Can your eCommerce business afford to not have a ERP system?

Enterprise Resource Planning (ERP) can be simplified to the core functions of managing an infinite number of multiple-complex scenarios, having precise multi-tasking skills whilst exhibiting the most detailed time management, all at the same time. You would agree, that if it was a person holding these credentials, then they would be a game changer in the organisation and worth a lot of money.

If you were to try and imagine an ERP system in an alternative context, then imagine that you were holding a birthday party for around 30 people and you decided to hire an external venue and provide food and drinks for the guests.  Planning of an event like this requires you to immediately perform interrelated decisions that involve volume (quantity) and timing of materials.   By estimating how many people are likely to attend, how much food and drinks will be needed, minus the amount of current food & drink (stock) that you already have, the proportion of frozen food and when exactly the frozen food needs to come out. Estimation of any food that needs to be cooked from a recipe and the calculation of multiplying by 30 to meet the demand and the timing of when to shop.  When the invitations need to be prepared and sent out for RSVP’s, the availability of suitable venues and not to mention all the communication from the potential guests that have any questions.

In business, especially e-commerce, the ERP system is the latest and most significant development that has been built on the predating philosophy of the Materials Requirement Planning (MRP) system.  The MRP system was originally devised in the mid-1960s to support the British Nuclear power efforts and subsequently developed further to match the integrated socio-technical system that Toyota car production had developed.  The general concept around MRP was the use of calculating the product information or ‘component structure’ with the demand information to precisely form a ‘Master Production Schedule’ that was the basis of controlling and planning the perfect execution of materials arriving at the very point of manufacture, with built-in consequence factors, that saw avoiding delays in production and benefitted cashflow as stock was only called upon, on precise demand.  In the 1970s the MRP system witnessed a radically overhaul that changed the basic planning and control mathematics of MRP with a turbo injected boost of ‘computer power’ as the ERP system became part of the early game changers that kicked starting the digital revolution.

Figure 1: The Holistic view of an organisational ERP system.

Through development, the ERP system is now widely acknowledged as a sophisticated tool that integrates all departments and all functions within a whole organisation into one single computer system that can serve all departments and all personnel.  By housing all departments into a single network of communication allows transparency across the whole spectrum, as figure 1 shows the from sales and marketing, multiple warehousing, inventory control, supply chain management, manufacturing, human resources, accounts, finance and strategic reporting with all levels of management control that meets the needs for every department without duplication of information.

An unlikely benefit of allowing the transparency of an integrated system and database manipulation is the immediate reflection of any consequences of decisions that are taken in one part of the organisation that will always be shown in the planning and control system of another part of the business.  This is recognised with multiple warehousing and stock control that may be on different continents or the accounts position of a customer before dispatching of goods and the transparency of a CRM system that can traverse across the world to ensure that information is accurate and up to date as all information is updated in real time by those who use it.  However, the real clever abilities are the streamlining of processes that reduces errors and saves money with the wider integration with other ERP systems of supply chains that can work in collaboration to organise an effective stock movement, logistics and purchasing ordering efficiencies all of which save time and money and reduce mistakes. This, of course, will only ever be truly effective when more and more businesses accept the benefits of ERP and trust the collaboration.

By its very nature, an ERP system directly addresses organisational fragmentation and therefore the process of integration can take a period of time to achieve as it is a difficult system to meet the needs and expectations of cross organisational boundaries,  that have to ensure the correct functionality of the overall business. Furthermore with the concept of moving everybody into a single integrated system that operates within a single database will invariably create resistance to change, which management will need to manage carefully by articulating a clear business vision, outlining achievable goals and timeframes, build a positive user acceptance through comprehensive training and clear communication.  Concluding in a requirement for owner/managers to not only understand the amazing benefits an ERP system can bring to a business but equally to understand the levels of complexities that are also associated with the implementation and that a full and comprehensive consultation is required before embarking on an ERP project.

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Clay Cowie is an eCommerce specialist at business management consultancy S.M.A.R.T Turnaround Ltd. He often writes blogs on topics designed to help businesses thrive and grow online.

Are you wearing S.W.O.T goggles?

S.W.O.T analysis will help you better understand how to diagnose your business. Read here to learn how to do a S.W.O.T analysis and improve business.

What if there was an easy technique to make your business stronger every month? As it turns out, S.W.O.T analysis is the perfect tool to help your business achieve its goals. However, many people do not know enough about what S.W.O.T is and how it works. Keep reading to discover our S.W.O.T analysis example and definition!

What Is S.W.O.T Analysis?

S.W.O.T is actually an acronym. It stands for Strengths, Weaknesses, Opportunities, and Threats.

S.W.O.T analysis is an honest evaluation of what your business does well and what it could stand to improve. The goal is to use this analysis to develop a business strategy that emphasises your strengths while finding ways to address your potential weaknesses and acts as a visual aid to evaluate the holistic dimensions of your business.

Benefits of S.W.O.T Analysis

The S.W.O.T analysis remains popular because it has a number of benefits. The first is the simplicity of it: you can present analysis findings in a single image, making it easy for anyone and everyone to process. A good S.W.O.T analysis is also thorough. By looking at opportunities and threats in addition to strengths and weaknesses, you are able to create both short and long-term plans for success. A S.W.O.T analysis is very versatile. You can apply it at the macro level to your entire business or on a micro level to a smaller team, division, or individual within the company. Finally, a S.W.O.T provides insight into the external changing environment and provides management with the tools to gain or sustain the competitive advantage.

Drawbacks of S.W.O.T Analysis

The S.W.O.T analysis is still widely used because of its many benefits. However, this form of analysis is not without its drawbacks. First, a good S.W.O.T analysis is only as good as your information collected. If you put together analysis without very much detailed data and research, then you will come out with flawed results. Second, it can sometimes be difficult to categorise certain things. Sometimes, changing external factors, such as customer attitudes, means something could be a threat or an opportunity. Finally, for all the S.W.O.T analysis opportunities, there is the risk of oversimplification. By reducing complex data into a handful of talking points, you risk overlooking the need for complex solutions.

SWOT Analysis Example

Now you know a bit about what a S.W.O.T analysis is. Now, the big question: how to do a SWOT analysis? We’ll answer this by way of example.

For example, if you managed a Chinese Fusion restaurant. Your strengths might include that you offer customers a convenient location and that you are a fast and affordable alternative to going to a drive through. Your primary weakness might be that your business is new. As such, you might be struggling to pay back some of your start-up loans. Opportunities might represent factors such as the city population increasing and/or visitors increasing. This means opportunities for greater profit. Finally, your threats might be other nearby restaurants targeting your demographic. In this way, they are the primary obstacle to your success.

The Bottom Line

Now you have a good S.W.O.T analysis example. But do you know who can help you analyse your business? At S.M.A.R.T. Turnaround, we are experts at business strategy. With our analysis, you get all the benefits and none of the drawbacks.

To see how we can reshape your business, contact us today!

The Four V’s

The main characteristics of the processes that transform the resources into outputs are generally categorised, into four dimensions Volume, Variety, Variation and Visibility.

The heartbeat of operations management lays in the ability to manage core activities that transform key resources into deliverable products or services.  The process of creating the products and services are based fundamentally on converting original input resources through a conversion process that creates value by eventually outputting transformational products and services.

Volume

Denotes the process of managing volume output dimensions.  If the volume of an operation demands it, a streamlining of the processes to create a uniform system will provide the quality of goods being common and offers an opportunity for an increase in the speed of production.  If significant volumes can be met, with bespoke equipment, will produce a uniformed result, the operation ultimately will lead to lower unit costs. A biscuit factory is a perfect example of this.

Variety

Denotes the dimension that clarifies the differences between standardised goods and services V’s non-standardised, providing flexibility.  Providing services that are standardised, attracts the lower costs and creation of profitability as, flexibility and additional goods and services increase the core transformational costs.

Variation

Variation dimension addresses the contrasts in the business model and the impact on costs and volume as the businesses address the variation. The advantages of a low variation of business allow predictability as a strong consideration for lowering costs.

Visibility

Allows the amount of visibility to the customer, of its operations, as most manufacturing operations have very little visibility to the customer.

The role of operations is to transform the original resources to goods and services that create value.  The characteristics of the four V’s confirm that there are many clear principles to monitor processes.  By understanding the holistic processes this opens up opportunities for management to address and change the operation, to become a far more efficient business that gains lower unit costs and more profitability, which goes some way to claw back the advantage over the competition.