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July 13, 2022

Lean Manufacturing (LN) to Help MSMEs Gain Competitive Advantage

    • July 13, 2022
    • By Team Kinara
    • < 1 mins read

    MSME Loan

    MSMEs face challenges running day-to-day operations to achieve a sustainable growth rate. Lean manufacturing is a strategy implemented by the companies which follows the principle of minimising waste and maximising productivity in a manufacturing process. The efficiency generated due to implementation of lean manufacturing is visible. MSMEs who have adapted to this system have higher chances at achieving better quality, reduction in cycle time and less waste production. In this blog, MSMEs learn how lean manufacturing adds competitive advantage to their business.

    Implementing Lean Manufacturing in MSME Manufacturing Sector

    Developing this system requires proper planning and execution which needs to be followed by all the employees top to bottom in an organisation. To run a successful business, understanding what the customer wants is important along with the value stream of the enterprise. Once an MSME entrepreneur recognizes the areas which need improvement or a different strategy, apply it to have a better value stream flow and give customers exactly what they are looking for. By giving customers what they want there is less non-value added product produced, decreasing rejection. This is a process which needs to be done continuously to have a healthy success rate.

    The MSME manufacturing sector constitutes around 40% of total industrial production and they face challenges such as supply chain inefficiencies, sub-optimal scale of operation, technological issues and fund shortages. With the implementation of lean manufacturing, small business manufacturers will produce higher quality output cost-effectively.

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    MSMEs Gain Competitive Advantage

    Reduced Inventory Costs

    MSME lean manufacturing follows this system to stock up the resources as per the requirement, just enough to complete orders. Based on the demand from the customers they purchase the materials and supplies necessary to fulfil orders with minimum waste. Investing in unnecessary resources will only tie up funds in inventory costs. Hence by doing this the additional funds can be used for the particular MSME’s development.

    Reduced Lead Time

    By eliminating the wasteful activities in the manufacturing process MSMEs reduce the overall time in attaining the end product. A certain method known as the ‘pull method’ is followed which requires the product only to be moved to the next stage in a manufacturing process only after it is prepared. This system reduces lead time further increasing the customer services which helps build reputation giving a competitive advantage to MSME entrepreneurs in the market.

    Innovative Ideas and Continuous Improvement

    Lean manufacturing system allows for continuous improvement at each stage of the process involved, employees are required to meet the standards set for the businesses. In addition to this, new ideas are implemented based on what the consumers are looking for in order to increase the satisfaction level thereby, making adjustments and changes. All this leads to improving the quality of the product too and setting the standards high allows them to sell valuable products at competitive prices.

    Employee Involvement and Customer Satisfaction

    Improving the quality of the product sets, more involvement of the employees in the manufacturing process create a positive environment and morale is positively impacted in the organisation. As small business entrepreneurs strive to build a good reputation it also attracts high quality employees which strengthens the business giving opportunities to challenge competitors. All these factors are interlinked, hence automatically fuels the customer services enhancing a positive customer experience and boosts revenue and profitability of manufacturing MSMEs in India.

    Better Impact on Environment

    Lean manufacturing system promotes MSMEs to be environment friendly. By reducing waste production it naturally creates sustainable growth, showcasing that the company promotes a green business giving an advantage over competitors.

    Lean Manufacturing Competitive scheme

    Under this scheme MSMEs are supported to apply the following techniques:

    • Total Productive Maintenance (TPM)
    • 5S
    • Visual control
    • Standard Operation Procedures
    • Just in Time
    • Kanban System
    • Cellular Layout
    • Poka Yoke

    It is used to mainly identify and eliminate waste and improve the value stream of business.

    Lastly, for MSMEs to have a competitive advantage they have to focus on new innovations to upgrade and transform their products and services. This can be practised by adapting to the latest technology and gaining the advantage over competitors. Lean manufacturing will help in small businesses growth and increase revenue.

    Role of Kinara Capital

    Finding funds to invest in machinery or assets for the latest technology might seem hard. Kinara Capital offers asset purchase loans to empower MSME manufacturing businesses. Small business entrepreneurs can seize this opportunity and grow their business by using funds to purchase equipment, installation, repair of existing machinery and other business expenses. Check your loan eligibility in the myKinara application to avail a quick business loan to grow your business exponentially.

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    Written by
    Team Kinara
    • Tags
    • Lean Manufacturing
    • Lean Manufacturing Competitiveness Scheme
    • MSME lean manufacturing
    • MSME development
    • msme manufacturing sector
    • small business entrepreneurs
    • MSMEs

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