Carl Hilier is the head of Profit4 Operations at OGL Software
Today, there’s no getting away from the fact that doing business is getting more expensive. The Covid-19 pandemic hit component and product availability hard. Brexit added new cross-border challenges and staffing shortages. Then, along came war, inflation, the energy crisis to further impact supply chains.
Sadly, Covid-19 is still with us. Companies feeling the effects of staff sickness, labour shortages and product availability, barely had time to recover. The rising interest rates are today hugely affecting confidence and so far, doing little to impact inflation. The Bank of England predicts recession could be with us into 2024.
Long-term, we’ll get used to an even newer norm and be stronger for it. Interest rates and higher costs of borrowing will draw down demand and inflation will drop. However, wholesalers must be ready for changes in consumer behaviour.
Now is the time to review business processes, implement efficiencies, streamline, and explore as many new sales channels and markets as possible. A good contingency plan is a worthy addition to any board level to do list. Take the government’s Programme Yarrow to deal with potential blackouts as motivation to have your own.
Profitability takes a hit
In OGL Software’s Profitability in UK Wholesale Businesses report the key factors affecting profitability were the Covid-19 pandemic (54%), Brexit impact (33%), manual processes (33%), and stock availability (32%). It’s likely the energy crisis and recession will appear as factors next year.
We are in a crisis, so the top priorities for survival still hold true today, from effective management of cashflow, having a robust sales strategy and exploring routes to market. We also need to move away from manual processes, as a third of respondents believe they negatively impact profitability. 82% of wholesalers are turning to technology to become competitive, and 76% have switched to cloud hosting of applications.
Indeed technology, especially ERP software, can help to take tighter control of operations to create efficiencies, improve processes, reduce costs, price appropriately and reach customers effectively.
Initiatives to stay in business and get ahead
Businesses do realise that efficiency and technology go hand in hand – 86% of respondents agreed technology is vital to the efficient running of their businesses. While negatively, some still have manual processes, others are running multiple systems with 68% seeing benefits of integrating disparate systems.
Adding a single, comprehensive, system can streamline business operations and increase productivity, as well as providing the data required to make informed business decisions.
Cloud-based software with intuitive consumer-like interfaces improve the employee experience allowing them to be motivated and impactful to their employers. The inclusion of stock and order management, full CRM and eCommerce integrations in the latest ERP systems for stockists means it’s easier to reach and engage customers, keep them happy and sell online. Nurturing customers is vital during a downturn.
Cater4you is a good example of a company using integrated software. They told us that their website was extremely busy during lockdown, but with the integration into OGL Software they were able to stay in control of stock and still manage customers’ expectations.
As part of a move to multi-channel selling, they said: “We’d see products sell out in 3-4 hours and we’ve never seen products sell that quickly, but the system made us more efficient, so we were able to cope with the sheer volume and be equipped to come into the office on Monday to send out over 500 orders.”
Shake off despair, embrace risk and profit
The pandemic started to prepare us for the rough road ahead. As a result, many in the wholesale sector see managing cashflow better as a priority (81%), no surprise for a niche severely impacted by rising business costs. But using software adaptable to new business models also featured strongly (78%).
Given the current business outlook there is an argument to say there is more reason to take a risk, and embrace a little business disruption, when there is a chance to survive and prosper with a refined, streamlined, multi-channel operation.