In the bustling corridors of global commerce, the unsung heroes are often the small and medium-sized enterprises (SMEs). With 90 per cent of businesses worldwide falling under the SME category, as per World Bank’s analysis, SMEs are also responsible for creating two out of every three jobs. Their impact is thus undeniable and far-reaching.
The textile and apparel (T&A) sector, a vibrant tapestry, valued at over $1.5 trillion by Statista, exemplifies the complex interlacing of supply chains that stitch together economies across continents. In the Indian context, this sector emerges as a cornerstone of the economy, employing over 45 million people and contributing a substantial 2.3 per cent to the nation’s GDP as per Invest India estimates.
according to the International Trade centre, SMEs account for 80 per cent of the T&A sector in India, making them the largest segment of the industry. SMEs are instrumental in diversifying and fortifying supply chains. In India, MSMEs employ over 110 million people, which is 27.5 per cent of the country’s workforce, pegged by the mSmE annual report 2022-23.
Navigating the maze Despite their critical role, SMEs face a labyrinth of challenges. a survey by the World Bank revealed that SMEs in the T&A sector face higher barriers to trade than large firms, such as higher tariffs, non-tariff measures and customs procedures. additionally, SMEs often lack access to finance, technology, and skilled labour, which hamper their growth and innovation potential.
Technology stands as a beacon of hope, offering SMEs the chance to enhance collaboration and networking opportunities. E-commerce platforms, such as amazon, Flipkart, meesho, and myntra, have enabled SmEs to reach millions of customers across India and beyond, without the need for physical stores or intermediaries. Social media platforms, such as Facebook, Instagram and Whatsapp too have empowered SmEs to showcase their products, interact with customers and build brand loyalty.
Digital transformation can unravel savings in logistics costs by an impressive 18-45 per cent, underscoring the financial incentives for SMEs to adopt modern technological solutions. By leveraging cloud-based software, artificial intelligence and blockchain, SMEs can optimise their inventory management, reduce wastage, and enhance transparency and traceability in their supply chains.
Bridging the gap The dearth of trained middle management can stymie SmE growth. By using data analytics, machine learning and business intelligence tools, SMEs can gain valuable insights into their customers, competitors and market trends and use them to devise effective strategies and solutions. For example, a data analytics tool, such as Tableau, can help SMEs visualise and analyse their data, and create interactive dashboards and reports to share with their stakeholders.
Embracing digital technologies can bolster data security, enhance connectivity with supply chain partners and improve traceability, as well as supply and demand management capabilities. The integration of digital technologies into the supply chain offers SMEs unparalleled visibility and control over their operations. By harnessing data capture capabilities, factories can conduct in-depth analyses of their performance, scrutinise margins and assess costs and consumption down to the individual SKU. This data-driven approach enables SmEs to pinpoint inefficiencies, optimise resource allocation and ultimately, enhance profitability. rather than focussing solely on cybersecurity, the digital thread empowers SmEs with the intelligence to make strategic decisions that bolster their competitive edge in the global marketplace. Through technology, SmEs can transform data into a strategic asset, driving operational excellence and sustainable growth. By using cloud computing, internet of things and 5G networks, SmEs can connect and communicate with their suppliers, distributors, and customers, and exchange data and information in real-time.
By using RFID tags, QR codes, and blockchain, SmEs can track and verify the origin, quality, and movement of their products, and ensure compliance with standards and regulations. Technology can also enable SmEs to innovate and differentiate themselves from their competitors, by offering customized and personalised products and services and creating unique and memorable customer experiences.
Despite the clear advantages, the uptake of technology among SmEs remains dismally low. cultural barriers, high investment costs, a scarcity of skilled labour and legal uncertainties are the usual suspects hindering this transition. a report by the World Economic Forum revealed that only 16 per cent of SMEs in India have access to digital skills, compared to 51 per cent in china and 37 per cent in Brazil.
As we thread through the complexities of the global marketplace, it is imperative for SmEs to harness the power of technology. This strategic integration is not merely a necessity but a bold step towards sustainable growth and enduring resilience. Technology can thus transform SMEs from the threads that bind the supply chain to the fabric that shapes the future.
The author is co-founder& CEO, Groyyo Private Limited