SMEs have been affected by the Covid pandemic in so many different ways, some good, some very bad, but the future looks very promising, says Eric Carter, Solutions Architect at Indigo Software.

At the start of the Coronavirus outbreak, some SMEs experienced severe disruption to stock availability whilst Chinese factories were closed. Then when the factories re-opened, there were problems with having excess stock to shift, which in turn led to widespread discounting. There were difficult decisions to make about whether to start trading online and how to adapt former business models to suit the new trading restrictions. Some SMEs have realised the best way out of their difficulties is to expand and diversify.

SMEs that were able to adapt and diversify have done amazingly well and seen meteoric rises in their sales. Often these businesses will have achieved years of growth in a single period and had to introduce e-commerce, or 3PL distribution services very quickly. Now, looking ahead, they will need to ensure excellent real-time stock visibility and that their operations are efficient and sustainable for the long term. Investing in a best of breed warehouse management system (WMS) solution will help achieve this and deliver many other benefits.

Accelerated growth SMEs will need to take precautions to ensure they can sustainably operate at a greater scale in the longer term without escalating costs. For instance, if a business is receiving 100 orders a day, it can capture serial numbers manually, but if they have 500 orders a day that will generate too much data to handle without either recruiting a lot more people or putting software like a WMS in place. And now with Brexit, the previous access to readily available migrant labour is reducing, so adopting technology will become more common.

4 key supply chain trends that SMEs should expect in 2021

• Online is here to stay now – people won’t be returning to physical stores in the same ways as before so all businesses (and their supply chains) will need to adapt to this new landscape. Businesses that introduced e-commerce will start to see the impact of managing returns efficiently, as the ‘ugly side of selling online’. A good WMS will help to get warehouse returns booked in and back out for re-sale as quickly as possible.
• Smart SMEs with enough cashflow will have over bought stock by now, to ensure they don’t get caught short with Brexit related customs delays and in the event of a shortage in their sector. They will have a cushion to see them through the first quarter of 2021 and in some cases, might even be able to raise their prices slightly.
• SMEs are likely to experience many changes in the market, with the possibly of having to merge businesses and integrate processes. In some cases, a business might find themselves inheriting a poorly managed DC or one that is full manual and all the problems associated with that. It will be important to get advice from suppliers who have the industry experience to help improve the business as a whole, rather than just improving their logistics and warehouse operations.
• R&D tax credits are well worth investigating if your warehouse is looking at introducing new technology or working processes. On average, tax savings of approximately £53,714 per claim can be realised for the average SME and for larger companies it is much more (based on 2017/18 figures from HMRC). UKWA the United Kingdom Warehousing Association recently highlighted the use of R&D tax credits as an opportunity for warehouse managers but unfortunately, due to the reference to R&D in the scheme name, many companies don’t realise they could be eligible to claim. In order to be eligible companies just need to be registered in the UK, required to pay corporation tax and have conducted qualifying business improvement activities.

All supply chains have been badly hit regardless of the size of the company, but SMEs, especially those who are new to e-commerce, need to be a lot more agile and focused, with a good handle on their cost bases and accurate stock figures to push to web front ends. One thing this year has demonstrated more than anything is that agile businesses that are quick to diversify and embrace technology will always do really well.