Employing close to 40% of India’s workforce, SMEs are a force to reckon with today. A decade back, it was Corporate India that was in the driving seat, creating jobs and providing hope to the nation. Today, that seat is occupied by a sector that contributes volumes to the country’s exports, GDP and manufacturing output, while generating millions of jobs. The sector is continuously evolving, and for entrepreneurs, any aspect that makes them more competitive makes the entrepreneurial space more viable
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Now let’s look at two very disparate factors, and how they come together to make complete sense for entrepreneurs. First, India has close to five crore SMEs, and according to some estimates, this space will contribute close to two-thirds of the Indian GDP by 2020. Second, logistics contributes 6-7% of all business cost internationally, while in India logistics and supply chain management constitutes 12-13% of business cost. Combine the two, and you realise that logistics draws greater than 10% of all money put into a sector that is projected to contribute two-thirds of India’s GDP. Quite a statistic!
The logistics industry plays an important role for SMEs, being pivotal in maintaining the relationship of an organisation with its stakeholders across the life-cycle of the product or the service on offer. It involves planning, implementation, flow and storage of raw materials, in-process inventory, finished goods and spares, besides procurement, maintenance, distribution, and replacement of personnel and material.
Costs involved in SME logistics management, thus, range from transportation to warehousing, from inventory management to packaging. In an extremely competitive market, where SMEs have to compete not only with other entrepreneurial ventures, but with corporates which see them as upstarts with limited means, success requires optimisation of all resources, possible by planning carefully one’s entire logistics strategy, given that logistics is the one thread that runs common through most products’ and services’ life-cycles.
At the time of deciding the level and model of logistics outsourcing, some important factors should be considered, like the volumes, distribution structure, penetration level required, time and their customers’ preferences. Thus, an SME in the agro space in Punjab would need to focus on the fact that warehousing is a major issue in that part of the country, while an SME in the textile space in Tirupur would have to keep in mind the fact that market demand in the fashion sector changes seasonally, and at times, even whimsically.
Since all these factors are dynamic, the business model chosen should be flexible enough to accommodate the changes. It is in such a scenario that efficient management of logistical resources yields greater returns by reducing costs for the entrepreneur. The supply chain thus has to be supple enough to adapt to market changes, yet ensure a steady flow of goods, while preventing bottlenecks and other hurdles. A logistics provider, therefore, becomes a stakeholder and a partner rather than a vendor, where at a stage when you are trying to build your own business, you do not need to spend time worrying about stocks, raw materials and timely supply in correlation to demand.
What is certain is that small and medium industries exhibit a large amount of potential to do international business, only to be held back by logistical and organisational concerns. Should these concerns be addressed in conjunction with a logistics partner, not only will entrepreneurs become more competitive on the home front, they shall also be able to compete on the international markets and tap myriad opportunities.
These companies do not always find a solution matching their specific needs. So efficient logistics companies offer them complete relief from the burden of logistical issues by providing them with facilities such as export management, warehousing comparable with global standards and a team familiar with order-picking and packing. Making life easier, so that the focus remains on the core business, by reducing cost, improving top lines and gaining market share.
R S Subramanian
Source : http://www.financialexpress.com/
.
Now let’s look at two very disparate factors, and how they come together to make complete sense for entrepreneurs. First, India has close to five crore SMEs, and according to some estimates, this space will contribute close to two-thirds of the Indian GDP by 2020. Second, logistics contributes 6-7% of all business cost internationally, while in India logistics and supply chain management constitutes 12-13% of business cost. Combine the two, and you realise that logistics draws greater than 10% of all money put into a sector that is projected to contribute two-thirds of India’s GDP. Quite a statistic!
The logistics industry plays an important role for SMEs, being pivotal in maintaining the relationship of an organisation with its stakeholders across the life-cycle of the product or the service on offer. It involves planning, implementation, flow and storage of raw materials, in-process inventory, finished goods and spares, besides procurement, maintenance, distribution, and replacement of personnel and material.
Costs involved in SME logistics management, thus, range from transportation to warehousing, from inventory management to packaging. In an extremely competitive market, where SMEs have to compete not only with other entrepreneurial ventures, but with corporates which see them as upstarts with limited means, success requires optimisation of all resources, possible by planning carefully one’s entire logistics strategy, given that logistics is the one thread that runs common through most products’ and services’ life-cycles.
At the time of deciding the level and model of logistics outsourcing, some important factors should be considered, like the volumes, distribution structure, penetration level required, time and their customers’ preferences. Thus, an SME in the agro space in Punjab would need to focus on the fact that warehousing is a major issue in that part of the country, while an SME in the textile space in Tirupur would have to keep in mind the fact that market demand in the fashion sector changes seasonally, and at times, even whimsically.
Since all these factors are dynamic, the business model chosen should be flexible enough to accommodate the changes. It is in such a scenario that efficient management of logistical resources yields greater returns by reducing costs for the entrepreneur. The supply chain thus has to be supple enough to adapt to market changes, yet ensure a steady flow of goods, while preventing bottlenecks and other hurdles. A logistics provider, therefore, becomes a stakeholder and a partner rather than a vendor, where at a stage when you are trying to build your own business, you do not need to spend time worrying about stocks, raw materials and timely supply in correlation to demand.
What is certain is that small and medium industries exhibit a large amount of potential to do international business, only to be held back by logistical and organisational concerns. Should these concerns be addressed in conjunction with a logistics partner, not only will entrepreneurs become more competitive on the home front, they shall also be able to compete on the international markets and tap myriad opportunities.
These companies do not always find a solution matching their specific needs. So efficient logistics companies offer them complete relief from the burden of logistical issues by providing them with facilities such as export management, warehousing comparable with global standards and a team familiar with order-picking and packing. Making life easier, so that the focus remains on the core business, by reducing cost, improving top lines and gaining market share.
R S Subramanian
Source : http://www.financialexpress.com/
