By Raghu Subramanian, Founder and Global CEO, actyv.ai
The use and impact of Artificial Intelligence (AI) and other new-age technologies have gone beyond the realm of movie screens and marked their presence across domains. The rise of platforms like ChatGPT, Bard AI, and Midjourney has seen AI enter the mainstream. Imagine having personalised products and services, perfectly fitted just for you, at your fingertips.
With Industry 4.0, this is no longer theoretical but rather a reality; it is a revolutionary force in today’s rapidly evolving business landscape and for society at large. By driving innovation and introducing new technologies on such a massive scale, it has transformed the way we do business. While this is valuable to the whole supply chain ecosystem, it can significantly impact and transform MSMEs.
About Industry 4.0
The Fourth Industrial Revolution, or 4IR, is the integration of automation and digitization, leading to the rapid development of industries and society. It encompasses a range of cutting-edge technologies that include big data analytics, AI, robotics, and cloud computing. These enable seamless connectivity, data-driven decision-making, and automation, which leads to improved collaboration across the entire ecosystem. In fact, a McKinsey survey reported that when the COVID-19 global pandemic first hit, 94% of respondents said that integrating Industry 4.0 helped keep their company operations running. For MSMEs, this industrial revolution is invaluable.
Why Should MSMEs Adopt Industry 4.0?
MSMEs are vital to the supply chain, making up 30% of India’s economy. Embracing Industry 4.0 allows these small businesses to enhance their competitiveness and longevity, and the benefits are manifold. For instance, AI offers organisations interfaces to ask questions, allowing users to ask and search for queries. The Generative AI model will interpret, search the database, and provide accurate responses. This process simplifies data access, enabling data-driven decisions without the need for pre-built queries. By integrating technologies like AI, MSMEs can optimise their production processes, identify any inefficiencies, and streamline operations.
Overcoming Roadblocks: What Is Holding MSMEs Back?
While there are substantial benefits to this revolution, there remain several challenges for MSMEs to overcome. For one, limited resources and access to finance Upgrading technological infrastructure, investing in advanced machinery, and implementing digital solutions require financial resources that may be scarce. In fact, Indian MSMEs are currently facing a $530 billion credit gap. Overcoming this hurdle requires support from governments, financial institutions, and industry associations to provide funding opportunities, flexible financing tools, and support schemes.
Another challenge is the lack of digital confidence. It is common for many small enterprises to hesitate to embrace this digital transformation due to a fear of complexity, data and security concerns, and a general lack of understanding about the processes. Providing educational material and training programmes can help instill a sense of digital confidence.
Path to Success: How MSMEs Can Successfully Embrace Industry 4.0
For MSMEs to successfully embrace Industry 4.0, the path ahead requires several strategies.
- Embedded offerings—embedded offerings like software solutions and embedded finance—can be leveraged. These offerings can be customised to cater specifically to their needs and challenges. Not only are they cost-effective, but they are also user-friendly solutions that assist in integrating technologies into existing structures. Considering MSMEs struggle with access to funds, embedded finance options like BNPL can be the flexible financing tool required to solve the problem. In addition to this, the role of AI integration cannot be overstated. AI-powered algorithms can analyse vast amounts of data and identify patterns to generate actionable insights and help businesses make informed decisions.
- Support and Knowledge Building: Given that many small enterprises struggle with digital literacy, various support systems and knowledge-building interventions can help build this literacy, establish favourable regulations, and ensure access to infrastructure. This support can range from hyper-specific interventions to industry-wide support, all ensuring that MSMEs are sufficiently equipped to embrace Industry 4.0.
- Strategic partnerships: Another effective approach is strategic partnerships. MSMEs can collaborate with relevant industry players to access expertise, resources, and shared knowledge. These will empower MSMEs to overcome resource constraints and accelerate their digital transformation journey.
In summation, Industry 4.0 presents a limitless opportunity for MSMEs to thrive in the digital era. By embracing advanced technologies and digitalization, MSMEs can unleash their true potential and enhance operational efficiency in all aspects, paving the way for future growth in the Indian economy.