As any graduate of a modern mba programme will tell you, one of the best ways a company can edge ahead of their competitors in the modern business world is to implement an it solution that increases the value proposition of their core business. This has been explored in countless case studies of western companies. In contrast, high profile case studies showcasing chinese companies gaining a competitive edge with their it systems are fewer in number, let alone case studies for mid-sized business in Mainland China.
Yet increasing numbers of mid-sized chinese companies are starting to embrace agile it solutions like cloud ERP systems to improve the experience of their customers and boost their business performance. There are several reasons for this: in industries in China like manufacturing or e-commerce where competition is cutthroat, companies need every competitive advantage they can get; moreover, businesses can no longer rely solely on traditional advantages like labor costs, which are on the rise in China.
But chief among these reasons is the fact that modern it systems, such as cloud ERP solutions can have wide-ranging benefits for many companies, especially smaller companies in China that could not previously afford traditional ERP systems.
These include:
1. Significant, measurable reductions in operational costs,
2. Increased staff productivity that would otherwise require additional hires
3. Increased revenue through quicker order fulfilment and other work processes
4. Reduced error rates across multiple areas of business operations,
5. Superior customer support and overall customer experience
6. Significantly improved data safety and security
Together, these benefits can combine into a considerable competitive advantage, as e-commerce company Skque discovered when they implemented an ERP system using NetSuite’s cloud platform.
Company Background
Skque is an e-commerce company based in shenzhen, China, that sold a variety of electronic products and accessories. Their main sales channels include alibaba’s taobao, aliexpress (a platform for wholesale vendors), multiple countries’ websites on amazon, the company’s own website, ebay, and through third party delivery arrangements with their vendors. The company employed around 30 associates and received anywhere between 2000 and 20 000 product orders a day. At the time of implementation, Skque offered more than 100 products in over 1000 different product combinations to their online customers.
Challenges
The challenges faced by Skque were typical for a chinese e-commerce company. The included:
1. Managing a high volume of orders across multiple e-commerce platforms.
2. Managing stock fluctuations and product categorisations for more than 100 products that could be ordered as part of thousands of product combinations.
3. Managing prices efficiently across multiple platforms to stay competitive in the market
Skque decided to address these challenges by integrating all their business operations on a single platform, in order to automate as many business processes as possible. However, selecting the right platform to achieve proved to be a challenge in itself. First, the company tried to develop a solution in-house using open-source ERP technology, but found that doing so exerted a massive strain on the company’s resources; not only did they require a dedicated it team to develop applications and maintain a database for the system, they found that the team struggled to develop capabilities to support the changing requirements of Skque’s business.
Next, Skque considered several proprietary systems, including sap, and the local chinese brand yonyo. Yet these brands proved unsuitable due to excessive initial investment requirements in system hardware and infrastructure, inflexible and expensive customisation capabilities, and in the case of yonyo, unacceptably slow connection speeds due to a vpn required by the system for all operations.
Lastly, the company decided to take a risk and adopt a type of system that was not widely used in China: a pure cloud-based ERP system offered as a “software-as-a-service” solution provided by NetSuite, a us-based ERP company.
Finding The Right Cloud ERP Solution
Skque decided to select NetSuite as the core of their integrated business system for several reasons:
1. First, NetSuite’s benchmarked work processes included solutions aimed specifically at the e-commerce industry.
2. Second, because NetSuite provided the ERP solution as a hosted service, Skque did not need to invest in any hardware or security infrastructure. Moreover, as a listed company, NetSuite’s service level agreements ensured a level of security and system reliability previously unattainable by medium-sized companies like Skque in China.
3. As no hardware deployments were required for NetSuite, Skque was implement the system much more quickly than traditional ERP solutions would have allowed. Initial investments were also significantly lower than for comparable systems.
4. Perhaps most crucially, NetSuite’s solution included a development tool that combined scripting and in-system configurations that allowed system customisations with a much lower workload than open ERP solutions. This allowed them an easier path to developing system customisations that were directly tailored to their business requirements.
After choosing NetSuite for their core ERP system, Skque began to implement an it solution that aimed to unite each of their critical business processes on a fully integrated platform.
Implementation Objectives
The primary aim of the implementation was to build a system that was more effective than the sum of its parts by connecting the ERP system to each of Skque’s sales channels, their shipping system, their price analysis software and to their outlook email system. The next set was to automate an standardise the work processes for each of these channels as thoroughly as possible. Skque defined 5 core functions that NetSuite had to fulfil in order to meet their business requirements which were as follows:
1. Order management synchronisation
2. Inventory synchronisation
3. Automated product sorting
4. Price synchronisation
5. Customer support ticket synchronisation
Order Management Synchronisation
using NetSuite, Skque was able to connect each e-commerce platform to their third party shipping system, via the core ERP platform. In this way, orders could be processed without needing to enter data multiple times into each system. Checking numbers in the shipping system were also synchronised automatically in NetSuite
Inventory Synchronisation
by connecting each sales channel to NetSuite, Skque was then able to send updated inventory data to each e-commerce platform. In this way, if orders were purchased and no inventory was available, the order’s status was automatically changed to “back order” in the system and the money would be returned to the customer. Items for which inventory was available were labelled as being in “packing” status
Price Synchronisation
this function was essential to the company’s competitiveness. Price information from all products was collected in NetSuite via an automatic integration with a third party price analysis tool. This information was then transmitted automatically to each of the e-commerce platforms used by Skque. Moreover, as NetSuite ERP includes multi-currency and multiple language capabilities, price information could be automatically updated in the target language and currency of the region of each sales channel. When different prices for different regions were required, this information could also be updated automatically by records maintained in NetSuite.
Automated Product Sorting
each product order offered by Skque was assigned a barcode that was maintained in NetSuite’s system. Multiple product order combinations could also be assigned a single barcode. In this way, warehouse staff could retrieve order information via a simple barcode scan and locate products the warehouse quickly and efficiently. Packing staff could then print delivery addresses associated with each order automatically by scanning the product barcode again, saving considerable time for staff as they retrieved all relevant order information to fulfil each delivery.
Outlook Integration
to manage the high volume of emailed customer queries, emails were managed and sorted using netsuiet via an integration with outlook. Certain categories of emails could be assigned automatic responses, and detailed email categorisations allowed service representatives to deal with customer support issues quickly and more efficiently.
Return On Investment
Since each of these functions were successfully implemented, Skque has achieved considerable cost savings and enhanced business capabilities across a variety of areas. Significant kpis include:
1. Skque achieved 75% reductions in order approval time, thanks to automated fulfilment processes
2. Staff are now able to process 4 times the number of orders previously possible in one working day
3. Using NetSuite, Skque was able to limit the size of their it team to two staff members: one administrator and one security specialist. By choosing NetSuite instead of an open-source platform, they were able to reduce headcount costs equal to the salaries of 3 full time in-house it staff
4. Further savings associated with headcount were made by automating data transfer between various systems. By integrating all e-commerce platform data into NetSuite, there was no need to employ one staff member to manage each individual sales channel. Moreover, automation allowed Skque to fulfil thousands of orders each day using just 4 warehouse staff.
Indirect Benefits
In addition to the concrete measurable cost savings achieved using an integrated cloud ERP system, Skque also enjoyed several more subtle but significant benefits as a result of their new solution. Among these, a major benefit was that the reduced workload achieved through automation allowed staff members to spend more time on specific initiatives that added further value to Skque’s operations. This initiatives included data analysis, price management and competitor analysis. What is more, the automation of business processes allowed staff to avoid excessive overtime work, as more processes could be conducted without manual intervention during non-work hours. An integrated system therefore not only decreased the workload on the staff members, it also made a positive contribution to the work-life balance of each staff member.
Key Takeaways
By integrating disparate systems with a core cloud-based ERP system, Skque was able to combine these systems into a solution much greater than the sum of its parts. Skque was therefore able to growth their business while reducing operational and staff costs, accelerate order times, reduce error rates and improve the experience of each of their customers.
The result is a comprehensive, sustainable competitive advantage for the company and a model for other e-commerce enterprises in China to follow to stay ahead in a hyper-competitive environment.