Logistics MSME Sector

The Indian MSME sector is huge; one of India’s top news publishing platforms reports that MSMEs have generated 120 million jobs. Today, almost 1/3rd of India’s GDP is generated from MSMEs, with the Government of India focusing on bringing that figure to 50% through the Ministry of MSME (MoMSME).

Correspondingly, India’s logistics sector is expected to reach around $380 billion by 2025, a sharp increase from the approximately $100 billion market size in 2020. 

Under such promising circumstances, MSMEs are in the right position to start and scale up. By nature of business size, however, MSMEs face challenges that could potentially block them from the path of success. We’ll discuss some of these challenges from the Logistics MSME perspective:

  • Limited Resources

Raising adequate revenue is difficult in the beginning. Cashflow management and cash recovery are especially major challenges in areas like freight forwarding, where businesses are required to spend from their own pockets and recover the dues from the shipper later

  • Fragmented Operations

As with all MSMEs the world over, manual processes lead to fragmentation and creation of silos right from the very start. In logistics, this issue worsens over time, as a firm scales up 

  • Inadequate Customer Service

MSMEs don’t have the networking infrastructure of their bigger counterparts, and might thus be unable to offer competent pricing and other facilities to their customers

Many of these are realities of small businesses, but it is also true that most large-scale organizations were once clubbed under the ‘MSME’ banner. There are always ways and methods through which organizations scale up, and the best method in today’s day and age is the adoption of technology. 

Learn more from our experts how you can digitalize your freight forwarding & logistics business.

Exploring SaaS as a Path to Success

From just $27.61 Billion in 2023, the global Digital Logistics Market is expected to touch $149.37 Billion in just 8 years, by 2031. This is a crystal-clear indication of where the global industry is heading. SaaS-based logistics has gained momentum too, carrying utility in warehousing, transportation, and operational management, among other things. To define Software as a Service (SaaS) in logistics, it is a cloud-based software delivery model that enables businesses to access and utilize software applications over the internet. 

Let’s explore some of the ways that SaaS solutions can provide competitive advantage to MSMEs:

  • Cost Considerations

Unlike traditional on-premises software, SaaS eliminates the need for extensive infrastructure 

investments, maintenance, and upgrades. The Indian market has especially experienced Logi-Sys to be a comprehensive solution suite that caters to the specific needs of businesses of all sizes, including MSMEs, with hundreds of features that range from automated documentation handling to Sales & CRM, Accounting, Warehouse and Transportation management.

Here are a couple of examples of how Logi-Sys helps manage costs: Its Report Scheduler sends out automated emails to customers regarding their pending payments, while the system keeps track of all incoming and outgoing payments/expenses. The Logi-Sys Approval System provides control and flexibility for managers by letting them set a maximum amount cap, only below which an Accounts Team member can approve cash payments. Anything above the specified limit must be separately approved by the manager. 

  • Operational Aspect

With a centralized platform, Logistics MSMEs can automate key processes and rid themselves of excesses such as manual documentation, order management and inventory control. Such work approaches lead to improved efficiencies and reduced errors and processing times, helping deliver faster service. There are multiple sources that conclude that using SaaS in operational processes is a cost-saving factor for businesses

  • Customer Service

SaaS solutions also allow MSMEs to provide services such as real-time data visibility to their customers. With accurate intel, be it on inventory levels, shipment routes, delivery statuses, SMEs provide reliable updates to their customers and deliver exceptional customer service, building the much-needed trust for an upcoming business in the competitive logistics market.

  • Resilience and Long-Term Success

Demand fluctuations, seasonal peaks, changes in local and foreign government policies are all factors that affect activities. In addition, sourcing in talent from across the globe requires opening up to work-from-home policies. The right SaaS solution will allow MSMEs to be updated on all the policy changes like tax revisions, and facilitate a cloud-based work culture that can be operated from the world over. In essence, MSMEs can build the robust framework they need to compete with the larger players, and respond to market dynamics swiftly

  • Security and Data Protection

Data security is a significant concern for MSMEs. Especially in the logistics sector where sensitive information about shipments, customers, and financial transactions is involved, data needs to be highly protected. SaaS providers employ robust encryption protocols, ensure regular backups, and provide comprehensive access controls to users based on, say, designations. 

Logi-Sys by Softlink Global provides all the above-discussed benefits to MSMEs. It also facilitates enhanced collaboration and connectivity, enabling seamless collaboration among different stakeholders in the logistics value chain. MSMEs can connect with shipping lines, customs agents, and other service providers, facilitating smooth information exchange, tracking of shipments, and efficient coordination. Such enhanced connectivity can help forge strong partnerships and enhance their overall market competitiveness.

Comparing Traditional Software with SaaS

Implementing traditional software solutions can involve significant upfront expenses, licensing fees, infrastructure setup, and ongoing maintenance costs. In contrast, SaaS solutions offer a more affordable alternative. With a pay-as-you-go model, MSMEs can avoid large upfront investments and only pay for the software usage they require. This cost-effective approach allows businesses to allocate their financial resources more strategically, invest in growth initiatives, and improve their bottom line.

To Conclude,

The Indian SaaS market is expected to grow to $13.1 billion by 2025, with logistics being one of the key sectors driving this growth. The Indian MSME sector in the logistics industry is poised for growth, and embracing the power of SaaS solutions can be the tipping point for these enterprises. By leveraging SaaS technology, Indian MSMEs can level the playing field, expand their market reach, and contribute to the growth and development of the logistics sector in the country.

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