Small and medium enterprises may be gunning for the global markets. However, the reality in getting their systems in place before making this quantum leap, is posing its own set of challenges.
Wonder Polymers is a medium-sized company that manufactures and markets a wide range of self-adhesive tapes in India. This Delhi- and Haryana-based company boasts of a design unit, quality and test laboratories, and employs over 80 skilled workers.
For Wonder Polymers, managing its sales process and leads was proving to be a painstaking task. Wonder Polymers’ internal reporting was done manually by a sales person, who would record the leads, opportunities and client contact information on an MS Excel sheet. Information was being processed and available to one person at a time. Invariably, to the one recording it.
In the modern manufacturing era, with real-time tracking and inventory processing, this system was proving to be inadequate. It was also holding them back on streamlining sales processes to improve employee productivity.
Wonder Polymers is not alone. Millions of small and medium enterprises (SMEs) in India face the same conundrum.
Traditionally small businesses are defined as an industrial undertaking with investments in fixed assets of Rs 1 crore and with less than 50 employees, while a medium-sized enterprise is one with fewer than 250 employees.
According to the reports by the SMB Chamber of Commerce and the Ministry of Micro, Small and Medium Enterprises, India currently has more than 48 million SMEs. These SMEs contribute more than 45% of India’s industrial output, 40% of the country’s total exports and create 1.3 million jobs every year. However, for these businesses to make the leap to international markets, digitisation via information technology is the business need of the hour. It’s driven by the growth potential, incubated by programmes such as the government’s ‘Make in India’ initiative.
‘Make in India’, launched by the Prime Minister in September 2014, is enabling growth, investment and the tools to promote integration with global manufacturing and supply chains. It encourages multi-national, as well as domestic companies to manufacture their products in India. Apart from ensuring that India emerges as the top destination globally for foreign direct investment, it is also about creating jobs, boosting manufacturing output and exports. All of this directly engages the SME sector — be it in automotive, retail, manufacturing, defence and aerospace, or electronics. While the government has listed 25 sectors to boost the globally integrated local economy, the reality is the bulk of the ‘Make in India’ focus (as the name suggests) will be on manufacturing and retail.
Manufacturing and retail take lead
Manufacturing and retail are leading the race to digitisation as they will see the maximum gains from this effort to integrate IT into their business processes.
According to a survey conducted by the Confederation of Indian Industries (CII) and the Boston Consulting Group, 72% of manufacturing executives said they would be heavily investing in advanced manufacturing technologies in the next five years. Manufacturing companies will increasingly use more technology to gain competitive sustainable advantages, better their innovative capability and shorten their product development cycle. The government, which is pushing India as a global manufacturing hub through its ‘Make in India’ initiative, can play a more important role by providing a conducive environment, and support to the manufacturing companies.
As Tallam R Dwaraknath, the President of FKCCI (Federation of Karnataka Chambers of Commerce and Industry) puts it, “In today’s digital era, it is essential that our SMEs have an online presence. Less than 5% of our SMEs have online presence today.”
Beyond this online presence, managing an enterprise requires specific technological solutions. When it comes to real-time tracking, streamlining of business processes, quality control, collaboration and efficient delivery systems, technology will play the crucial differentiator. Currently, they see technology as a cherry topping they can do without, but to truly compete on the global stage as a world class manufacturer or retailer requires synergies, cost benefits, flexibility, scalability and responsiveness that only information technology can provide.
How technology can power the dream
In terms of government policy reforms, ‘Make in India’ has kick-started many initiatives promoting the ease of doing business and to set up infrastructure. By de-licensing and deregulating the infrastructure, the government plans to make it easier to do business or manufacture in India. Application for industrial licenses will happen on a 24x7 basis online, and a single window IT platform will be integrated with this portal so that all clearances are obtained in one go.
Apart from licenses and environmental clearances, a checklist of compliances will be clearly listed. Smart cities and industrial corridors are being planned to ensure government policy and reforms match the ease of doing business and infrastructure. But, more than the investment, it is the change in mindset and technology and innovation that the true competitive advantage for SME’s and startups will emerge. In an increasingly complex and competitive global economic landscape, the need to align people, processes and technology is stronger than ever. .
(The author is General Manager, Small and Mid-Market Solutions and Partners, Microsoft)
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