Evolving Digital Priorities For India's Manufacturing Smes

Indian SMEs account for 17% of the national GDP and constitute 90% of the industrial units. Forming the backbone of the economy, do SMEs have what it takes to compete in an increasingly digitizing economy? The B2B landscape in India is ripe for accelerated digital adoption, and the recent pandemic has only acted as a catalyst; pushing industry leaders to rethink and reprioritize their digital transformation agenda. Here are two key categories driving this shift in India's business landscape.

Continuity-driven priorities

Businesses must focus on these areas to recover from the pandemic's shock and resume their operations:

• Human capital-dependence: Small and medium-sized manufacturing relies heavily on migrant and local labor to conduct their operations. With distancing norms in place and migrants moving back to tier-1 and tier-2 towns, a number of businesses had to stop production. Business owners should, therefore, find new ways to enable activities that previously relied on human resources. For example, product pitches and customer support can be enabled through video-conferencing and voice technologies like PRI solutions and SIP Trunks.
• Inefficiencies in production and distribution: Small and medium manufacturing businesses in their current shape are subject to a number of inefficiencies. According to a 2018 study, small-sized manufacturing enterprises' production efficiency reduces by 2-3% as capital stock ages by a year. Relying on old technologies and manual processes has only amplified pandemic-related challenges. SMEs should look at cost-efficient solutions that bring value out-of-the-box. Examples include the use of sensors to eliminate monitoring and manual control in production processes. In fact, many SMEs are already deploying IoT devices for inventory management and stock control, GPS-based monitoring systems for tracking their fleet and managing their workforce in realtime, and RFID tags to monitor the movement of goods and parts across the factory and the warehouse. These solutions can help business owners eliminate the need for inventory monitoring and audit personnel, and simultaneously reduce human reliance on the production floor and the warehouse alike.
• Supply and demand-related challenges: A number of firms across industry segments were recorded to mention raw material shortages, some highlighting fulfilled capacity of raw materials at sub-50% levels at the onset of COVID, while the number was much higher for exporters. While some are adopting 3D printing to reduce their reliance on contract manufacturers, such a move might not be possible for smaller firms. However, enhancing communication along the upstream and downstream supply chain through voice and video technologies and diversifying the supplier list for critical components can help businesses strengthen their production planning and execution efforts. Video-based technologies are clearly the winners for Indian manufacturing SMEs in terms of costs and benefits.

Thriving beyond recovery

Beyond continuity, enterprises must aim to thrive in this new normal. Here are some of the guiding principles for building a competitive edge post-recovery:

• Adopt digital platforms: Digital sales is slowly making inroads into the Indian B2B manufacturing landscape. While small manufacturers rely on physical one-to-one interactions for sales and logistics partnerships, an extended pandemic recovery will help digital sales dig deeper roots into the economy.
• For medium-sized manufacturers, now is the time to invest in Cloud CRM solutions which come with zero-infrastructure costs on a subscription model. Enhance your information highways: As SMEs grow digitally mature, leased-lines and cloud-enabled voice channels will become the backbone of a connected manufacturing enterprise. Wearable computing technologies like AR and VR will help service-heavy industrial enterprises bring efficiency into on-site interactions.
• Expand your IoT network: IoT can help small businesses lay the groundwork for low-level automation. In addition, small investments in IoT can come with big incremental benefits.

While India's SMEs have some way to catch up and embrace the complete Industry 4.0 paradigm, the pandemic, in addition to other macro-environmental variables, has provided a solid opportunity for enterprises to turn this needle and emerge as the new leaders post-pandemic.