Evolution of a business
When you start out in business selling your product to the big wide world you always hope for the best, but do you consider how you will adapt and adopt technology as you grow?
The best aspect to focus on is the monies going out but more importantly monies coming into the business and the requirements laid down by the HMRC here in the UK.
This is a huge topic so I want to focus this blog on how, as a new business, you need to consider how you evolve as the business grows in respect of Electronic Data Interchange (EDI). It could be that you adopt EDI sooner than you think!
At some point if you want to work with a retailer you will be asked to support some form of connectivity/EDI if you want to trade with said retailer. However, EDI does not only have to support trading with retailers but can also work with marketplaces and websites.
With the advent of the internet there are so many more choices as to where you start your technology journey.
Do you:
1) Build your own website to sell directly to the end consumer
You then need to build your brand on a website and attract custom to that website along with the rest of the market vying for the consumers money.
At least this will start to get you to think about how you structure your product data and publish this on the internet. This will mean that you might adopt a simple Product Information Management (PIM) solution.
The website could then support all of our activity as you grow. There are many solutions out there designed to support a start up business.
Initial options/thoughts
As you are selling on a single platform you do not need to consider exporting or importing transactional data, however what will you do as you grow.
Will the solution grow with you or will you need to deploy other solutions such as an Enterprise Resource Planning (ERP) solution or a Warehouse Management Solution (WMS).
This then links to how you deliver your orders to your end consumer. Using a carrier web portal in the early days to generate a postage label will work but what happens when you grow and keying these shipment details becomes a time consuming process?
2) Sell via a marketplace and sell to the end consumer
There is a show here in the UK that keeps referring to entrepreneurs t sell via Amazon. They never say if they are referring to Amazon Seller Central or Amazon Vendor Central.
Selling via this marketplace or others does come with Service Levels that must be maintained so that there is no reputational damaged inflicted on the marketplace website.
Having automated selling on Amazon Seller Central the big issues to consider are:
Processing orders outside of office hours
This becomes a bigger challenge during the Black Friday and Cyber Monday sales
Providing accurate inventory levels through out the day and night including weekends
Acknowledging receipt of the order outside of office hours
Fulfilling the order when the order is shipped from your warehouse
If the marketplace is able to fulfil your orders, then you could choose to ship you stock to their agreed warehouse so alleviating to need to ship orders from your warehouse. You do however still need to track the sales activity after all the marketplace is selling your stock and you need to ensure you get paid plus replenish the stock as it getting low.
Initial options/thoughts
Yes, there are interfaces/web portals to allow you to either key the details manually or export and import some form of Excel document, but I would have to question if this is efficient? In the short term as you grow this might not be an issue but in the medium to long term this could start to become a logistical problem which could impact on the agreed Service Level.
There are apps available to make your life a little easier, but there will be some form of financial cost associated to using said app.
Again, as you grow how do you manage your finances, orders etc. to comply with the UK’s HMRC’s rules? How do you manage your stock that you are holding?
3) Sell via a retailer (Physical or virtual)
There are two possible methods of trading with a retailer:
Wholesaling
Drop Ship Vendor (DSV)
There is a third possible option and that is consignment trading in which you place your stock in the retailers warehouse and receive payment as the stock is sold.
Retailers that have been trading for some time and have adopted lean processes so keeping head count down and ensuring their work is not complicated. For these retailers to succeed that want their staff to use their ERP system and to use EDI to communicate with their suppliers.
If you want to trade with retailers on a wholesale or DSV basis you will at some point be asked to work to their EDI standards if you want to work with them.
System Evolution
As you grow you will deploy further systems to support your trading activity.
Systems that you might use as you grow:
ERP – to support your order book and finances
WMS – to support your warehouse activity
PIM – to support your products that you sell on the internet (directly or indirectly)
3PL – you might outsource your warehouse activity
Business Intelligence – reports designed to make you get the most out of your business
Carrier Management System (CMS) – can be used to keep your delivery costs down plus give you end consumer delivery options
However, do you have to grow your headcount?
If you consider how you want to trade from the outset, please consider how you can get your systems to do the mundane work allowing your staff to then focus on the important work.
You might not consider using an EDI Managed Service Provider (EDI MSP) in the early days of starting up your business. If the right provider is sourced, you could find that you can grow your business by automating with ease. The automated processes should grow as your business grows so reducing the need to employ more staff and keeping costs lower.
By adopting an EDI solution you might find that more businesses are willing to work with you as it is easier to place an EDI order compared to either calling or emailing order details to you.
Also, as a further option email orders could be converted into an electronic format using Optical Character Recognition (OCR). The more that you can automate the easier your processes should be.
Conclusion
Over the years I have seen businesses struggle as they try to deploy an EDI Managed Service Provider as they had not considered how that wanted to trade or how their customers (the retailers) use their systems.
When sourcing an EDI Managed Service Provider in a previous role I laid out a simple remit of "any file type and any connection type". What we know is useful, however do you know what might be deployed in the future? By doing this I was able to connect to multiple external systems selling the product so reducing the workload on the staff as the work moved from being keyed or export and import to automated.
If you choose the right EDI Managed Service Provider they, like you, should then benefit in the success and become a true partner to the business rather than a hinderance.
I hope this blog gets you thinking. If you have any questions please do not hesitate to contact me.