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At first glance, the inauguration of President–elect Donald Trump would appear to usher in a period of uncertainty for Australian wholesalers. During his campaign Trump indicated he wanted to pursue policies that brought manufacturing jobs back to the US, which could see changes to current and proposed future trade agreements.
Last year Trump described the Trans-Pacific Partnership, which includes Australia and 11 other countries in the Asia Pacific region, as a potential disaster for the US. He also flagged tariffs of up to 45 per cent – up from 3 per cent – on goods imported to the US from China.
How the new US president’s policies will affect the Australian economy remains to be seen. But any Trump-led challenges may also create opportunities for wholesalers in the Australian market place, particularly with China looking to pick up market share in other geographies.
For Australian wholesalers, the best move going forward is to streamline their operations as much as possible, says Michael Williamson, Sage Partner Sales Director.
“It’s difficult to say at this point just how it’s going to pan out in the future, so I think wholesale players in Australia need to continue to run their operations as efficiently and as cost effectively as possible so they can deal with the uncertainties going forward in the global trade environment,” he says.
Managing a smart system to budget is an ongoing challenge for Australian wholesalers. Doing business in an increasingly competitive global market raises significant complexities including the need to track inventory, navigate international legislation, different languages and currencies.
“Often we would be dealing with local businesses in Australia for, maybe, their requirements in Australia and potentially New Zealand, and now we’re seeing local business that have requirements that cover the Asian market,” Williamson says.
“So they’ve got a system in place that they can use across all the geographies that support the local language requirements, the local currency requirements, and local legislative requirements, all while being able to capture and process all the transactions they need to be able to manage their entire supply chain.”
Implementing a proficient business management solution or ERP (Enterprise Resource Planning) system is the key to keeping ahead of the curve. An overarching business management solution can smooth out the difficulties wholesalers commonly waste time and money encountering, says Philippe Gratelle, Sage Solutions Consultant.
“These Australian companies are now operating across borders so you have to have a system – rather than multiple systems that may not be connected or integrated which creates fragmentation of information,” he says.
“You want to have one system which has the ability to handle multiple tax legislation and languages, in order to be useful in that foreign country.
“The other aspect is currency. You have to be able to import and export trade in multiple currencies and keep accurate records.
“Not everyone uses BAS statements and English to function.”
In an effort to control the quality of goods being imported from overseas and drive down costs, many Australian wholesalers have set up offshore offices. These companies stand to gain a host of benefits from a single system that manages everything from inventory to purchasing.
“Traditionally manufacturing has left Australian stores so it means sourcing is a very important part of what a wholesaler is now doing. A lot of the manufacturing has found its home in Asia which means as a wholesaler very often you will need to have local representative in China or somewhere in Asia who will be your buying officer and also your quality assurance officer,” Gratelle says.
“It means that sometimes as the wholesaler grows into their relationship some of them take more and more control of that production. So originally it might just be sourcing, then it’s sourcing the ingredients or components; then it can expand into buying the components and owning them and passing them to factories.
“So suddenly you have a growing local operation and you need proper systems in place to handle the training you do on the ground in China, for instance.”
But leaping cross-border complications is not all a business management solution will do. It will also capture massive amounts of important information gained from customer orders. It will track and sort orders by product and by region, then analyse that data to enable companies to identify seasonal trends and patterns. Armed with this valuable intelligence allows teams to make better, well-timed decisions to maximise sales and cut back on unnecessary costs.
“Gut feel is good for a business but, when it gets to a particular size, you need insights into what it is that you’re really doing, what things are working really well, and what things are not working so well,” Gratelle says.
Transitioning from an ERP can take anything from four months to one year, but the rewards are worthwhile.
“Obviously you need to put more information in, but you get so much more in terms of analysis,” Gratelle says.
“It is an undertaking and it needs management buy-in. So if the owner or some of the senior managers are on board with the project and leading it, then it has every chance of success.
“It’s a cultural change as well. There are things that companies have probably done on piece of paper or Excel spreadsheets that will find their way in a more structural manner in a proper business management solution.”
Superseding outdated software with a faster and more flexible business management solution that is scalable also allows a company to grow without the need for continual system upgrades.
All of this enables wholesalers to have the right products on the right shelf at the right time.