Challenges in MSME

The MSME is a major contributor in the economic growth of a country. The Indian MSMES are facing different types of problems that create hurdles in the growth path. In the 9 years that we have been into SME consulting, we have come across the following key challenges mainly faced by them in India.

Challenges in implementation

The biggest challenge for MSMEs today is implementation. Be it ERP, processes in business or strategy execution, SMEs face hurdles to drive and execute business decisions. Partly because they do not have the expertise required to drive business results from execution. Also they do not have the right people to drive the decisions in the system. AABC has built its business around this challenge. Consulting services focus primarily on implementation of doables in each department of an SME business. Here are articles that talk about major challenges in implementation in SME and solutions:

https://economictimes.indiatimes.com/small-biz/sme-sector/erp-implementation-top-five-challenges-for-smes/articleshow/57034195.cms
https://www.onlinejournal.in/IJIRV3I4/375.pdf
http://www.researchersworld.com/ijms/vol4/specialissue1/Paper_01.pdf
http://www.forbesindia.com/blog/economy-policy/goods-and-services-tax-gst-since-implementation/
http://www.scholarshub.net/ijms/vol2/issue1/Paper_03.pdf
https://www.reliancemoney.co.in/-/lean-implementation-in-auto-component-industry-case-of-msme-in-bhiwadi
https://pdfs.semanticscholar.org/bdc4/2b03988867709e9a7266f6bb2c4904904958.pdf
http://www.cxotoday.com/story/how-to-solve-the-tech-challenges-in-gst-implementation/
https://www.shrm.org/shrm-india/pages/how-can-indian-small-and-medium-enterprisesbridge-the-digital-skill-challenges.aspx
Procurement of raw material

Procurement remains another challenge for SMEs. Logistical challenges often lead to delays in delivery, and diminishes their cost competitiveness. Following are few article links which throws light on the procurement challenges and possible solutions:

https://www.power2sme.com/smekhabar/Articles/677/ Driving%20Efficiency%20in%20Raw%20Material%20Procurement
http://www.cii.in/uploads//08_Jaideep%20Ghosh894.pdf
https://economictimes.indiatimes.com/small-biz/sme-sector/power2sme-signs-mou-with-nsic-to-empower-msmes/articleshow/60288452.cms
Lack of distribution of marketing channels

SMEs face challenges when it comes to selecting the right business model for their business. AABC has been working with SMEs on this front and helping them create the business model and distribution channels that suits their business. Here are few important links on selecting the right business model:

http://www.dailyexcelsior.com/opportunities-and-challenges-in-msmes/
http://shodhganga.inflibnet.ac.in/bitstream/10603/137912/14/12_chapter6.pdf
https://www.smartsoft.in/blog/direct-selling-strategy-msme/
Under-Utilization of Capacity

SMEs make an inventory of 99 products when in actual there is demand for only two products. Over production often lead to under-utilization of resources. Following articles echo similar sentiments. Take a look at these:

http://businessworld.in/article/Why-MSMEs-In-India-Need-To-Focus-On-Capacity-Utilization-/20-09-2017-126618/
http://jses.ase.ro/downloads/current_issue/3.Saikia%20final.pdf
https://www.indianretailer.com/article/whats-hot/investments/How-Enhancing-Capacity-Utilization-will-help-overall-Economy.a5812/
Lack of advanced technology

SMEs do not have access to high end technologies. It affects their business because they are not able to leverage the power of IT. With digital media taking the world by a storm, AABC creates customized IT solutions through its IT Consulting Practice. This has made technology accessible and affordable for SMEs. Access the links below that highlight the overwhelming presence of technology already influencing how SMEs operate:

http://pib.nic.in/newsite/mbErel.aspx?relid=144899http://pib.nic.in/newsite/mbErel.aspx?relid=144899
http://knnindia.co.in/news/newsdetails/knowledge-resource/lack-of-advanced-tech-low-investment-hamper-machine-tool-msmes-study
https://www.shrm.org/shrm-india/pages/how-can-indian-small-and-medium-enterprisesbridge-the-digital-skill-challenges.aspx
Poor infrastructure

Poor infrastructure doesn’t help the cause of SME businesses either. They lack basic facilities, don’t have proper office space or are located at places where clients and business partners don’t want to visit. AABC works with SMEs in this area to take care of their infrastructure needs at economic budget. Following links highlight the infrastructure challenges of SME:

http://www.business-standard.com/article/sme/poor-infrastructure-a-big-hurdle-to-msme-growth-110071300097_1.html
http://www.smetimes.in/smetimes/face-to-face/2014/May/02/poor-infrastructure-biggest-challenge-for-smes704506.html
Lack of training and skill development program

SME employees lack skills. Despite of government’s initiatives on skill development, most SME workforces are not able to either access that or need advance level training and consulting interventions. AABC works on skill enhancement of SME workforce by providing training modules that come along the consulting services.

https://www.thehindubusinessline.com/economy/policy/msmes-need-skill-enhancement-study/article8396998.ece
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