A study of 4,500 CRISIL-rated Micro and Small Enterprises (MSEs) shows that just four per cent of them have deployed business process management systems such as Enterprise Resource Planning (ERP) to generate better profitability and inventory management. Most of them limit their operations to basic computer-based management information systems or use simple software.

Enterprises having a business process management system improved their operating margin by 200 basis points because of better inventory control. Their inventories on average were 12 per cent lower than enterprises with little investment in holistic IT systems, thereby releasing additional capital for effective deployment towards other functional areas.

Enterprise-level IT spawns many efficiencies Sectors such as IT/ITeS, auto engineering, electrical components and chemicals manufacturing have implemented such business process management systems while traditional ones such as rice milling, trading, construction and real estate development are laggards. There is also regional disparity – companies in west and south India fare better than their northern and eastern counterparts.

The analysis also shows that enterprises nearing annual net sales of Rs 5 crore are increasingly beginning to invest in implementing business process management systems for better management of internal processes.

 

Source: Business Standard