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By Abhijit Dasgupta

Data is the new fuel, this does not only apply to big data companies, but also MSMEs (Micro, Small and Medium Enterprises) as they can now take advantage of Data Science.

MSMEs face numerous challenges. Most MSMEs are founded by individual entrepreneurship & vision with little capital. Many of them are engaged in contract manufacturing and/or services. The major problems they face are in the areas of (a) access to long-term and short term capital (b) access to markets and revenue realizations (c) costs management (d) statutory compliances including taxes & duties (e) technologies / machineries used (f) training & development of human resources / staff (g) operations.

A problem seen through many businesses in MSME is that they look forward to making profit as their primary goal, rather than brand building and customer trust building. Its clearly visible that MSME sector is behind the data curve but its still not too late for them to apply these methods in their business. Small businesses may have just limited resources, but the good news is that they dont realise that they too generate humongous amount of data in form of payments, credit sales or even as reminders given to clients. One of the use cases where data science can be effectively used in MSMEs (though applicable for other sectors as well) is use of AI. AI has left a big impact in positively improving the Manufacturing Sector. Data science tools proved to be revolutionary for manufacturing since it helped in improving value chain management and making best use of resources. Apart from this, it also helped to predict the hot selling products, hence serving for better logistics management and not disappointing customer by having a shortage for the product. We will dive deeper as to see how Data Science helps to improve business for small manufacturers and contractors in Manufacturing sector.

A critical aspect for any manufacturing business in MSME sector is their product. Customers trust companies through their products, and this is where Data Science can prove to be a turning point for these businesses. The AI and data management tools see to it that the product is made after a proper strategy that involves modelling to decision making to customer feedback to new idea generation. It also sees the market competition before launching the new product. Hence, it makes it clear to put customers needs and demands as its priority. Once the product is ready, the next step any business does is try to forecast its sales so as to avoid any future problems. Moreover, Data Science tools may help businesses with this challenge as they make sure that data is being used to its full potential. Apart from forecasting sales, they even make use of predictive analysis from an early stage to ensure and prevent any hindrance for future opportunities.

Another area where Data Science can help immensely is in for predicting faults / downtimes and scheduling maintenance. The planned breaks will not slow down the process and at the same time help in avoiding any delays or future failures.

A key part for any product-based business, whether small or big, will be its inventory management. Over here data analytics proves to be more than useful for MSMEs as it assists them in regularly notifying for over-ordering or under-ordering or outstanding inventory records. Hence, it assesses full data and then improves the ongoing methods to create a stronger and more profitable inventory management system. Not only that, but also it uses this historical data to forecast the stock to keep according to the conditions. Like if a storm is predicted, then data analytics can predict to have the most popular thing as majority of stock so as to avoid overstocking and hence again increasing cost savings.

Supply chain and logistics, a field that no business can overlook. Earlier, when there was less consumption, there was less demand and hence the supply chain was manually done by small businesses themselves, but technology has made scalability a thing of past; but MSMEs need to leverage the advantages that eCommerce can provide. Over here big Data Analytics can not only help them to plan and notify backup suppliers by evaluating probabilities of problems that can occur in future, but also provide with real time data analytics that is very crucial to keep up with the ever-updating world. Along with that, these tools also provide with demand forecasting option which reaps multiple benefits like inventory control, restricting storage for pointless products and nonetheless help better enhance the supplier-manufacturer relation and eventually the supply chain process.

Another help Data Science provides to an FMCG-Retail MSMEs is promoting their brand and providing them help to plan their next branches. The world lives on social media today and businesses should definitely take that as leverage to create impactful posts in form of retweets or emoji or comments on Twitter, LinkedIn, or Facebook to create a full proof strategy for boosting their brand recognition. This is usually done through sentiment analysis which is another breakthrough achieved in Data Science field. Along with it, they should also take full advantage of location intelligence, that is use customers location data to increase revenue and cost savings by targeting and informing customers about any updates in the business.

Some of the most beneficial use cases of data science in MSME sector is in price optimization for a product which it decides based on an analysis done keeping all factors in mind and which isnt too expensive for the customer but that the same price is nominal enough to survive in the competitive market. Earlier we saw how it helps with supply chain management, but apart from that it also tends to save time for warehousing process where it automatically suggests how to stock goods, saving time and space, and keep a constant track of items to be re-ordered so there are no stock shortages.

A famous example of where Data science is brilliantly used is in making of Rolls Royce. The prototype is only finalised if it matches the excellence criteria and that is achieved through analysing terabytes of data extensively using the AI and Data Science tools. Similar process is used in manufacture of BMW, where they use data analytics to understand and act on any loopholes or faults they find in prototype, hence saving millions of dollars before releasing anything into market. These experiences can be quickly replicated in manufacturing, contract manufacturing and product engineering in small scale sector.

In India, there are several MSMEs engaged in pharma and chemical business data science can help them in quite a big way in managing quality standards and to ensure that drug efficacy is not compromised. According to an experimental study, just by introducing roughly around 9 parameters, the yield for vaccines has seen to be improved by over 50% it is a great accomplishment in todays time.

With resources being at stretch in this sector, often a question arises in the minds of the owners / managers about costs and risks of such endeavours : the good news is, most of the softwares used in data sciences are free, even computing for a test-drive can be absolutely free (may be at a little cost of a few thousand rupees) by cloud services providers, the possible upside of the work is way larger than the risk/downside of the failures. The only challenge in that case remains in the form of human competence.

To sum it up, Data is the most powerful weapon today if used correctly. So, all businesses, whether it be small local retail store or a medium scale contract manufacturing entity, should seek to imbibe use of technology to build and grow business. The recent experience of Covid and the general lockdown conditions the world experienced gave rise to a very interesting observations: companies those used technology, those companies did exceedingly well and the others who did not suffered losses and got shaken up. The data can be used as companies leverage with developing a correct big data strategy, as not adapting to the big data revolution might leave those businesses at a disadvantage. The AI trend will be high yielding for MSMEs if they have a vision and patience to achieve long-term success.

The author is director, bachelor of data science, SP Jain School of Global Management.

Go here to read the rest:

How can MSMEs benefit from data science in their business? - The Financial Express