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How SMEs can keep at bay logistics costs with digitisation


As the adage rightly says, “In every adversity lies an opportunity”, Covid-19 has highly demonstrated it with every sector adopting digital platforms and the story of the logistics sector is no different.


As per a McKinsey 2020 report, SME management teams don’t have the bandwidth that enormous companies have in core functional areas to manage commercial pressures and answer the pandemic. This lack of capacity is evident in an inability to swiftly adapt their supply chain and production processes. Frequently, SMEs source inputs from supply chains that became longer, complex, and more global but the pandemic has disrupted it now. Thus, leaving many SMEs without the materials they have to take care of operations. Additionally, measures meant to slow the spread of coronavirus has also disrupted SME production processes. Factory floors of small enterprises aren't designed for physical distancing, and therefore the companies typically don't have the expertise and resources to quickly reconfigure their operations.


Taking a major stride for MSMEs (micro, small and medium enterprises), Amazon India inked a deal with the government of Gujarat in September 2021, to help drive e-commerce exports from the state. The e-commerce major aims to train and onboard MSMEs from the state on Amazon Global Selling, to sell Made in India products to over 200 countries and territories.

While these types of initiatives have been encouraging the prowess of SMEs to find a position in the global marketplace, still the field is vacant for the sector to explore.


Meanwhile, India’s e-commerce sector is expected to reach $111.40 billion by 2025 from $46.20 billion in 2020, growing at a 19.24 percent CAGR, with grocery and fashion/apparel likely to be the key drivers of incremental growth, as per Indian Brand Equity Foundation.

The crisis has also showcased real disruption and has outlined the gaps in operations and technology investments. Businesses are now thinking strategically about digital capabilities as an imperative rather than an option.


The resilience of SMEs also depends on their ecosystems, which features a crucial role within the continuity of market activities. Today’s economies have thousands of SMEs, which are vital for the economy and growth of the nation as value generators. It is important to make businesses more resilient to shocks and strengthen links between them and the ecosystem to withstand the next storm.


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