Accelerating the digital journey for India’s MSMEs: Top trends for 2022

Micro, small and medium enterprises (MSMEs) such as small manufacturers, retailers and kiranas are the backbone of India’s economy, accounting for almost 30 percent of GDP, 40 percent of the workforce, and 40 percent of exports. The MSME sector is growing at about 10 percent annually.

However, despite the rapid adoption of technology in various sectors of the economy, the MSME sector has had a late start and has only recently started harnessing technology and digitisation for growth.

The past couple of years has seen technology making inroads into the operations of small and medium businesses.

While the government’s initiatives in the MSME landscape, such as the Emergency Credit Line Guarantee Scheme (ECLGS), have mainly revolved around easing the financing issues of the sector, numerous technology-led startups have stepped in to help MSMEs integrate technology into various aspects of their operations – ranging from logistics and supply chain management, working capital and credit, payments, accounting and compliance, among others.

The emergence of B2B ecommerce platforms for MSMEs has also facilitated one-stop access to trusted networks of buyers and sellers to conduct commerce, working capital and invoice discounting, and other critical business services to help India’s 63 million+ small and medium businesses focus on upscaling and growth.

While this is a start, it is the proverbial tip of the iceberg in terms of further leveraging technology to streamline various aspects of small business operations. Here are some areas where accelerated digital transformation can be expected in this sector in 2022.

Digital inventory management

MSMEs will increasingly adopt inventory monitoring systems and other technology to digitally monitor and manage real-time inventory, improve visibility by tracking data, and gather information as finished products go through the supply chain.

With such systems, businesses can track in real-time how much inventory is available, where products are located, and how each SKU performs. This in turn will help them make much more efficient decisions on inventory allocation, restocking, and more.

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Faster credit 

The typical time-to-decision for loans for small businesses from traditional banks has been between three to five weeks. Increasing digitisation and B2B platforms such as Solv incorporating financial services from traditional banks as well as new-age fintech lenders will drastically reduce the time-to-credit for MSMEs.

Significantly quicker approval and disbursement by leveraging alternate credit rating methods will allow small businesses to access working capital and invoice financing much faster and enable growth.

Leveraging AI and ML for greater efficiency

MSMEs will accelerate the adoption of AI-powered digital platforms to improve their supply chain and logistics efficiency for better warehouse management, smarter shipping, inventory upgrades, route optimisation, and improved delivery.

Data captured at every stage will allow AI-driven optimisation algorithms to drive efficiencies and unlock value across the chain. AI will also be leveraged for quality checks and better assurance by using a combination of natural language processing and deep learning techniques.

Automated customer support chat platforms will be increasingly used to capture data and feedback, understand customer requirements and purchase patterns, modify product and service offerings based on customer needs, and drive greater customer satisfaction.

Storefront digitisation

The COVID-19 pandemic drove home the perils of relying purely on physical storefronts for conducting business. The coming year will see a greater push among businesses of every size to incorporate digital, online storefronts to share product catalogues, record customer orders, and accept contactless payments.

This will not only provide a more stable foundation for small and medium businesses to survive and thrive in the face of unforeseen challenges such as future COVID-19-induced lockdowns but also ensure greater reach unconstrained by geographical location, improve the ease of doing business and enhance overall customer experience and satisfaction.