In this article we look at how small business ERP software can help small businesses and small distributors respond to the effects of the Coronavirus pandemic on their businesses.
The Coronavirus pandemic has profoundly changed small businesses. The shelter-in-place and stay-at-home lockdowns implemented across many states in the US and around the world had massive and disproportionate economic consequences for businesses. While large enterprises coped and, in some cases, even thrived through the pandemic, small businesses and small distributors were devastated across the board. The contrast has been stark, and the Washington Post even argued that large enterprises could be the only survivors in the post-pandemic economy.
What caused this disproportionality?
The reasons small businesses were so negatively impacted are varied. Some were the result of public policy decisions that, for example, closed small retailers while large national big box retailers continued to operate, or imposed costs of compliance that were beyond the means of small businesses. However, many of the reasons had to do with small businesses and small distributors using outdated technology that couldn’t respond to the new requirements. Also, many small businesses had outdated business processes and either didn’t or couldn’t quickly adapt. Most observers believe that many of these new pandemic-driven requirements will not fully go away even as the immediate public health effects of the pandemic recede.
How small business ERP software can help
It is instructive to look at some of the issues that small businesses and small distributors will have to address in order to remain viable in the future. Most small businesses were not set up to cope with remote access and work-from-home requirements. Many small distributors had on-premises servers and were reliant on outside IT service providers, who suddenly weren’t as accessible. With most people working remotely, security breaches and Ransomware attacks accelerated causing further stress. Most small business distributors had poor inventory management, poor fulfillment capabilities and antiquated paper-based business processes that didn’t work well with social distancing and occupancy restrictions. Most small distributors had no eCommerce strategy. Many of these shortcomings can be addressed with good Cloud-based small business ERP software.
Facilitating work from home
Allowing employees to work from home requires enabling remote access, setting up VPNs and putting in place extensive security protections. This is a big undertaking for small businesses’ on-premises networks that weren’t already set up this way. Another approach is for small business distributors to move their major applications like ERP and HR functions, email and document storage to the Cloud. Cloud-based applications are, by definition, remote access ready and are built to handle users coming in from anywhere over any device.
Reduce reliance on outside IT service providers
Another clear benefit of moving to the Cloud is that small businesses no longer need to depend on their local outside IT service providers to take care of hardware issues, O/S upgrades, application updates, etc. In an increasingly complex technological environment, these tricky, time consuming tasks are better and more securely handled by specialists in a Cloud platform such as AWS or the application software publisher. In the long-run the efficiencies of a Cloud platform also make it less expensive on a TCO-basis than on-premises systems.
Security issues are easier on the Cloud
Security issues are an ever-increasing problem in a connected world. If a small business or small distributor is connected to the Internet, it is vulnerable and has to take defensive measures. The intrusion prevention, intrusion detection, threat isolation, threat management and remediation available in Cloud platforms is orders of magnitude greater than any small business on-premises system could ever hope to achieve. Moreover, once an on-premises network is breached, the malware finds its way to the domain controller and infects everything on the network including the databases underlying major applications such as ERP and HR. This contrasts with Cloud-based small business ERP software which does not allow access to the database from the website front end. Even if a user’s password is compromised malicious code cannot get past the web front-end of a Cloud-based ERP or HR solution to get to the database.
Implement small business ERP software and change business processes
Small distributors have been slow to adopt current technology. Many are still running on home-grown, customized business systems that were built decades ago with antiquated technology. Many distributors still use paper-based pick tickets printed on multi-part dot matrix printers. These kinds of processes are labor-intensive, slow, error-prone and cannot work with smaller staffs. It is also harder to find people to do the manual warehouse pick, pack and ship jobs these days. These distribution businesses need to adopt inventory tracking by location, cut down on printed pick tickets, implement hand-held barcode scanners and batch processes to cut down on multiple passes through the warehouse and improve fulfillment. Many small distributors tie-out and submit their rebate claims manually – which can be extraordinarily time consuming and expensive with manufacturers seizing on any discrepancies as reasons not to pay. There are many reasons to implement good Cloud-based small business ERP software, including better fulfillment tools, automated reordering, linkage with third-party services and applications, EDI, and the list goes on. Small businesses need to change the mentality of “this is how we’ve always done it” and look for ways to become more efficient.
Set up eCommerce options
One enduring change from the pandemic will be the acceptance by customers of eCommerce. During the pandemic Amazon experienced unprecedented growth as eCommerce became widely accepted and, in some cases, the only alternative with widespread lockdowns. According to CNBC, Amazon’s success is also due to its willingness to rethink and implement new business processes which small businesses by and large don’t do. Many small distributors don’t have an eCommerce strategy either to allow existing customers to order online or to attract new customers. These are major problems that small businesses and small distributors need to address.
The way forward
Small businesses and small distributors need to re-engineer their businesses for the new post-pandemic normal. If they take steps to move to the Cloud and upgrade their technology, their businesses will be stronger and they’ll be better positioned to weather new pandemics and other global disruptions.