners can go a long way and the value of these relationships should never be underestimated.
Addressing the human resource challenge: In MSMEs, the supply chain function tends to take a back seat to other functions such as accounting and finance, marketing, operations, etc. Most of the time, even a budget wouldn’t exist for a specialized supply chain team. However, in my experience, this is not a good idea, as it could harm the business. Regardless of the size of the facility, it is always prudent to have a dedicated supply chain team. This would not only help operational compatibility, but also help grow the business in the time to come.
Since Rosemoore’s inception, we’ve had a dedicated supply chain team. Initially, it was only a two-member team, but now it has six members. Having a dedicated team has helped us meet the demands of our consumers both at institutional and individual level. It has also helped us streamline our manufacturing. Supply chains are vital, whatever their size.
Ridhima Kansal is Director, Rosemoore