ERP Solutions: making the critical choice for future success
No matter the scale or age of your business, your trading volumes, channels, in-house skill base or budget, the pressure is firmly on you to ensure that you deploy the best in class solutions for your business and, more importantly, your customers. In an age where many larger retailers are still trying to operate with legacy systems which simply don’t support the level of integration needed across today’s multiple channels, it is customer expectation that should be at the crux of any review of what a future business’ “master solution” should deliver. Arguably smaller businesses are able to be more nimble and to more swiftly respond to the demands of the customers but when they are struggling to cope with growth due to the lack of a robust proven system need they become vulnerable. For many it is a time for review and to make some fundamental decisions for the future. This may lead to the choice of a direct solutions investment, further modules or extensions to an existing system, or a move to a quality third party fulfilment service.
Approaching this topic from a non-technical SME owner/director perspective, drawing on the many conversations held and questions asked, we opted to go to some well respected solutions providers for advice. Some of our readers have in their own words “been loathe to start talking to systems suppliers for fear of being pressured into making a fast decision” and “felt unable to define what it is we are trying to achieve to the degree required.” On these points it is worth saying that reputable systems suppliers always take their time to fully understand each requirement and are just as loathe to rush into new relationships.
“We do come across businesses which are using ‘cobbled together’ processes based on spreadsheets and whilst they know there are solutions which could streamline everything, there is a fear of stepping into the unknown,” said Mike Cockfield whose business developed the widely used Khaos Control ERP Solution. “We recognise that not all businesses have deep technical skills in-house and it takes a huge leap of faith to make that final decision on a supplier who will become a key partner going forward.”
There are retail businesses which are so stretched in terms of manpower that there really isn’t the time for anyone to take on the additional task of looking all of the options in the market, let alone compiling the all-important and exhaustive review of the business’ requirements. In fact, Jason Colbridge of Sanderson believes this process review to be the first, absolutely critical, step which every business should invest time in. “We recommend that all retailers look at their business processes as thoroughly as possible. We offer a business process review to support this task and the objective is to help retailers make the right decisions about project scope and the functionality required. We also recommend that retailers have a dedicated project manager who is either an existing employee (with time available) or a contractor.”
Tim Williams, former CFO for Long Tall Sally and now an independent consultant has also worked for fulfilment specialist Prism and has led the development of a number of systems refinements. “Success of any project boils down to understanding where the business is, where it wants and expects to be, and what steps need to be taken in operations and systems processes to achieve that. Whilst, of course, being fully conscious of the budget for the project and its projected return on investment.”
MNP Multichannel Solutions’ CEO Pierre D’Arbost concurred with this “We are often asked about how best to reduce the timeframe involved in a new implementation. What we say is it will all depend on the retailer having available resource to help project manage and co-ordinate with the supplier on a regular basis. The best advice is to allocate the resource from the outset, have the right decision making processes planned for quick efficient management as the project evolves.” He added “The cost of a poorly implemented solution is too high to ignore and may have an impact on critical trading periods. Firefighting is best left to the emergency services!”
To sum up, much of the success of any new systems choice and implementation boils down to the work done in advance to accurately specify the requirement and create a well evolved Invitation To Tender (ITT). There are many factors involved and most systems suppliers are generally happy to provide a standardised template which a client can use as a guide to start gathering the required information.
In some businesses the skills to get to the ITT stage are available and there is full commitment and involvement in the process at owner/board level. But what happens when the skills and drive to get the work done thoroughly and meticulously, and in a timely manner, are not available in-house? In cases like this, any project based on incomplete or uncorroborated information is almost destined to fail and it is better that the business finds itself a very good long term consultant it has complete trust in. The consultant then to lead the project through from review stage to ITT issue – to the comparison of responses from suppliers – through to site visits – final negotiation and a successful implementation. Or the client makes the decision to simply “muck along” as it always has, for as long as it can. Or looks instead at a fully outsourced fulfilment solution where, again, a consultant could greatly support the process. The choice will differ between businesses. There is no right way or wrong way. Simply a better way for each individual business.
Sector veteran Martin Harvey who moved from the role of managing director for Marshalls Garden Catalogues to establish his own start-up business BioGuard said “When my co-director and I founded BioGuard we decided straightaway that we didn’t want the burden of employing staff, choosing and implementing IT solutions or committing to our own warehouse premises and the inevitable long hours managing it all. I had already done that for many, many years. Instead we chose to outsource everything (to Clientbase) and this leaves us free to do what we are best at, growing our business, introducing new products and producing profitable data-driven marketing campaigns.”
Successful businesses like, for example, Boden and Charles Tyrwhitt also started out by using a third party fulfilment service rather than establishing their own in-house facilities from day one. When able to outsource during the high risk testing phase, new entrepreneurs can focus all of their energies on developing their brands, growing their ranges, and orchestrating the marketing campaigns that brings in the customers, rather than getting swamped with the nitty gritty of running the operations and IT functions.
It doesn’t have to be a decision for life. If a business has a change of strategy at any time and seeks to outsource rather than continue to manage fulfilment in-house, most third party service providers are adept at managing the transition. They may also be running the same ERP solution. Jason Colbridge, Sanderson said “If it is an option to look for a fulfilment partner that utilises the same system, the main advantages are the speed and the reduced cost of moving the business. Systems considerations normally require the longest lead times and the ability to keep existing reporting and routines in place is a benefit. A further advantage is that the fulfilment partner may be able to offer access to improvements, enhancements and best practice that have been gained through use of the system for other clients.”
DCA co-chair Mark Wilby who is operations & IT director at Nauticalia, a multichannel retail and wholesale business added, “What we find through the DCA is that members are always keen to share information, including problems encountered. When they make genuine recommendations to others who are looking to migrate to new systems or outsource all of part of their activity, these recommendations are invaluable and invariably acted upon.”
These days it is all about finding the core platform that can integrate all of the channel activity, deliver live inventory data to all who need it, cope with peaks in demand as well as having the capacity and functionality to grow with the business. Whether this is delivered via an in-house team or a through a third party doesn’t actually matter provided it works on a financial and on a quality of performance basis. Not that outsourcing is a complete walk in the park. It will require management focus, ongoing reviews, training of the frontline CSRs managing calls, customer service queries and emails. Outsourcing simply means that the burden of directly recruiting and managing the operations team members, of maintaining the systems, facilities and pressures of peak trading are delegated to a third party.
“A lot of our members’ businesses are becoming more complex and need to maintain increasingly high levels of service to their individual customers,” said Wilby, adding “That is why we hold events like our Operations & Fulfilment Forum so that operations managers from retail businesses can share their experiences, find out how others are managing, and receive impartial advice from selected specialist consultants and key suppliers.”
Presentations from DCA’s Operations & Fulfilment Forums can be accessed by DCA members at www.direct-commerce-association.com