How can the MSME Ecosystem Leverage Sustainable Procurement for Digital Innovation

As of 27th March, 2022, the Indian MSME sector comprises more than 7.9 million micro, small and medium size enterprises. It also contributes to 33% of the nation’s GDP and generates over 120 million employment prospects across diverse industry verticals.  

Furthermore, the Indian MSME sector is expected to rebound with 15% growth in 2022 (Source:, which complements the fact that the scope of transformation is immense. 

There is a tremendous possibility for progress and innovation, especially in the manufacturing sector in India. However, if enterprises tend to lean on conventional supply chain solutions, the overall growth is compromised.  

Similarly, conducting business in a fast-paced world can get challenging. Therefore, as an enterprise transitioning to become future-ready in every sense, leveraging technology to streamline procurement is extremely important.  

Supply chain as a business function involves macro-scale transportation of products. Right from sourcing the raw materials, analyzing financial transactions to selecting the right logistics partner, sustainability must be a core imperative. Therefore, it’s vital that organizations prioritize digital adoption, first, to conserve the planet and most importantly, for a competitive edge.  

Here are a few factors that can inspire MSMEs to leverage digital innovation for sustainable procurement:  

Validating the Digital Response 

Before designing a supply chain procurement strategy, organizations must analyze core business functions that require automation. According to research by McKinsey, “69% of procurement leaders consider digital and analytics solutions as a valuable resource, with a greater potential to increase the effectiveness of procurement solutions.”  

With the much-needed assistance of digital technologies, MSMEs can drive robust procurement practices for outcome-driven results. For example, without the involvement of paperwork to maintain vendor records, enterprises can mitigate supply chain disruptions and drive real-time process visibility with digitization. 

Transitioning into New-Age Digital Technologies 

In order to digitize procurement functions, it’s imperative that organizations use sustainability as a catalyst. The performance of a supply chain model is measured by conducting on-site audits. These are in-house teams that physically verify the effectiveness of procurement functions. However, now that the world has moved past the impact of the pandemic, business operations are more or less hybrid in nature.  

By integrating the possibility of sustainable and digital data management, the performance of procurement solutions can be tracked and monitored in real time. Through a digitized platform, supply chain solutions are automated, ensuring an omnichannel experience. Also, centralizing procurement procedures can help in-house professionals conduct compliance reviews without human intervention.  

Leveraging Transparency to Drive Innovation 

As an emerging business looking to adopt sustainable procurement practices, it’s vital that procurement leaders invest in transparent business models. By centralizing procurement functions and integrating them into a single platform, enterprises can empower their customers, stakeholders and distribution partners with key insights. Transparency also means that independent business partners and investors have the required information about projects, impact on the environment in terms of the carbon footprint and procurement guidelines.  

Designing a Future-Proof Procurement Framework 

Although digital adoption is one of the key imperatives for a strong procurement strategy, it’s important that MSMEs leverage technologies, understand supply chain objectives and design a future-ready framework.  

Here is how your enterprise can facilitate a sustainable procurement strategy:  

  1. Clearly set pre-defined sustainability targets
  2. Set guidelines for code of conduct for individual suppliers/vendors
  3. Digitize compliance related documents and certificates for easy access and added security
  4. Discuss KPIs with vendors to arrive at a common objective

According to a study by REED: 

Therefore, with the focus on sustainable procurement models, the Indian MSME community can empower a future-ready India by driving digital innovation. Moreover, by creating partnerships with local enterprises and suppliers, emerging MSMEs can build connections based on trust, transparency and reliability.  

SAP, a trusted technology partner for MSMEs in India offers solutions that promote the importance of digital transformation across diverse industry verticals. For more on how your enterprise can leverage e-procurement models by SAP to drive compliance and gain business visibility, click here.