Evolution of Procurement Challenges since 1980 for Indian MSMEs

What were the top challenges in procurement in Indian MSME between 1980 to 2010

There are likely to have been a number of challenges faced by Indian micro, small, and medium enterprises (MSMEs) in the procurement process between 1980 and 2010. Here are some potential challenges that these businesses may have faced:

1. Limited access to credit: Many MSMEs may have struggled to secure the financing they needed to make purchases or investments in the procurement process. This could have been due to limited access to bank loans or other forms of credit, or because of high-interest rates and other financial barriers. This hindered their ability to grow and expand their businesses.

2. Limited access to markets: MSMEs may have faced challenges in finding buyers for their products or services, which could have made it difficult for them to secure the raw materials or other supplies they needed to operate their businesses.

3. Complex regulations: The procurement process in India can be complex and subject to a range of regulations and requirements. This could have made it difficult for MSMEs to navigate the process and secure the supplies they needed in a timely and cost-effective manner.

4. Limited bargaining power: As smaller businesses, MSMEs may have had less bargaining power when negotiating with suppliers and other partners in the procurement process. This could have made it more difficult for them to secure favorable terms and prices for the goods and services they needed.

5. Limited technological capabilities: Many MSMEs may have had limited access to technology or expertise in procurement-related processes, such as supply chain management or e-commerce. This could have made it more difficult for them to compete with larger enterprises in the procurement process.

6. Poor infrastructure: The lack of proper infrastructure, such as roads, ports, and warehouses, makes it difficult for MSMEs to transport and store their products, leading to higher costs and lower profits.

7. Limited skill and knowledge: Many MSMEs struggled with a lack of skilled labor and knowledge of modern production techniques, which hindered their ability to innovate and improve their products and services.

What were the top challenges in procurement in Indian MSME between 2000 to 2020

India went through enormous Economical and Geo-Political changes after 2000 because of Government policies and access to information available. This led to newer hindrances in MSME procurement as they were not upgraded as required.

It is likely that procurement in Indian MSMEs (Micro, Small and Medium Enterprises) will become more digital and automated in the next decade. This may include the use of online platforms and artificial intelligence to streamline the procurement process, as well as the use of data analytics to make more informed purchasing decisions.

1. Lack of access to financing: Many MSMEs struggled to obtain financing to purchase raw materials and other inputs, which hindered their ability to compete in the market. It was easier to import from Global Manufacturing Hubs like China, Taiwan, Vietnam, etc than procure through local vendors because of higher prices. Indian MSMEs were simple not able to produce at cheaper rates because of lack of funds.

2. Limited bargaining power: MSMEs often had limited bargaining power when negotiating with suppliers, which resulted in higher prices and less favorable terms. Because credit was a scarce commodity for MSMEs their negotiation power was negligible.

3. Difficulty in accessing global supply chains: Many MSMEs struggled to access global supply chains due to a lack of resources and connections. Access to global network was an issue with smaller companies.

4. Complex and time-consuming procurement processes: The procurement process was often complex and time-consuming for MSMEs, which reduced their efficiency and competitiveness.

5. Limited access to technology: Many MSMEs had limited access to technology, which hindered their ability to effectively manage their procurement processes.

6. Limited access to market information: Many MSMEs struggled to access relevant market information, which hindered their ability to make informed procurement decisions.

There are several challenges that Indian MSMEs in procurement are likely to face between 2020 and 2030. These challenges include:

1. Access to finance: There have been multiple efforts from Govt and other institutions to provide finance to MSMEs still it hasn't been solved yet completely. Many MSMEs struggle to access the finance they need to grow and compete in the market. This can be a major challenge for procurement as MSMEs may not have the resources to invest in large quantities of raw materials or other supplies.

2. Competition from large firms: Indian MSMEs often face competition from larger firms that have more resources and bargaining power. This can make it difficult for MSMEs to secure the best prices for their supplies.

3. Lack of technology adoption: Many MSMEs in India still rely on manual processes and lack the technology to streamline procurement. This can lead to inefficiencies and higher costs.

4. Limited supplier diversity: Many MSMEs in India rely on a small number of suppliers, which can increase the risk of supply chain disruption.

5. Complex regulations: The Indian government has implemented various regulations and policies related to procurement that can be difficult for MSMEs to navigate.

6. Limited bargaining power: As small businesses, MSMEs often have limited bargaining power when negotiating with suppliers. This can make it difficult to secure favorable terms and prices.

What will be the future of procurement in Indian MSME between 2030 to 2040

It is difficult to predict the exact future of procurement in Indian MSMEs between 2030 to 2040, but it is likely that there will be a greater emphasis on technology and digitalization. This may include the increased use of online platforms for sourcing and purchasing, as well as the adoption of artificial intelligence and machine learning to streamline procurement processes.

There may also be a greater focus on sustainability and social responsibility in procurement, with companies prioritizing suppliers who adhere to ethical and environmental standards. This could involve the use of eco-friendly materials, fair labor practices, and transparent supply chains.

In addition, there may be an increase in global procurement as Indian MSMEs expand their operations and seek out new international partners. This could involve the use of cross-border e-commerce platforms, as well as the establishment of strategic relationships with suppliers in different countries.

Overall, it is expected that procurement in Indian MSMEs will become more efficient, cost-effective, and sustainable in the coming decades, as companies adopt new technologies and practices to stay competitive in the global market.