This time last year, we wrote about our observations on the state of eCommerce in a mid-COVID world.
Automation - The missing piece in B2B eCommerce
When you’ve been involved in B2B eCommerce as long as we have, you tend to make a few observations along the way. As eCommerce continues its unstoppable growth, we’re noticing something striking happening off to the side. There remains a missing piece within the channels to market that few businesses stop to consider.
It’s not uncommon for a human being to sit between any of those systems I listed above, performing some part of the eCommerce process manually. It’s what we call “swivel chair integration” and it’s costing businesses precious time, resources, and money – needlessly.
The missing piece here, as you’ve probably guessed, is automation.
I’m a big fan of storytelling, so let me use a story here to illustrate:
- what current reality looks like for many wholesale distribution businesses today, and
- how automation is increasingly being used to tie all the B2B eComm pieces together.
“G’day, good to meet you! I’m Dave Stone, Operations Manager for Electrical Parts. My management team comprises the Managing Director, Financial Controller, Sales/Marketing Manager and myself. My role covers the order-to-cash and procure-to-pay functions of the business – basically everything coming in and going out of the warehouse.
For context: we’re a pretty typical business in that we manufacture offshore and import to our Melbourne warehouse. We sell to electrical parts retailers, repairers and distributors across Australia. We turn over around $75 million per annum and employ 80 people, including eight Reps on the road and five in our Customer Service team.
Technology-wise, we’ve been running an ERP system to support our business for the last 20 years. Approximately seven years ago, we implemented a shiny new B2B eCommerce system. It allows our customers to order online, easy access to rich product content and data sheets, and self-service functions like order tracking, account payment, and invoice reprints.
Whilst our eCommerce site is a success and our customers love the convenience and the functionality it provides, the challenge has been growing the number of mid-size customers who order online.
Our two largest customers (who represent 20% of our business) are now using EDI, which in their case works well. Everything flows from their ERP as a PO, straight into our ERP without anyone touching it. EDI took quite a while to set up and cost everyone a bomb, but now it’s basically set and forget.
Similarly, our smaller customers are going well - I call them our ‘mum & pop’ shops. They represent another 40% of our business and they almost exclusively order online now. The transition for them was relatively easy, as support for their special pricing was the dangling carrot we used when requesting they use our new website. They’ve been pretty happy to stop faxing and emailing orders, as they were using the website to check availability and product info anyway.
That leaves us with the rest – around 40% of our market who just don’t (perhaps won’t) order online. This is a real constraint in our business and reducing it somehow would have huge benefits for our order to cash process. Not to mention benefitting my chance of getting that bonus I’ve been hanging out for…
Some of our current challenges:
- Although we run a nationwide, coast-to-coast business, our office is only open 8am - 4pm. Automating order entry would enable our warehouse to start fulfilment from 6am when they start their day. We’d be able to get capital city metro orders placed before 11am out for same-day delivery - something we’ve been struggling to execute on.
- Sam, our Sales & Marketing Manager, has lately been trying to get our five Customer Service reps to focus on sales of a new range we’ve brought to market. But the team just don’t have much time to speak to customers or promote the new range because order entry takes up around 50 percent of their time.
- Margin pressure is having an increasing impact. Whilst our overseas suppliers and our factory have locked in pricing, it looks like our landed costs are going to increase in the midterm…not good for profit. We’re also starting to see signs in the US of Amazon and other mega-competitors eyeing the B2B market. We need to inoculate ourselves against this competitive pressure, which means driving efficiency up and cost to serve down.
To better understand the source of this constraint, Sam had Marketing survey about 50 of our mid-size customers, asking them questions about our eCommerce site and why they didn’t order online. Here’s what we found:
- Whilst this majority group of customers (comprising retailers, repairers and distributors) loved the self-service functions of our website, they ran ERP or Point of Sale systems within their own business.
- The demand for our product was based on their own procure-to-pay process, which generally started with some replenishment function they ran, that dictated what to order and how much.
- This function would turn the demand into a Purchase Order, and their system would automatically email it to us as a PDF.
Of course. Sam and I looked at each other and it all made sense. There was no way in the world our customers would want to manually punch an order into our eCommerce system after they’d already automated that segment of their procure-to-pay process to create the purchase order. They’d done their work! From there it became our order-to-cash process, and right there at the beginning was a manual step - data entry.
The challenge was on – we’d need to remove this order entry constraint if we wanted to reap the rewards. That month, Sam and I presented our findings at the management meeting. We gained approval to initiate a project to automate our order entry process and address a major break in our extended supply chain.
Today, three months in, our automation project is showing some promising results:
- Approximately 50 of our 300 mid-size customer orders are being handled by our automated order processing system.
- Just based on those 50 customers alone, we’ve clawed back roughly 15 percent of the total time spent by Customer Service on order entry. And that number will grow as we automate further customers.
- Freeing up this time has allowed Customer Service to be proactive about educating customers on our new product range, and it’s getting a bit of traction out in the market.
- The CSRs are enjoying bonus incentives for the new range, which Sam believes will be a winner.
Automating our manual sales order entry has really benefited the business and we’re definitely keen to expand it to even more of our customers.”
Dave, Sam, and their electrical parts distribution business, while fictional, are typical of what’s occurring out there. Companies today have invested in order management tools like ERP, workflow systems, and eCommerce to support automation across their businesses, but manual processes are still letting them down in key places.
In the complex world of B2B eCommerce, there is no one panacea. It’s highly unlikely you’ll ever get 100% of your B2B customers to order on your website. And only a small percentage will ever be interested in costly procurement solutions like EDI.
But sales order automation is for everyone.
As the missing piece of today’s B2B puzzle, automation in eCommerce is more accessible than ever before, both in function and in cost.