Brexit, staff costs and inaccurate data impacting profitability in wholesale businesses
October 14, 2019
Multiple software systems leading to inaccurate data and threaten profitability
A new survey commissioned
by OGL Computer, among 255 managers of wholesalers and
distributors in the UK, reveals that 88% are using multiple software systems,
and seem unable to break away from manual processes in managing business
operations despite over a quarter (27%)
citing those manual processes to be ineffective in managing business
operations. Nearly all (98%) of respondents still used some level of manual
processes.
According
to the research insecurity around Brexit is the key factor affecting company
profitability with 47% of respondents citing it as a top three reason, followed
by employee costs 44% and inaccurate data 38%.
With the fate of Brexit still to be decided, a
danger for wholesale businesses lies around stockpiling products and parts that
are currently freely available from Europe. The
National Living Wage is rising to at least £9 an hour by 2020, which will
affect some warehouse employees. Inaccurate data is the only major concern that
can, however, be influenced by wholesale businesses. Inaccurate data can lead to potential loss of
revenue and inability to correctly assess performance and sales.
One
respondent cited major factors damaging profitability as: “sloppy work from our
sales team where they follow an old price rather than checking up to date
prices with suppliers and price increases from suppliers which are difficult to
pass on to customers in the current climate.”
Leonie Pannell, MD of Cablecraft
Leonie Pannell, survey participant and Managing Director of
Cablecraft, a supplier of cable marking systems, accessories and management
products said that: “the major factors
affecting profitability are the state of the economy, with the weakening pound,
competition lowering prices and lack of investment by the government.”
Entering a potentially uncertain economic
period, wholesalers’ efforts to increase profitability are critical. Technology
is at the heart of this. 85% of respondents agreed that technology is vital to
the efficient running of their business, while 80% agreed that automating
business processes helps their companies stay competitive.
A key finding was the wide spread of
technologies used and the disparate nature of systems that are not necessarily
“talking to each other” to provide a full view of operations. Wholesale
businesses use a range of software systems to function: 88% of respondents use one or more software to run
their business, from warehouse management, inventory/stock control to
accounting software, CRM (customer relationship management) and ERP (enterprise
resource planning).
76% of respondents saw benefits from integrating
disparate systems. 57% listing the main reason to use a single system as
reducing administration time, followed by 40% citing improved accuracy of
information and 37% stating improved efficiencies by removing duplication of
work across different departments.
Single systems are
beneficial for online stores, where stock checks and reporting ensure that
customers have a good understanding of delivery timescales and product
availability. Indeed, survey respondents confirmed that e-commerce is growing
in significance in the wholesale sector, with 82% stating that being able to
sell products online easily is really important to them.
In the era of digital transformation, cloud
computing is a driver for change, with 73% of respondents agreeing that hosting
applications and data in the cloud have improved efficiencies and productivity
(or would improve them if cloud were implemented). Despite the benefits of
cloud, concerns about security persist and just over half of the respondents
(55%) have concerns about security of their data in the cloud, so are reluctant
to move core applications and data to the cloud.
Critically ERP systems are a key technology
with 82% agreeing that ERP systems give greater availability and control of
stock. ERP refers to a suite of integrated software that businesses use to
manage day-to-day business activities, such as sales order management, stock control, warehouse
management, CRM and more. However, 46% of respondents think that that ERP
systems are for large enterprises only.
Survey respondent Alex Blakeley, Financial Director at tools and fixings wholesaler Frank
Blakeley, comments on implementing a single ERP system: “This has given us a
full visual on all activities within our business and allows everything to be
transparent. So, anyone can look on the system at a product and know the who,
what and when of a transaction.”
Leonie Pannell added: “The single ERP system brings all the
customer data including orders and quotes in to one screen. The fully
integrated, live data, stock module with the ERP System enabled Cablecraft to
go down the e-commerce route. The fully automated system between sales and
warehouse also allows us to offer a very fast and reactive service.”
The main barriers to deploying an integrated software solution were cost, with 53% citing budget as the top hurdle, followed by 38% with time to migrate and 34% selecting business disruption. Cost is associated with the misconception that ERP systems are only for larger businesses, and the lack of information about affordable subscription-based models.
Nick Davies, Head of Software Development at OGL Computer
Nick Davies, Head of Software Development at
OGL Computer, a technology provider with a strong client base in the wholesale sector, commented: “The survey findings correlate
with much of what we are hearing from our wholesale and distribution clients.
The uncertainty of Brexit and impact of wage increases is leading companies to
focus on increasing profitability, with technology playing a huge role in
business success.
“Many smaller businesses just don’t have the
time or money to prepare for Brexit and are waiting for 31 October, and
whatever the outcome they are hoping that EU and British governments take a pragmatic
approach to enable continued business with EU suppliers and customers.
“It’s great to see businesses adopting more
technology instead of inefficient manual processes, but disparate systems are
not always leading to efficiency. A single view of a business, with the same
information available to multiple users will lead to better profitability,
increased productivity and accurate data for planning purposes. It also enables
wholesalers to extract data much more easily and analyse and
manipulate the data to assist with reporting”.
“At OGL Computer, we take our clients through
a comprehensive process to ensure we fully understand their business and the
way they operate and then map their processes into our software. We also plan the
migration process from data transfer to go live in detail to minimise business
disruption.”
OGL Computer’s top 5 tips for a smooth ERP
implementation
Select an ERP product based on your future business strategy and
goals – choose a software solution that will grow with you and support your
needs in the future.
Conduct a Business Process Review – changing software is a great
time to review your existing processes to see how you can use new technology to
enhance and redesign your processes to increase effectiveness.
Review and clean data – take the time to review and clean your
customer, supplier and product data to make sure you transfer quality data to
avoid further complication and data errors.
Don’t underestimate training – identify super users for each
department at the start of the process so they can help to train staff moving
forward and take ownership of their processes for their division. Quality
time for training will ensure you can maximise the effectiveness of the
system.
Choose the right partner – invest in a
software provider that can support you and help you to achieve
maximum potential from your investment.
NB: survey conducted in September 2019. Respondents were given a
number of options for each question.
About OGL Computer
OGL Computer is the technology partner to over
1,200 UK businesses, including small, growing businesses as well as multi-site
enterprise businesses. We are accredited by the world’s leading IT and cyber
security vendors, to deliver best-in-class IT, business software and cyber
security solutions. We are incredibly proud of our 40-year heritage and our
unique proposition whereby our three specialist divisions work closely together
to deliver the complete technology package to our customers.
OGL
Computer is the author and developer of prof.ITplus, a fully integrated ERP
solution for stockists, distributors and wholesalers across the UK. prof.ITplus
offers a wide range of modules including: CRM, Sales Order Processing,
Warehouse & Stock Management, Accounts & Invoicing, Sales Analysis and
eCommerce integration, which takes care of all common business processes to
deliver greater efficiency and profitability. prof.ITplus is the premier choice
for organisations looking to drive their business forward.
