Gaps between business systems are a serious threat to Manufacturing Retail Hybrids

For companies in the category of manufacturing and retail hybrids, business systems often become bottlenecks, which both create problems and force employees to improvise. The solution is instead to create functional Ways of working with a digital and change-oriented business support that connects the whole.

There have always been companies that have been responsible for the entire value chain themselves, from production to sales, without any intermediaries. Thanks to digital development, more companies of this kind have been developed, and today it is possible to speak of it as a special category of companies - hybrids that combine manufacturing and retail.

But for many of these companies, it is a reality that their business systems set limits on how they can work, instead of the other way around. This is because the standard systems are either optimized for manufacturing or for retail. Companies that do both end up in an intermediate position, and get extra large gaps between the systems.

When there are different systems for everything from production and logistics to sales and returns, it often ends up in incomplete processes and lack of decision support. Different parts of the business are not measured in the same way where employees either need to run around and put out fires, or they are forced to create their own manual processes that will bridge the gaps between the systems. Instead of efficient working processes, the situation often becomes chaotic.

- It can easily become a jumble of information, says Barium's CEO Mattias Arnelund. We meet a lot of companies that experience this in different ways. They simply do not manage to have manufacturing and retail working together effectively.

Returns put the process at its peak

The rapid digital development, not least e-commerce, has increased in this category of companies. But it has also made the handling of goods more complicated. Consumers not only expect it to be as easy to shop online as it is to watch movies or listen to music, but it should also be easy and smooth to return purchased goods. This has led to a major behavioral change among consumers who shop more and return products to an increasing extent.

Returns are a very concrete example of how lack of business systems, and not least shortcomings between the systems, create major problems for companies that both manufacture and sell. A returned product must first and foremost be treated in the production and sales flow. And when returned, it must be included in the return handling, in order to ultimately be repackaged and re-registered in the sales flow. Most systems used today do not have the capacity to handle all of these steps.

It is just these kinds of situations that lead to manufacturing and retail companies creating work processes that will cover system deficiencies, instead of being able to work with processes that make them better and more efficient. Employees are often forced to solve problems manually, or with the help of improvised bridges between systems.

- 80 percent of the customers who come to us have built really advanced IT systems in Excel where they report tasks, handle numbers and collect information from other systems. This is done because existing systems are too expensive to adapt or that systems on the market are not close enough to the working methods they should support. Problems with Excel systems arise immediately when information must be sent between employees and then be processed. It makes it impossible to get an overview of progress and discover bottlenecks in their business, says Dana Markovic, COO at Barium.

Functional Ways of working is the key

When these companies realize that a standard system cannot help them, the next step is often to turn the issue into an IT project. Either to develop your own system or try to adapt a larger system to your own needs.

But there are great risks with such a project, mainly it takes a long time and has a high price tag, much because work processes are not only IT-related. What is required instead is to look at the needs of the entire business, including IT, to find functional Ways of working. Then, all parts can be gathered under the same platform.

- We work very closely with our customers and together we model a desired work process "end-to-end" in Barium's platform. Often customers do not know exactly what they are asking for or they have a clear picture that changes in the meantime, but this is something we welcome in contrast to more traditional IT development that is not as agile in its approach. This invites innovation, which today is perhaps more important than ever, says Mattias Arnelund.

Want to see more of how Barium help their customers? You’ll find several cases on https://www.barium.se/en/about-us/customers

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