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FORECASTING MONTH: Navigating Ecommerce Growth – Choosing the right tech stack beyond ERP 

Selecting the right technologies plays a pivotal role in facilitating connectivity, driving efficiencies, and ensuring seamless operations as businesses scale and become more complex. A key consideration for many large-scale enterprises is the adoption of an Enterprise Resource Planning (ERP) system. However, the question arises: is an ERP solution really the right technology solution for ambitious online retailers? 

Simon Curd, Chief Product Officer at Linnworks, discusses what an ERP system is and why it might not be the best solution for an ambitious online retailer…

When does a retailer need an ERP?

ERP systems are designed to empower retailers with informed decision-making, trend identification, and the ability to respond swiftly to changes, ultimately reducing costs and providing a more customer-centric shopping experience. Additionally, they streamline communication between departments, enhancing collaboration and efficiency, especially in areas like HR and finance where data centralisation can simplify payroll, employee management, and financial processes.

While the idea of having one system to run your entire business may sound attractive, for many businesses, an ERP system may create more problems than it solves.

Determining the right time for an ERP implementation can be a puzzle for retailers. While there are clear advantages for large-scale enterprise, the complexity, cost, and lack of flexibility can outweigh the benefits for smaller businesses.

Typically, it’s when a business surpasses a revenue threshold of $100 million or more that the need for comprehensive reporting functionalities drives them towards adopting an ERP solution. But, it’s often the business’s need to manage its financial reporting beyond the scope of a more focused accounting package that pushes it toward deploying an ERP solution. However, deploying an ERP system does not come without its risks…

Navigating the risks: Is an ERP an unnecessary expense? 

It’s common knowledge that implementing any ERP system is a lengthy and costly process and one that rarely runs smoothly.

The sheer scale of the project often limits the agility of retailers to adapt their strategy post implementation. This lack of flexibility creates a problem for many online retailers operating in what is still a rapidly evolving and, at times, volatile industry. According to Gartner, between 55% and 75% of all ERP implementations fail, presenting a substantial risk.  Even partial failures that necessitate businesses to retain legacy systems add complexity and potential confusion across the company.

To suit the businesses’ specific needs, customisation is crucial, but it comes at an ongoing cost alongside the initial investment and support fees. Therefore, having the right in-house resources is essential to manage both the implementation and ongoing maintenance effectively.

Building an agile ecommerce business

While modern businesses increasingly demand more sophisticated reporting tools to drive their operations, the scale, complexity, and cost of an ERP system may actually hinder an online retailer’s growth. Rushing into ERP too early may restrict the ability to handle new business opportunities because of their lack of agility. Often, businesses revert to their original specialist systems introducing extra layers of complexity and cost which may ultimately corrupt the information managed by the ERP.

Instead of a one-size-fits-all approach, retailers should look towards specialist solutions tailored to their requirements such as integrating their tech stack with an ecommerce platform like Shopify, BigCommerce, or WooCommerce. In addition, with 50% of online sales happening on online marketplaces, a specialist solution will provide the connectivity and deep integration to major online platforms such as Amazon, eBay and Walmart, as well as newer, emerging marketplaces that provide businesses with first-mover advantage.

In order to gain a competitive edge, businesses can combine specialised vendors and technologies to create highly efficient and customisable IT systems. This allows for faster innovation cycles, incorporating the latest technologies before comprehensive system upgrades are required.

Conclusion

Ambitious, high growth retailers should avoid encumbering themselves with long-running implementation programs that struggle to deliver on the original business benefits. Instead, partnering with a core set of agile, integrated, specialist solutions provides a highly flexible and lower-risk technology landscape that delivers immediate gains as well as providing a long-term foundation for growth and success.

FORECASTING MONTH: Crystal Balls and Algorithms – The changing nature of forecasting in supply chains

Accurate forecasting is the lifeblood of a successful supply chain. Predicting demand, inventory levels, and potential disruptions has always been crucial, but recent years have seen a surge in sophisticated forecasting techniques and related services. This article explores how supply chain managers are utilising these advancements and how forecasting approaches are likely to evolve in the future…

From Gut Feeling to Data-Driven Decisions:

Traditionally, demand forecasting relied heavily on historical data and intuition. However, today’s supply chain managers are embracing a data-driven approach:

  • Advanced Analytics: Techniques like machine learning and artificial intelligence (AI) analyze vast datasets, uncovering hidden patterns and predicting future trends with greater accuracy.
  • Real-Time Data Integration: Integrating data from sales, marketing, and customer relationship management (CRM) systems provides real-time insights into customer behaviour and purchasing patterns.
  • External Data Integration: Incorporating external data sources like weather forecasts, economic indicators, and social media trends allows for a more holistic view of potential demand fluctuations.

Beyond Demand: Forecasting a Broader Spectrum

Forecasting is no longer limited to just demand. UK supply chain managers are now utilizing it for:

  • Inventory Management: Predicting optimal inventory levels to avoid stockouts and minimize storage costs.
  • Lead Time Forecasting: Accurately predicting lead times for raw materials and finished goods helps ensure smooth production and on-time deliveries.
  • Disruption Management: Anticipating potential disruptions like port congestion or labour disputes allows for proactive mitigation strategies and contingency plans.

The Future of Forecasting: Collaborative and Intelligent

The future of forecasting in UK supply chains is likely to involve:

  • Collaborative Forecasting: Closer collaboration with suppliers and retailers allows for more accurate demand forecasts and synchronized inventory management across the entire supply chain network.
  • The Rise of Explainable AI: As AI plays a bigger role, ensuring transparency and understanding the rationale behind forecasts will be crucial for building trust within the supply chain ecosystem.
  • Real-Time Scenario Planning: Advanced analytics will enable real-time scenario planning, allowing supply chains to adapt dynamically to unforeseen circumstances.

Investing in the Right Tools and Expertise

Embracing sophisticated forecasting requires investment in:

  • Technology: Implementing the necessary software and hardware infrastructure to collect, analyze, and utilize forecast data.
  • Talent: Recruiting data scientists and analysts who can understand and interpret complex forecasting models.
  • Training: Equipping supply chain managers with the skills to integrate forecasting data into their decision-making processes.

Accurate forecasting is no longer a luxury – it’s a necessity. By adopting advanced techniques and related services, UK supply chain managers can navigate the complexities of the global marketplace, optimise operations, and ensure a more resilient and responsive supply chain for the future.

Are you searching for Supply Chain Forecasting Tools for your organisation? The Total Supply Chain Summit can help!

Photo by Nicole Avagliano on Unsplash

OPINION: Red Sea Crisis underlines the need for greater data transparency

The speed with which shipping companies have responded to the crisis in the Red Sea underlines the growth of digitisation and utilisation of diverse data resources to support complex decision making. But data issues, from ownership to a lack of open integration, remain a challenge explains Captain Steve Bomgardner, Vice President – Shipping & Offshore, Pole Star Global…

Rerouting Confirmed

It is fast becoming clear that shipping companies have evolved beyond their immediate, journey specific response to the escalation of hostilities in the Red Sea to a strategic approach that has been embedded in 2024 plans. Data from Pole Star confirms a significant reduction in the number of vessels using the Red Sea. Despite the additional cost and delay associated with rerouting via the Cape of Good Hope, the number of cargo ships and tankers traveling through the Red Sea dropped almost a quarter in the last few months, from 830 in October 2023 to 626 in February 2024.

Rerouting decisions are, of course, influenced by a number of factors, including cargo, cost and risk perception; but with the cost of war insurance rising, especially for US, UK and Israeli shipping firms, the shift towards the Cape of Good Hope is increasing. For many firms, the experience in March 2021 when the Ever Given container ship blocked the Suez Canal, causing an unprecedented shipping backlog, has provided vital insight to support these rerouting decisions. The additional time required for the Cape of Good Hope route, as well as issues of fuel consumption and emissions, were already understood. Firms have been able to quickly calculate the implications for crew, including the potential need to extend contracts by several weeks and delay the onboarding of new crew members.

This information is now firmly embedded in shipping companies’ emergency response plans, enabling rapid, vessel-by-vessel decision making based on crew costs, fuel and state of repair, balanced against the potential time sensitive nature of the cargo commodity and possible penalties for missed delivery deadlines. What is different this time around is the risk assessment and insurance premium. To the existing baseline calculations, companies are quickly adding the cost of war insurance as well as a vessel-by-vessel perception of risk associated with the targeted nature of attacks.

Data Transparency

This current disruption to global shipping is just one more example of a global supplychain facing constant and ever evolving challenges. The maritime industry increasingly recognises the vital importance of fast access to an array of data sources to support complex risk assessment and rerouting decisions. The rapid digitisation occurring throughout the industry is supporting fast decision making, however emergency response, as well as day to day activity, remains challenged by the lack of open data.

Shipping companies need instant visibility of an array of data from multiple sources, and without open Application Programming Interfaces (API), integrating these diverse data resources is incredibly challenging. The slow, painstaking integration process is adding significant time and cost to digitisation projects, and delaying access to the consolidated information resources and analytics that have the power to transform the speed and power of decision making.

Furthermore, as companies increasingly look to add sensors across their vessels to provide vital information to improve efficiency and safety and support preventative maintenance, uncertainties over data ownership are arising. The shipping company may own the sensor – but the ownership of the valuable data recorded by that sensor, the temperature, fuel consumption or engine emission reading – often turns out to have been retained by the OEM.

Conclusion

Fast access to high quality data is transforming the maritime industry both day to day activity and emergency response. Solutions such as hardware free voyage optimisation systems that deliver fleet monitoring, regulatory compliance, performance analytics and voyage optimisation in a single view are providing a seamless access to vital information both onboard and on shore.

However, these data issues clearly need to be urgently addressed if the maritime industry’s adoption of digitisation is to continue at pace to provide shipping owners with the trusted, real-time insight required to respond to the next emerging crisis.