The Ecommerce Challenge Peter Drucker Considers One of the ‘Great Divides’ in Management and How to Overcome It

ecommerce challenge

Many merchants’ front-end software for sales have no way of connecting with their back-end supply and operational systems. Since they don’t communicate, information isn’t being shared across the business. As a result, they can’t get the information they need into the places it has to be, when it has to be. Without this back-end to front-end integration, they are forced to handle the resulting process failures and inefficiencies by using tedious workarounds and hour after hour after hour of manual data entry – which is never in time to make key decisions.

Peter Drucker considered this challenge one of the ‘great divides’ in management. The Massachusetts Institute of Technology (MIT) had this to say: “The divide between demand and supply is a key reason that companies are so often trapped into selling excess products well below market rates or losing sales because an inventory shortage makes it impossible to fulfill demand. Bringing the supply and demand sides of an enterprise together can represent a significant opportunity for efficiency and value creation. Structures and processes need to be put in place to facilitate information flow and create visibility across the organization and its partners.”

This is where those tedious workarounds come in. Workarounds like spreadsheets and manual updates. Workarounds leave room for human error. Manually entered data can be incorrectly entered by ‘fat’ fingers and tired eyes and a frazzled brain. When data in the front-end doesn’t match the back-end, the problems begin – and so does the problem solving, which uses up what little gas you have left in the tank. It’s a never-ending merry-go-round of wasted time and effort.

The Cost of Not Having End-to-End Integration

Now, it’s one thing to identify the root cause of these problems. But the cost is what really hurts. Check out
these stats published by IHL Group:

  • $284.9 billion is lost annually due to internal process failures. 29% of the time retailers blamed overstocks and out-of-stocks on those poor processes.
  • With no front-end (sales) to back-end (supply & operational) communication, annual losses hit $222.7
    billion; 60% of this caused by retailers not measuring the impact of overstocks and out-of-stocks; 25% lost by not sharing info across the business; 15% wasted when systems don’t communicate with each other.

Here’s a reality check. How many of these standalone systems are part of your business operations?

  • Inventory management
  • Order management
  • Repricing
  • Shipping
  • Accounting

No matter how many or how few of them you have, if they’re not connected, if they’re not sharing
information, you’re stuck behind the 8-ball. You spend most of your time finding, managing, and re-entering data. Time that should be spent strategizing for the next quarter. Time that could be spent with family and friends or doing things you enjoy. If you don’t find the answer to this challenge, you’ll never make it to the next level. You will not celebrate that million dollar month. 

Bridging the Gap Between Supply and Demand

To connect your front-end sales to your back-end suppliers and operations, you have two options. You can choose an ERP system and pay for all the customized integrations and additional bolt-on applications. OR – you can choose a single integrated platform that would centralize your data and streamline your operations … and save you time … and save you money … and make you more money! It’s actually the best solution to help you scale your ecommerce business.

Choosing a fully integrated solution from the get-go provides you with a foundation strong enough to support the weight of a rapidly growing business. More importantly, it allows you to focus on growth, instead of building and maintaining a technology infrastructure that will continually need to be updated.

Not all integrated platforms are the same in how they work, what they offer and how they are supported. In fact, some platforms only provide one-way integration which requires you to enter data into the system multiple places, multiple times. There are very few platforms that provide true, two-way integration enabling the flow of information in both directions between the front- and back-end of your business – meaning data only needs to be entered into the system once. 

 


Dispensable.png

 

You have just read a chapter from our new special report: Dispensable: Why Your Ecommerce Software is Costing You More Than Its Worth. 
The concepts in this report – some of which can’t be found anywhere else – have forever changed the way some sellers think about and manage their business. Click here and enter your name and email address to read the rest of the report.

 

 

Leave a Comment