Embracing expansion into new countries represents a serious business challenge for any organisation, and turning to managed services where organisations outsource critical business processes to external experts is becoming increasingly popular. TM explores the innocent way...
Embracing expansion into new countries represents a serious business challenge for any organisation, and turning to managed services where organisations outsource critical business processes to external experts is becoming increasingly popular.
Globalisation and the emergence of the internet has opened up a whole catalogue of new business opportunities, not only for the sourcing of raw materials and products more efficiently and cost effectively, but also for building trading relationships and developing new sales channels. As technology effectively transforms the world into one global village, there is added pressure on manufacturers to adopt smarter business processes, including increasing supply chain efficiency and the way in which they communicate with suppliers and customers on a global scale.
innocent, the UK’s number one smoothie maker, grew from humble beginnings to a market-leading brand with global requirements and has found that sometimes, handing over the reins can make the most business sense.
It’s hard to believe that just nine years since the company began, innocent has become one of the most recognisable retail brands in the UK. innocent began life as a company of just three people with £500 worth of fresh fruit and a bundle of ambition. Selling fruit smoothies at a minor music festival in London, the company’s founders asked customers the simple question, “Do you think we should give up our jobs to make these smoothies?” They asked for the answer by the way of empty bottles in ‘Yes’ or ‘No’ bins. The resounding ‘Yes’ vote started the dream and innocent took its first steps on the way to becoming a leading player in the soft drinks market. After building up a solid network of local retail customers, innocent began taking orders via fax, phone and email – all perfectly acceptable methods for a start-up looking for a quick and easy conduit through which it could communicate with its customers. For the first couple of years of innocent’s life, the business was able to grow with traditional communication, developing an excellent customer base on a regional and national level.
As the innocent brand grew in popularity and attracted major retailers, the demands on its supply chain increased significantly. Contracts with these retailers required a system more complex than the previous way of sending and receiving orders, invoices and other data with customers. In 2002, a solution based on electronic data interchange (EDI) was implemented, connecting the head office to the UK warehouse and providing some automation of ordering and invoicing. As the business moved forward, both in terms of internal growth and the calibre of customer it was dealing with, the need for a system with additional functionality was apparent. The supply chain is a crucial part of most businesses – innocent being no exception – yet assigning dedicated IT staff to manually process orders and update back-end systems is resource-intensive, and few organisations, especially in the current economic climate, can afford to do so. Managing legacy EDI systems can prove to be cumbersome, with system downtime and unreliable internet connections causing IT administrators numerous headaches, as well as impacting the business’ capability to process orders and invoices.
Expertise is also another key area of concern within the supply chain. With many new IT graduates leaving university with skill sets that often do not include EDI, the availability of workers skilled in this area is diminishing quickly – yet leading retailers across Europe still demand that suppliers communicate through EDI and via pre-defined data standards and protocols. This creates a skills vacuum that organisations are increasingly turning to technology to fill.
With these factors in mind, and with the business planning to expand into Europe, innocent needed to address these challenges quickly and effectively. As the organisation began trading in the Benelux region, France, Ireland, Germany, Austria and Scandinavia, it became clear that improving the technology that was developing the supply chain was critical to expansion. In order to supply its European customers with the same level of service as those in the UK, innocent needed to ensure that the new solution could address cultural complexities, such as language, but also that orders and invoices could be sent and received in international data standards or protocols without any negative impact on the time taken to process data.
innocent’s supply chain manager Ben Tuppen was tasked with the job of finding the right solution and it quickly became apparent that Software-as-a-Service (SaaS), via an external supplier, could offer real benefits to the business.
“As we outsource much of our operation and don’t have 24/7 head office support, we also needed a partner who could manage this environment for us 24/7, serving all the countries we were operating in. Our EDI solution needed to operate round the clock, just like the rest of our supply chain,” said Tuppen.
Historically, businesses have been reluctant to outsource key business functions to SaaS suppliers; however, the benefits of doing so were immediately apparent. SaaS providers often offer high availability services, ensuring the supply chain will run round the clock, even in the event of a disaster. Tuppen also needed to ensure that new customers could be added onto the supplier network with the minimum of fuss –something that running the operation internally would not deliver. Because customer reputation is vitally important, innocent had to ensure that any transition onto a new system was as seamless as possible, to prevent disruption to its operation. After weighing up the challenges and issues facing the business, Tuppen decided that a managed service was the best fit for the organisation’s expansion plans.
“We were confident that managed services would provide us with the full support needed not just to deliver the technology but to guide our team as we worked with our customers and suppliers in this complex area,” he said.
The implementation of the managed service has allowed innocent to streamline business operations, better comply with SLA mandates and successfully expand in Europe, bringing on key new customers as a result of the roll out. Automation of order and invoice processing can also improve resource efficiency – innocent is already saving 20 hours a week previously spent on processing orders and invoices by hand (with more to come as they migrate more customers onto EDI).
Additionally, handing responsibility to a managed provider enabled innocent to connect a key customer within one month of starting their EDI implementation, critical to winning the customer contract. Since then, the scalable solution and support means innocent is on track to triple their number of connected partners within their first year, without worrying about complex European EDI standards.
With an ‘always online’ service via an easy-to-use web portal, innocent avoids having to create a separate and disparate EDI team by allowing all relevant personnel in logistics, finance and IT web-access to the solution – Inovisworks from Inovis – when they want it, wherever they are in Europe.
As with most businesses, budgeting is crucial, and selecting a managed service with a clear pricing structure was attractive for innocent, as it provided a flat-rate subscription fee rather than volume of traffic. This has allowed innocent to maximise the use of EDI to integrate systems with those partners they are connected to, whilst keeping costs predictable and low.
There are still businesses that prefer to maintain complete control of their supply chain environment, and arguably always will. However, with cloud computing becoming ever-popular, services becoming increasingly reliable and cost-effective solutions helping drive down costs and achieve a healthy ROI, the business case for managed services is hard to resist.
For innocent, bringing in an external provider to give support and assistance worked extremely well. And for smaller organisations for whom IT and supply chain technology in general may be stepping into the unknown, turning to a managed service can make real sense.
Growing a business during such tough economic times is a real challenge, however, as innocent has experienced, technology can be a great enabler, driving mass growth, improving efficiency both now and for the future, whilst remaining cost-effective and predictable in terms of pricing. Managed service offerings have their critics – those who believe only 100 percent ownership of business functions can guarantee control and availability – yet the case for bringing in the experts stands up for itself. After all, getting things right first time, every time has to be the key goal with such stiff market competition, and if that means enlisting the trust of those that live and breathe EDI, then that is surely a sacrifice worth making.