ACMA: MSMEs need better support to handle volatility

In a time of slowdown, VUCA (Volatility, Uncertainty, Complexity and Ambiguity) characterises the business environment and has impacted organisations of all sizes, across all major industries but most significantly MSMEs (Micro, Small & Medium Enterprises). How can they weather the storm and take on the challenge of tough times?
To debate this, apex component industry body ACMA and the Ministry of Micro, Small & Medium Enterprises jointly organised the third MSME summit in New Delhi last week in New Delhi. While Ajay Shankar, member secretary, National Manufacturing Competitiveness Council (NMCC) inaugurated the summit, N K Maini, DMD, SIDBI was the guest of honour and Sudam Maitra, chief operating officer (Supply Chain) Maruti Suzuki India, was the keynote speaker.
The summit was organised to assess the current business scenario and how component manufacturers, especially the small and medium enterprises can harness this challenging environment to their benefit. N K Maini redefined VUCA as Vision, Understanding, Communication and Agility and urged industry to strategise such that the adversity turns into an advantage.
During his inaugural address Shankar, referring to volatility as intrinsic to human civilisation said, “While we have seen growth come to a standstill due to uncertainty and lack of confidence, the challenges for the future are equally daunting. Lack of availability of power, poor managerial bandwidth and low return on investments add to the challenge of unutilised capacity, especially for small Tier 2 and Tier 3 manufacturers. The industry has a lot more ground to cover and become cost competitive, while the government needs to ensure a dependable and competitive ecosystem and infrastructure, the industry needs to focus on internal efficiencies and opportunities other than the conventional to keep their heads above water.”
At the event Sudam Maitra, referred to VUCA as the ‘New Normal’. To mitigate volatility, MSMEs must strategically design a long-term road map, have effective financial planning, prudently manage manpower, work smarter and leaner, and focus on limited dedicated yet diversified customers without any compromise on quality. It is imperative that for the auto component industry to be globally competitive, the Tier 1s must hand-hold Tier 2 and 3 companies to build their capabilities including technology and skilling of personnel.
Further, it is critical that the industry explores tools and best practices such as diversification to newer segments, globalisation, technology absorption, hedging forex, effective cash-flow management, and continually innovate, along with working on concepts such as Practical Improvement in Sales and Marketing (PRISM), improvising quality through innovation, better inventory management, re-examining suppliers credit processes and exploring external markets for increasing business returns to mitigate volatility.
Ramesh Suri, vice-president, ACMA, commented, “The purpose of this summit was to understand the dynamics of the Indian automotive market with focus on MSMEs, the factors affecting their de-growth and what could be the possible strategies to manage the volatility in the industry. The industry and the government will need to collaborate in helping companies manage the challenges especially handholding the Tier 2/3s, the weakest link in the entire automotive value chain.”