Slowdown: A Blessing in Disguise for SMEs

Everyone is talking about a slowdown in the industry. The world and industry have never remained in a slowdown forever. In fact, they were able to come out of the great depression of 1939. It has been observed that since 1999 this cycle of boom and slowdown has shortened. This may be due to the world getting closer and every economy becoming dependent on each other. The current phase of slowdown should not last for more than 6 to 12 months from now.

For SMEs, sailing through this hard and pressing time of slowdown is very challenging. Cost-cutting measures like employee retrenchment is also not an easy call as we have built our organizations through our people. Large companies are driven more by processes while SMEs are driven more by people. People are an SME’s asset as well as its knowledge hub. At the same time, human resources are not as cheap any more. Further, it hits hard if human resources are not utilized to the fullest.

Some of the common concerns for today’s SME owner include

• There is no more the concept of a loyal employee, who will work for you for 10 years or more
• Huge investment goes into training employees and they leave in a shorter period.
• An organization’s knowledge is lost when employees leave.
• Like large companies, can my organization be made process-oriented?
• Can my organization be truly compliant with quality standards like ISO 9001, QS-9000?

Can SMEs convert this “Slowdown” into a blessing?

The answer is Yes. All of us are sure there is going to be sunrise again. When we were busy fulfilling our customer’s demand, every day we were thinking about the above concerns. Why not use this little free time (born out of slowdown) to work on these concerns?

In today’s world, use of Information Technology, including Business Applications, Mobile applications, and IoT, will give solutions to most of the issues mentioned above. Technology has become very handy and cost-effective.

When we were pressed due to demand, we were not able to spare human resources to get these implemented. That is where there is an opportunity to Convert the Slowdown into a Blessing.

Solutions SMEs can look for based on the area of concern

We fail to deliver on time due to:

• Production not being done on time due to material unavailability
• Communication gap between us and vendor

SMEs shall:

• Implement Material Requirement Planning (MRP)
• Implement automated email communication with vendor
• Implement vendor portal

Projects type work is delayed and we have resource overrun because:

• Project progress is not visible across teams
• Real-time progress is not tracked
• Cost overruns

SMEs shall:

• Implement web/mobile-based work/project management system
• Implement web/mobile-based expense management system
• Implement web/mobile budget management system

We lack visibility of WIP Inventory and worker productivity because:

• We don’t know what is the progress of order through the shop floor
• Many times we end up in shortage for customer delivery due to scrap in the process
• Employee productivity remains dubious and becomes a cause of IR issues

SMEs shall:

• Implement production management module
• Implement daily job card posting, which will record Job/work order no, date, shift, product, worker, produced qty, scrap qty, rework qty, machine used, machine hours and man-hours
• This module will be able to give you material finished and waiting at each operation, machine efficiency (OEE), worker efficiency, scrap and rework quantity produced
• Implement work order analysis, which will give you material variance and operation variance. This will give you complete visibility about the value addition and you shall be able to compare your actual cost viz-a-viz your estimations at the time of costing of product.

With these modules, other modules like Purchase to Pay and Order to Receipt shall be implemented through one common application. SMEs shall choose ERP, which will give you a good Finance and Accounting module. If the accounting of SMEs remains disconnected from ERP over the period, they will find that ERP is really not giving the desired results. No payment or receipt shall be recorded unless a business is transacted through ERP.

Implementing ERP is more said than done. SMEs will have to make their human resources available for that. SMEs will have to do duplicate work till all their processes start running through ERP. Considering this, SMEs may look at the slowdown as a Blessing. Make the best use of your team in this period to get yourself ready for the next boom. All the best!

By Veerendra Jamdade, CEO, Vritti Solution Ltd