MSME manufacturers can no longer ignore digitization these days due to a variety of reasons. Rather than fearing or postponing digitization, some MSME manufacturers are increasingly embracing the changes and transformation that it can fuel. Since their needs and operational constraints are significantly different than their counterparts which are much larger in size, a specific roadmap catered to MSMEs needs to be considered. However, MSMEs need to proceed further on this path of digitization with some caution and planning, so that the desired outcomes can be achieved. For this, it is beneficial to lay out a specific roadmap that is applicable to them. In this article, a detailed digitization roadmap for MSME manufacturers has been laid out.
Why do we need a digitization roadmap?
Digitization is not the end, but the means to a goal for an organization. To ensure the digitization efforts and initiatives are aligned with business and strategic goals, teams must develop a roadmap and lay out specific expected outcomes. A roadmap allows for phased implementation, adaptability to market dynamics, and facilitates collaboration among various stakeholders. By providing a structured approach, it helps manufacturers to efficiently and effectively implement digitization initiatives which drive growth and competitiveness.
The key factors influencing the digitization roadmap for a manufacturer can be listed as:
Technology advancements: Any MSME cannot afford to be left behind in the adoption of latest technologies if it wants to sustain itself and grow larger, else it may risk its products to become obsolete in the market. Optimal management of operations, closer integration with value chains, better data capture from customers, etc. are some of the key areas where new technologies are impacting how things are getting done for mid and small scale manufacturers. Based on the technology trends prevalent in the sector, a manufacturer will need to take this into account in their digitization roadmap.
Competition: New business models are challenging the ways and means of conventional players in the industrial sector. Incumbent players are slow to change, thus giving an opportunity for newer, tech savvy players to make a mark on the market. These changes are especially disruptive for MSMEs, as a lot of them have been traditional, family owned and operated businesses. The roadmap needs to account for the evolving competitive environment that the manufacturer operates in.
Evolving customer needs: Customers in both B2C as well as B2B worlds are demanding newer and improved products. With the advent of several new technologies, the pace of prototyping and product development has been reduced to some extent. Better information integration for the entire sales cycle as well as the customer service cycle can yield important insights that can help improve the overall customer experience for an organization. Manufacturers which are incorporating provisions for such changes in their digitization roadmap are bound to have higher chances of sustained success in the long run.
Identify needs: The specific requirements of the MSME need to be understood clearly. The "why" of the needs should be understood clearly to ensure the right approach is being followed to solve the problems faced by the manufacturer, and one is not merely treating the symptoms. Future needs of the organization should also be considered.
Assess options: Various feasible and viable options need to be assessed in this step that can help achieve the objective for the digital transformation initiatives for the MSME manufacturer. A gap analysis of the needs with the current state is a good starting point to lay out which options will be good to consider. Based on the current as well as future needs of the organization, different options will need to be studied to understand the resource requirements, tradeoffs, constraints, etc.
Plan rollout: A detailed implementation and rollout plan needs to be formulated based on the technology options selected, various operational constraints, the future use case scenario and other such factors. Various contingencies need to be taken into account as well, so that the plan is infallible.
Upgrade infrastructure: Based on the digitization roadmap, investments will need to be made in appropriate physical and digital infrastructure for the MSME. Several systems may need to be added or upgraded. Policies for data governance and protection will need to formulated and implemented.
Digitize processes and implement automation: Existing processes will need to be mapped and charted out. It is often seen that this step is the most time and resource consuming for the MSME manufacturer, as previously things might not have been documented or might have been informally passed on. With the implementation of new technologies, these processes will need to be digitized so that data recording and tracking gets enabled. Since the processes can be digitized, automation of several tasks can be implemented as well. This can be incorporated in the process workflows, so that appropriate actions are initiated based on certain events. New and improved agile ways of working will need to be promoted by the top leadership to instill a culture which promotes continual improvement.
Analyse data and generate insights: Once the processes are digitized and data starts getting recorded, insights can be generated using this data. This enables data driven decision making. With time, historical trends can be recorded and studied to make more accurate judgements from the data and the insights can be adjusted accordingly.
Training: Various teams and personnel need to be trained to use the new technologies appropriately, to make the right use of it. A phase-wise training plan for frontline teams needs to be rolled out. Upskilling of several teams will need to be undertaken to make sure the digitization initiatives go in the right direction.
Organizational changes: Several changes will need to be done to the organizational structure. Various teams will get affected by these changes, so feedback mechanisms need to be put in place to ensure there is no discontent among the teams. The work of some teams might be rendered obsolete, so the team members will need to be accommodated in other parts of the organization where new processes have come up due to digital transformation.
Change management: To scale up the digitization initiatives continually, a change management framework will need to be formulated and adhered to. This will ensure scalability and continuity for the initiatives. Key stakeholders need to realize that continual improvement is a mindset and not a one off initiative. Change is always difficult to implement and manage, so a mix of top-down and bottom-up approaches will need to be used to ensure all teams are on-board of such transformation efforts.
Monitor and adapt: Control and feedback mechanisms will need to be added in place to measure the success of various initiatives that are rolled out. Appropriate targets and KPIs will need to be devised based on the use cases to monitor progress, understand deviations and make any course corrections. Meaningful metrics will need to be used by management to understand progress and adapt their process, if needed.
The key pillars on which the roadmap relies on can be described as follows:
Product: The manufacturer's product mix (and any allied services which they might offer to their customers) plays a key role in defining the digitization roadmap. For instance, for a High-Mix-Low-Volume (HMLV) manufacturer, the requirements and the technology options to choose might be very different than for a batch production manufacturer or a process based manufacturer. Other elements of the product will also need to be considered such as sophistication of the products, manufacturing processes involved, hardware and software combination, etc.
Customer Experience: The manufacturer should be aware of what its customers think when they receive and use its products, and how the products get actually used. Integrating such data with the buying process, the manufacturer can customize its offerings based on the customer persona. The input generated from such integration needs to be closely incorporated with the digitization roadmap so that insights can be formulated and actions can be listed accordingly.
Operational Transformation: The leadership needs to be very clear about the vision, goals and tactics for the digitization of the organization. Strategic plans make little sense if there is no operational transformation seen on the frontlines.
Business Model: Last but not the least, the core business model that the MSME follows is also of key interest that the roadmap will need to account for. Some manufacturers might want to maintain spare capacity to ensure they can respond to any spikes in market demand without any delay, while others may outsource non-core work to vendors.
Once the roadmap has been devised, the management needs to understand and track the digital maturity of the organization and its evolution with time. This will help them make any changes to their roadmap to achieve the planned objectives of such transformation. The framework described above gives a starting point to MSME manufacturers for their digitization initiatives, helping them with a complete 360-degree view of what they need to plan for.
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