Adam Lower, an expert in product lifecycle management at Centric Software, explains how start-ups can use supply chain data to become more adaptable and boost revenue.
COVID-19 forced seismic changes across the whole economy, with disastrous consequences for many companies. Remarkably, however, it has also encouraged a surge in entrepreneurship, with Companies House recording a start-up boom in the UK. 810,316 new start-ups were registered in the financial year from April 2020-2021.
But, now that restrictions have eased and the economy is treading an uncertain path back towards greater normality, can start-ups remain competitive and continue to be sources of innovation? It seems likely that one of the factors making and breaking new small businesses will be their ability to use data and IT to optimise their business models.
In order to carve out space for themselves in the modern economy, start-ups must be smart, streamlined and unique. Collecting and utilising supply chain data and digitalising processes are central to this.
In a data-driven marketplace, start-ups will need to use all the tools at their disposal to monitor everything that is happening within their business, and to track consumer behaviour so that they can adjust their practices appropriately. This kind of agility and the ability to react quickly to new information is key to how start-ups can stay one step ahead of their larger competitors, which may face significant challenges when making adjustments within larger and more unwieldy supply chains and systems.
Data collaboration and connectivity between the different players within supply chains will be a crucial element of start-ups’ IT strategies. According to research by Coresight, 40% of brands identify better collaboration as a cause of improved stock management and sales. However, the same research showed that many businesses still don’t feel that there is enough joined-up thinking between partners at different points in the supply chain. It’s important to understand what kind of barriers sometimes get in the way of better data sharing and usage.
Common barriers to sharing data
- Identifying key data. It takes time and skill to pick out what data is the most relevant and important to share with other parts of the supply chain and these tasks are often not as highly prioritised by start-ups as more directly profit-seeking ones.
- Building trust. Data sharing between businesses and with consumers has a positive impact on trust within these relationships; however, this kind of transparency is difficult to achieve as it requires significantly changing people’s habits and connecting parties who have previously had little contact and communication with each other.
- Legal issues. Data sharing and data management involves a complex landscape of laws and regulations which can discourage smaller businesses who don’t have in-house legal teams or large budgets set aside to engage lawyers.
- Security and intellectual property concerns. Start-ups may be worried that sharing data with other parties makes them vulnerable to being taken advantage of, their ideas being stolen by other businesses, or their financial information or customer details getting into the wrong hands.
Factors which encourage sharing data
- Consumer trends and demand: Modern consumers are pushing for more transparency and openness from the companies they spend their money with, especially when it comes to sustainability and corporate social responsibility issues.
- Law and regulation: Changes in laws and regulations increasingly require companies to share more information with both consumers and the authorities, and this trend is likely to continue.
- Medical considerations: Medical concerns such as the medical and sanitary safety of cosmetics and pharmaceuticals or the allergen content of food products require data sharing between the different parts of the supply chain, and between companies, the authorities and the customer.
Build consumer engagement with transparency on key issues
Not all data is suitable to be shared of course, and it’s far from necessary for start-ups to share all of their information publicly. However, it’s certainly true that many consumers are craving product data - whether it be for environmental, health or ethical reasons.
Sharing relevant data should lead to greater trust and a better relationship between the consumer and the brand. Issues around sustainability are at the top of the agenda, especially for younger customers; start-ups which collect and share data about sustainability, such as how much water they use and how much carbon they emit while manufacturing their products, stand out from the crowd as more transparent and trustworthy.
It’s not just customers who benefit from increased transparency and data sharing. Within start-ups and small businesses, it’s crucial that there is an environment of openness and honesty between leadership and employees. This helps to create stronger confidence and loyalty and ensures that everyone within the business is on the same page.
The sharing of data is also important for guaranteeing quality assurance and global compliance - and to help reduce (and hopefully eliminate) any legal risks, especially in heavily regulated industries.
Adapt quickly to market trends and stay ahead of the competition
As a start-up, developing greater agility and adaptability is a crucial way to stay competitive. Changing trends and sales performance levels are first detected through data analysis and business intelligence systems such as customer relationship management (CRM) and product lifecycle management (PLM) software.
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By sharing data in real-time, brand owners, product developers and category managers can use it to make corrective actions to existing products and ranges. This ability to react quickly is amplified when there’s a strong relationship between different parts of the supply chain.
They can also identify opportunities for new niches to target, or ways to optimise around customer behaviour. Sharing sell-in and sell-out data is very useful in detecting consumption trends, so the supply chain and production teams can react accordingly.
Better targeting with range production and planning
The more information that can be shared about sold-out products, product ranges and types of products - as well as geographic and demographic data - the more insights start-ups can optimise their range planning, seasonal offerings and promotions to develop relevant products for consumers.
Access to point of sale and inventory data, as well as to production volumes, allows start-ups to analyse gaps between supply and demand in real time. This facilitates speedy reactions, including price changes and tweaks to the timing and nature of promotions or product releases.
Think about the first lockdowns we experienced in 2020: levels of demand and consumption habits drastically changed. Companies that had access to trustworthy data were able to react quickly to manage stocks, change production schedules and retail arrangements and to ultimately maximise sales.
Using data for forecasting and planning can also be an invaluable tool for forward-thinking start-ups. Data-intensive forecasting enables a fairly high degree of accuracy and provides useful prompts to start-ups for where they need to maintain capacity within their supply chains, so that they can be prepared for likely eventualities.
Forecasting and modelling can also be used for risk management, creating well evidenced predictions for events like a warehouse fire, an outside economic shock, or a strike. Companies can then create plans and strategies which can be more quickly enacted if those events come to pass.
Using data to prove corporate social responsibility credentials
Corporate social responsibility is on everyone’s mind lately, but sustainability and inclusion are easy buzzwords to throw around. If brands, retailers and manufacturers really care about meeting growing consumer expectations in regard to the environment and other ethical concerns, they should be prepared to prove it.
Being able to access rich data sources can be extremely helpful for a start-up when sourcing raw materials, choosing services and making other similar decisions. For example, a database full of detailed information about different packaging options can be used to conduct more thorough analysis and make the best possible decision, which balances both cost and sustainability considerations.
Achieving true sustainability requires real effort from all parties in the supply chain, and it needs a lot of data. Strong digital infrastructure and data gathering software with a start-up can make managing information much easier, maintaining and monitoring complex data over the course of the data lifecycle.