Micro, small, and medium sector enterprises (MSME) have a vital role in the economic growth of a developing nation like India. Nearly 63.4 million units throughout the geographical expanse of the country, MSMEs contribute approximately 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities as well as 33.4% of India’s manufacturing output.
As per the information received from the Central Statistics Office (CSO), Ministry of Statistics & Programme Implementation (MOSPI), the Share of MSME Gross Value Added (GVA) in total GVA during 2016-17 was 31.8%.
As per the information received from Directorate General of Commercial Intelligence and Statistics (DGCIS), the Share of MSME related Products in total Export from India during 2018-19 is 48.10%.
Hence, cost analyses of MSMEs are crucial to make them competitive and successful in India and the global market. MSME has different significant cost overhead based on the following criteria
- Type of Industry
- Size of Enterprise
- Country / Geography
- Legal compliance
- Policy and procedures
- Target Customers
- Supplier Base
The entrepreneur considers some of the cost overhead can be improved/avoided, and some other cost overheads are unavoidable irrespective of any measure taken to adopt new technology or strategy. Here we will discuss some of the cost which can cut down to ‘Zero’ based on where the Organization stands today and what it wants to achieve. IT Computation, AI / ML-based solution, and Industry 4.0 guidelines adoption are some key starting points to begin the journey towards Zero cost. In practice, the value does not become Zero, but it optimizes resource utilization to such an extent that overall cost reduces drastically.
Here is a list of areas where you can begin your journey from cost overhead to Zero cost.
- Zero Cost Marketing
- Zero Cost Operation
- Zero Cost Manufacturing
- Zero Cost e-Commerce
- Zero Cost Logistics
- Zero Cost Productivity
- Zero Cost Compliance
We will continue our discussion on how each area contributes to your cost of running MSME and how each area costs to minimize to Zero.