Research and analysis

Use of IT systems by UK businesses for managing supply chains

Published 19 October 2023

Qualitative research with traders and intermediaries exploring the use of IT systems and software for managing supply chain information.

HM Revenue and Customs (HMRC) Research Report 726.

Research conducted by the independent research agency Ipsos between February and March 2023. The findings in this report reflect the attitudes of participants at the time it was conducted. Prepared by Ipsos (Amrita Sood, Alice Haywood, Kyle Morris, and Aamina Oughradar) for HMRC.

Disclaimer: The views in this report are the authors’ own and do not necessarily reflect those of HMRC.

Acknowledgements

Ipsos would like to thank all of the traders and intermediaries who participated in the research. We greatly appreciate the support of HMRC in explaining key processes and sharing their expertise throughout the project.

Glossary and abbreviations

This report uses terminology and abbreviations that are explained below.

Term	Definition
Community System Provider (CSP)	Community System Providers (CSPs) are commercial entities that directly interface with HMRC border systems including Customs Declaration Service (CDS). They provide community network services to specific port and airport communities of which HMRC form a part, along with other government agencies and commercial logistics entities such as freight forwarders, shipping lines, temporary storage facility operators and haulage companies.
Custom Management system (CMS)	A system that enables businesses to oversee all aspects of customs processes such as imports, exports, transhipments, and transits electronically and in accordance with relevant legislation.
Customs agent or broker	Customs agents or brokers complete declaration forms on behalf of traders importing and/or exporting goods, ensuring goods moving to and from the country are accurately declared for customs. They do not primarily deal with the physical movement of goods.
Customs declaration	The process required in order to notify HMRC of a particular assignment of goods being either exported out of the UK or imported into the UK.
Customs Declaration Service (CDS)	HMRC’s computer system for managing customs declarations, which is replacing CHIEF (see below) as the main way for traders and intermediaries to interact with HMRC as of 2022.
Customs Handling of Import and Export Freight (CHIEF)	HMRC’s computer system for managing customs declarations. CHIEF is being phased out over the course of 2022 to 2023 and replaced by CDS.
Customs intermediary	Most traders hire a person or business to deal with customs on their behalf. Options for intermediaries include freight forwarders, customs agents, brokers, hauliers or express operators.
Customs software	Customs software are IT systems used to allow an authorised user, for example an authorised trader or intermediary, to submit declarations into HMRC.
Customs Warehousing	Allows traders to store goods with duty or import VAT payments suspended. Only warehouse keepers authorised by HMRC can run a customs warehouse.
Electronic proof of delivery (E-POD)	A digital format of a traditional paper delivery order or delivery note.
Freight forwarder	Freight forwarders facilitate the movement of goods from between countries and can also be known as ‘shipping agents’. They cover the movement of goods via all different mediums: road, rail, air, and sea. They help traders to move goods directly (where they have their own fleet of vehicles) or indirectly (where they contract haulage operators or shipping lines to move goods).
Freight management system (FMS)	A system that enables the user to oversee procurement and management of shipping services.
Goods	Tangible products such as books, clothes, tools etc.
Haulier	Hauliers deal mainly with the physical transportation of goods.
Import(ing) / export(ing)	The movement of goods or services from one country to another. This research focused purely on goods as customs declarations are not required for services.
In-house	When customs intermediaries or traders complete declarations themselves.
Internet of Things (IoT)	Network of devices or systems that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet.
The New Computerised Transit System	A system of electronic declaration and processing that traders must use to submit Common Transit declarations.
Outsourcing	When services and or operations, such as filling in customs declarations, are fulfilled by a hired third party.
Qualitative research	This involves collecting and analysing non-numerical data (for example, through an in-depth interview) to understand opinions or experiences.
Supply chain systems	IT systems that help manage supply chain information, including for the purposes of managing business processes, stock levels, inventory and customer information. These systems are sometimes referred to as Enterprise Planning Resource Systems (ERP), Warehouse Management Systems (WMP), Inventory Management Systems (IMS) or, for intermediaries, Customer Relationship Management system (CRM), Freight Management Systems (FMS) or Customs Management Systems (CMS). Some of these functions may be provided by in-house systems or by commercial software products. Our research findings on the use of terminology around supply chain systems are discussed in further detail in this report.
Trader	Business which imports goods to the UK or exports to other countries. Traders are categorised by size according to the number of employees, as follows: Large Trader: 250+ employees. Medium Trader: 50-249 employees. Small Trader: 10-49 employees. Micro Trader: 1-9 employees.
UK Single Trade Window	The UK Single Trade Window will provide a simplified gateway where traders and intermediaries will be able to meet their border obligations by submitting information to Government once and in one place.

1. Executive summary

1.1 Background and research aims

Improved access to supply chain data has been set out as a priority of the UK’s Border 2025 Strategy and the UK’s Single Trade Window. It is thought that considerable supply chain data is held in systems used by businesses to help them carry out their day-to-day operations. Greater insight into this supply chain data would enhance government oversight of goods crossing the border, leading to reduced disruption for businesses, due to more targeted physical checks. Sharing this data with government via these systems could be used to fulfil border obligations, including customs declarations, reducing the administrative burden experienced by businesses.

HM Revenue and Customs (HMRC) commissioned Ipsos to conduct research to better understand the experience of traders and intermediaries using such systems, or the reasons why they do not, and how businesses would feel about sharing data held on these systems with government. Ipsos also researched businesses’ understanding and use of Internet of Things (IoT) devices, which are a source of supply chain data feeding into the systems used. More specifically, the research aimed to understand:

• what systems are being used by traders and intermediaries to manage information across the supply chain?

• what terminology is used when referring to the different systems used to manage supply chains?

• what are those not using these systems doing to manage supply chain information instead and what are their future plans?

• what IoT devices are in use and for those not using them, what do they expect their use might be like in future?

• how open are traders and intermediaries to sharing data from these systems with government for the facilitation of trade?

1.2 Methodology

The research involved 80 in-depth interviews with traders and intermediaries, which took place during February and March 2023. Traders included UK businesses who imported goods to the UK or exported goods to other countries. Intermediaries included were UK businesses who provided freight forwarding, customs and haulage services. Sampling quotas were applied to ensure representation of both users and non-users of supply chain systems, a range of business sizes and sectors, as well as use of IoT devices, volume of trade, and means of transport. A detailed breakdown of the research sample is provided in Annex 1.

1.3 Key findings

Terminology used to describe systems

No single term was used to describe supply chain systems among traders and intermediaries. Within businesses, systems were often referred to either by the brand name of the system itself or by the function they served. Alternatively, they were referred to by the type of information they managed, such as freight management systems, customs clearance systems or warehouse management systems. Not all businesses saw themselves as having a supply chain or used this term to define the process by which their goods reached their customers.

As a result of this uncertainty, some participants were initially misidentified during recruitment as users or non-users. For example, users of systems such as accounting packages had classed themselves as users during recruitment, although the interview revealed that they were not in fact using these systems to track supply chain information. Similarly, some had identified themselves as non-users although it became clear during the interview that they were in fact using software systems to track supply chain information. As these cases emerged and to overcome any ambiguity, a working definition of the minimum functions of a system was developed. Participants were reallocated accordingly to user or non-user groups.

When interviewing participants we defined supply chain systems as any software or platforms, or systems that are bespoke to a business, which help to manage and keep track of supply chain information and cross-border trading. We excluded from this definition more generalist office software such as office applications, accounting packages or e-commerce software.

Use and choice of systems within businesses

Traders used a wider range of systems than intermediaries, despite intermediaries managing a wider range of information across the supply chain. Traders often used enterprise resource planners (ERPs) or warehouse/inventory management systems (WMS/IMS), sometimes in conjunction, and sometimes alongside a range of other systems. Intermediaries, meanwhile, typically used freight management systems (FMS) and customs management systems (CMS). Both groups tended to initially adopt systems to address specific emerging business needs. This led to several businesses retaining what they described as a legacy system. Having a well-established legacy system that partially met the needs of the business (for the purposes of managing some supply chain information) was a further disincentive to change, as any new system would need to either fully replace this or to work effectively alongside it.

Role and benefits of systems within businesses

Systems provided functions that were central to the operations of the businesses, and often led to increased efficiency, productivity, and decision-making. However, they were thought to be expensive, and traders at early stages of their growth were often unable to access these benefits due to cost. Such traders would prefer cheaper, more scalable and modular systems to be available to better meet their needs. Traders typically used systems to record information on sales, stock, and orders. Systems used by intermediaries tended to record data on transit such as the destination, shipping method, and goods status.

Key challenges around implementation of systems

The main challenge faced by those using systems was in the initial transition to starting to use them in the business. Most notably, migration of data from systems previously used to manage a range of business process to new, often cloud-based, systems to manage data across the supply chain. This migration process was seen as complex, resource-intensive and expensive, with many businesses struggling to handle this. For businesses considering a new, replacement system, the prospect of undertaking such a migration with limited access to expert support from internal specialists or external consultants was off-putting.

Businesses not using systems

Not all non-users knew of the existence of supply chain systems or understood how it could help a business. A common barrier to the use of systems was the existence of entrenched habits and processes – businesses were often used to existing procedures and legacy systems. There was significant concern among some businesses that bringing in a dedicated management system would incur both direct and indirect costs. This was a particular issue for smaller businesses at an early stage in their growth. For many non-users, there was a perceived lack of a need for change, as existing processes met their current needs and allowed them to focus on the day-to-day running of the business. What is more, low awareness of these systems meant that many businesses not using them did not have a clear sense of how to begin the process of investigating potentially appropriate solutions. The lack of a clear definition and name for the systems meant that they could find it difficult to research potential options online.

Perspectives on future use of systems

Businesses not using supply chain systems in many cases did not have concrete plans for implementing them. Nonetheless, most were open to the idea of doing so in the future. They saw them as the sort of systems that they could imagine implementing once their business had reached a certain size and level of complexity – and once their concerns about the potential time, cost and upheaval of installing a system would be offset by the efficiency savings they offered.

Current and future use of IoT devices

The terms ‘IoT devices’ or ‘Internet of Things devices’ were largely unknown. However, there were much higher levels of awareness associated with specific devices, such as geo-location devices, smart seals, and temperature sensors. Only 6 interviewees, mostly hauliers, had made use of IoT devices, including electronic tags, and geolocation devices. There was an assumption amongst non-users that the major users of IoT technologies were intermediaries – and indeed, both large intermediaries in the sample used this technology. Typically, those that were not using devices themselves mentioned they thought these kinds of devices were relevant to sectors other than theirs, such as the retail sector. Another barrier to adoption was low knowledge, with most assuming that devices would be costly to implement. Businesses assumed that future drivers to adoption would be either competitive, where customers demanded use of devices, or legislative, if there was a need to use IoT devices to comply with government requirements.

Perspectives on data-sharing with government or HMRC

Traders felt comfortable with the idea of sharing information directly from their systems with government for border purposes such as customs declarations. Most felt they already shared data extensively and had nothing to hide. However, intermediaries and some traders worried that government might not be fully prepared to support traders to provide the quality of information needed. They wanted reassurance on a number of factors. First, that any change would be adequately resourced within government, particularly in terms of businesses’ access to advice and technical support from expert staff. Second, that requirements around declarations would be clear to that they could be easily understood. Finally, that expectations placed on businesses in the early stages of the change would be realistically achievable.

2. Introduction

2.1 Research context

Systems used by businesses to manage their supply chain operations are increasingly important in providing digital services for the processing of cross-border trade by traders and intermediaries. At the same time, while take-up may still be low, related technologies such as artificial intelligence, the Internet of Things, automation, and sensors are starting to transform the way businesses manufacture, maintain, and distribute new products and services.

Together, these systems can help businesses manage the different steps in supply chains in a more agile way, such as procurement, planning, product or service creation, order fulfilment, order tracking and order management. As a result, they potentially contain a lot of relevant information for government. For example, they may contain data which can be used to fulfil border declaration requirements, as well as provide greater insight beyond what is provided in these declarations, which can be useful for risking.

Improved access to supply chain data has been set out as a priority in the UK’s Border 2025 Strategy and the Single Trade Window, to which the government has committed £180 million. But a number of barriers mean that many businesses have yet to invest in these systems.

2.2 Research aims

HMRC needs to develop its understanding of how traders and intermediaries are engaging with these systems in practice, what the barriers and motivators for use are, and how they would feel about sharing data held on these systems with government. It has commissioned research to bring this to light.

More specifically, the research aimed to explore the following themes:

1. what language do traders and intermediaries use to describe supply chain systems or IoT devices?

2. what systems and devices are used by traders and intermediaries? What is their functionality? What data is collected and stored on those systems?

3. what is the ease of usage surrounding the systems and devices?

4. are there any benefits to using these systems or devices? Are there any barriers? Why would traders and intermediaries consider using different systems or devices?

5. how are traders and intermediaries managing trade information if they are not using these systems or devices? What are any of their future plans?

6. what would make traders and intermediaries use these systems and devices? In what ways could these systems or IoT devices be useful to them?

7. what are the views of traders and intermediaries on sharing the data that is collected by those systems with government? To what extent do they trust government with this data? Would there be a situation where traders would willingly share data with government in relation to goods moving across the border?

2.3 Methodology

The research included 80 in-depth interviews with traders and intermediaries, each lasting around 60 minutes. Interviews were conducted via telephone or on Microsoft Teams and took place between January and April 2023.

Traders included UK businesses importing goods to the UK or exporting goods to other countries. Intermediaries included UK businesses providing freight forwarding, customs and haulage services. A total of 50 interviews were conducted with traders, 34 of whom were users of supply chain systems; and 30 with intermediaries, 26 of whom were users of supply chain systems.

Sampling quotas were applied for both the trader and intermediary samples to ensure inclusion of key groups within the research. A full summary of the sample and breakdown of quotas is provided in Annex 1. For both traders and intermediaries, quotas ensured inclusion of users and non-users of supply chain systems; users and non-users of IoT devices; a range of volumes of trade; and different means of transport. Amongst traders, quotas were applied to ensure a minimum target of 5 traders from the agricultural, fishing, or forestry sectors. Trader quotas also ensured inclusion of a spread of other characteristics including those who self-declared, as well as both importers and exporters.

The exploratory nature of the research meant that a qualitative approach was deemed most appropriate. In-depth interviews were conducted to enable the research to explore nuanced perspectives and to comprehensively understand a diverse range of experiences and perceptions. As this was a qualitative study, it did not use a representative sample of UK traders and intermediaries. Participants were recruited by specialist recruiters using a screening document. The sample for the research was sourced in a number of ways, including from HMRC-supplied data, existing samples developed by Ipsos for other HMRC studies, and via free-finding traders and intermediaries from publicly available databases.

Interview outcomes were analysed thematically based on the study objectives and key issues emerging from the interviews. Interview data was recorded in an analysis grid, and key themes were identified during extended analysis meetings between the Ipsos project researchers. The HMRC project team also attended an interim debrief on the project findings.

2.4 How to read this report

Interpreting qualitative findings

Due to the qualitative nature of the methodology, findings should be interpreted within the following limitations:

• insight cannot be presented in percentage or statistical terms, due to the open-ended nature of discussions with traders

• whilst the sample size of the study is robust enough to give a good understanding of the common experiences of the businesses interviewed, findings should not be interpreted as statistically representative across the population of traders or intermediaries

• findings from this report reflect the experiences most commonly raised throughout interviews with traders and intermediaries

Verbatim comments from participants

Verbatim comments have been included in this report to illustrate and highlight key points and common themes. Where verbatim quotes are used, they have been anonymised and attributed with the following characteristics:

• role of participant – trader or intermediary
• size of business – micro, small, medium or large
• use status of supply chain systems – user or non-user

On being recruited, participants were asked to classify themselves as either a user, or non-user, of supply chain systems, having been read a description of what was meant by these systems. Ipsos’s classification of each respondent as a user or non-user in most cases follows this self-description. However, there was not always a clear dividing line between the 2 groups, and in some cases during in an interview it became apparent that some participants had misclassified themselves. In these cases, Ipsos reclassified participants to the category that seemed to better match their circumstances.

Use of terminology

In this report, we have adopted the following terminology to ensure that a distinction is made between supply chain systems in general, sub-categories of supply chain systems, and other types of systems, as follows:

• the term ‘systems’ used without further specification denotes supply chain systems in general

• where the report discusses particular sub-categories of supply chain systems, such as freight management systems or warehouse management systems, this is specified

• where the report discusses other types of systems operating within the business, not linked to managing the supply chain, this is specified

Please see the glossary for more details of the terminology used in this report.

References to named suppliers of supply chain and other systems

During the research interviews, participants mentioned the names of specific providers of systems. To ensure compliance with The Market Research Society code of conduct and participant expectations, a limited amount of identifying information has been redacted from this report. This includes the names of systems, software packages, and any specific devices used by participants. This also applies to information such as the business’ or participant’s name, titles, and any other such identifying information. To ensure readability, identifying information has been redacted and substituted with generic reference text (indicated by the use of square brackets).

3. Defining supply chain systems and their users

Chapter summary

This chapter briefly explores how users and non-users of systems which manage supply chain data were defining this technology when recruiting participants for this study. It also summarises some of the challenges encountered in applying a single definition across the board.

3.1 Defining supply chain systems

When participants for this research were recruited, they were asked whether they were currently using software or systems to manage their supply chain. Supply chain systems were defined as follows:

‘any software or platforms, or systems that are bespoke to a business, which help to manage and keep track of supply chain information and cross-border trading.’

We also excluded more generalist office software such as office applications, accounting packages, and e-commerce software.

Based on this definition given to participants by the recruiter, they identified themselves as either a user, or a non-user of supply chain systems and were selected for participation in the research accordingly. Other profile quotas were also applied when selecting participants, which are detailed in full in the appendices to this report.

3.2 Challenges in defining users and non-users during recruitment

It is worth noting that participants did not always find it easy to determine whether they were a user or non-user of these systems. As a result, some of them misidentified themselves as a user or non-user. This was often because they were unsure what was meant by ‘supply chain information’, or because they did not know whether their own systems should be considered as management software or platforms.

Based on their subsequent answers in the interview, they were then re-classified by Ipsos interviewers. In total, 10 non-users (7 traders and 3 intermediaries) were subsequently re-classified as users. In the same way, 2 traders who had initially been categorised as users were re-classified as non-users following the interview.

4. Users of systems

Chapter summary

This chapter explores the experiences of users of supply chain systems. It discusses which systems were being used within businesses and by whom. It covers the terminology used to describe systems and their functionalities and perceived benefits. The chapter also details the challenges associated with their implementation.

4.1 Profile of system users

The initial trigger for both traders and intermediaries to become a user of a system was often based on an assessment about business scale and complexity, and relative cost. Generally, traders and intermediaries felt that a system was worth bringing in once the cost of the system became cheaper than hiring junior staff to perform the equivalent process.

Smaller businesses, including both traders and intermediaries, tended to use basic or upgraded off-the-shelf system packages to keep costs down. Only larger companies were usually able to afford having either in-house developers or a third-party provider build them a bespoke system.

4.2 Terminology used

There was very little consistency in how traders referred to these systems. The research found that instead of using the term ‘supply chain system’, businesses tended to use more specific names that described the specific type of information or process being managed, rather than supply chain management as a whole. Where they used more general terminology, they used terms such as ‘business integration software’, ‘integrated management system’, ‘integrated business system’, the ‘internal system’ or just used the name of the system itself.

Intermediaries, in contrast, tended most often to refer to the primary functions of these systems – for example, a ‘customs declaration’ or ‘customs clearance’ system, or a ‘freight management’ system ^{[footnote 1]}.

4.3 Functionality of systems

The functionalities of systems depended on whether they were being used by traders or intermediaries, and which type of system had been implemented.

Traders

The choice of software system often depended on the needs of the business and its stage of development. Some smaller traders with more complex supply chains found it difficult to find an appropriate system provider.

There were 2 main types of systems used by traders – warehouse/inventory management systems (WMS/IMS) and enterprise resource planning systems (ERPs). However, these systems encompassed entire workflows and many subprocesses. These individual subprocesses were regarded as outright systems themselves. Some examples mentioned include a ‘project management system’ used for customer sales, as well as an ‘invoicing system’ that was used to manage invoicing and finance. Traders who used these tools often did so because they were cheaper and they did not require the extra capabilities provided by the larger systems.

System Type	Typical uses
Warehouse/Inventory Management Systems (WMS/IMS)	Typically used by traders to help manage inventory, orders, warehouse operations, reporting, and integration with other systems. These were deemed most appropriate for micro, small and medium traders with a simple more streamlined supply chain.
Enterprise Resource Planning Systems (ERPs)	Typically used by medium, large and very large traders, to manage and store customer details, purchasing orders, refunds and complaints management, delivery status, sales performance and analysis, asset tracking and HR/staff information. For traders with an ERP system, other systems centred around the ERP, including a Warehouse Management System (WMS) if in use. These systems were thought to be the most expensive.

“It [our ERP] has had a huge effect on efficiency. Without the system integrating everything, we would probably need another 10 to 15 people to process stuff. It also allows us to understand what customers want quickly, so we know that information before our competitors know about it. Therefore, it means we are producing what customers want much quicker and much more responsively than we would otherwise.”

Trader, medium, user

Intermediaries

There were 2 systems primarily used by intermediaries - customs management systems (CMS) and freight management systems (FMS).

System Type	Typical Uses
Custom Management Systems (CMS)	Used to automate customs documentation, process declarations, flag urgent issues, provide customer access, and share documents electronically. CMS allow streamlined processing of customs declarations once linked to CDS.
Freight Management Systems (FMS)	Used to choose and negotiate the best rates, plan the most efficient routes, improve the insights into movements (with live information), and allow for automated documentation. Real time information about the movement of goods and electronic proof of delivery (E-Pod) were beneficial for speeding up the processes of quotes and invoices.

“We only use the system for part of what it can do – so we use it for the start and finish of a customs clearance, whether that is import or export. I do air, sea and road clearance. So the admin staff will key in various records. The system then creates a document for each cargo, including the manifest of what is in the cargo. The shed at the border will then create a record on their system and automatically send it to our system electronically. It’s all linked up and makes it very easy to clear customs. If I didn’t have this system, I would not be able to do customs clearance, it’s as simple as that… it’s a vital part of the business.”

Intermediary, micro, user

These 2 systems were used by those who had a core service in customs and all those moving goods, respectively.

A wide range of different types of data was captured by the systems used by both traders and intermediaries. A fuller list of the data types mentioned by interview participants is included at Annex 2.

4.4 Use of supply chain systems within businesses, and how they were set up

Traders

Traders using these systems tended to use multiple systems but had one central system that they used to maintain information about their supply chain. While these might not have all the features of a WMS or ERP system, they usually delivered the core aspects of both. In some cases, software designed to handle one element of the business’s systems, such as invoicing, had been adapted to mimic some of the features of a supply chain system, such as customer relationship management or warehouse management.

Typically, where traders had both systems in place, the WMS/IMS would connect into the ERP to share relevant data. However, the extent of this integration varied significantly across traders depending on the complexity of their internal processes, and the level of skills available among staff. One example was a piece of software used by a business within the fashion industry that could access data such as product order numbers, purchase order dates and expected delivery times from the widely used [software provider].

Traders often had other non-supply chain systems such as HR or payroll systems, accounting packages or project management tools. While these were not necessarily fully-featured, and should not be considered as supply chain systems in their own right, some of them had the ability to interface and exchange data with ERP/WMS supply chain systems. This was particularly the case with finance software, with respondents mentioning [accounting packages] being able to access data from their ERP or WMS. However, in other cases interconnectivity and compatibility were more patchy, this was particularly prominent in the case of newer e-commerce tools.

“We have an ERP system […] It covers everything from order entry to purchase orders, to everything to do with the supply chain, finance and manufacturing, and obviously for our friends in quality, everything, all the batch traceability is held in the system.”

Trader, medium, user

Access permissions meant that staff typically had limited access to the system, with permissions varying depending on the business’ policy and staff assignment. Whereas some companies allowed all employees to access the entire system, others had more stringent requirements. Access in some businesses was granted on a needs-must basis, with role and job requirements dictating permissions. This was also seen in businesses where there were multiple supply chain systems, where staff might be granted access to one system but not another. Externally, access was typically granted to key partners such as customs intermediaries allowing them limited access on a needs-must basis.

Intermediaries

Intermediaries, meanwhile, often had 2 key supply chain systems in place, primarily a freight management system and a customs management system. They tended to see both as being central to their business operations.

While these 2 systems were seen as important, it was rare that they connected with each other. This meant that agents often had to complete processes using the 2 systems independently. To move between different systems, users utilised unique identifiers, such as an order number, a declaration number, an email address, or another piece of uniquely identifiable data. Moving between systems in this way was sometimes a source of manual data entry error, although some intermediaries had tools in place to detect errors that arose through double-keying, where multiple people enter the same data independently. Some mentioned that their systems typically flagged up errors they found and would not let the user move forward before they had been eliminated.

Beyond this, intermediaries tended to mention using accounting software, and most reported that their supply chain systems connected well with it. However, supply chain systems themselves often also included advanced features that allowed them to manage financial processes like invoices and purchase orders. Respondents mentioned a number of systems with the capacity to interface with the Customs Declaration Service (CDS), although not all were able to manage this element of the customs process.

“We use a piece of software from a company called [software provider] … We’ve been working with them for 2 years now. They’re a platform provider, because what they do is they interface us into CHIEF, CDS and NCTS (New Computerised Transit System).”

Intermediary, small, user

4.5 Perceived benefits of using systems

The implementation of supply chain systems appeared to bring several benefits to businesses.

Traders

For traders, it brought improved efficiency and cost reductions – for example, knowing the precise delivery time of a component or item could mean reduced waiting time for goods for customers, and less storage space for inventory required. Businesses were able to be more agile, and could provide better customer service, with customers being able to receive more accurate and timely updates on the status of their order. Traders were also able to easily provide the entire history of their interactions with a particular customer to their entire workforce.

In addition, with the advent of systems using cloud technology, businesses can scale their operations, access the systems remotely, save on hardware and licensing costs, and benefit from better security due to the requirement of two-factor authentication. Businesses that had most recently invested in supply chain systems tended to be using cloud-based systems.

“It took time to get used to, obviously. But now we can do a lot of stuff ourselves, whereas on the old system, if we wanted to get a calibration report, we’d have to ask the lab to do it, and then we’d have to wait for the lab to then have the time to get it done and send it to us to then send it to the customer. Now it’s either we can just download it ourselves, or we can just give a customer a log in and they can do it themselves. So it’s almost like you’re cutting out a person in between.”

Trader, large, user

Intermediaries

Intermediaries also experienced specific advantages such as improved supply chain visibility, better collaboration with hauliers and carriers, and improved compliance with customs obligations. They were able to identify and address potential issues faster by having better visibility of the status of their operations, and to save costs by minimising the risk of delays.

Customs management systems received alerts provided by CDS, Border Force or those moving goods. This meant that issues could be resolved quickly, while freight management systems enabled easier rate management, route planning, and document automation. The adoption of these systems allowed businesses to digitise and automate tasks, reducing the time spent on manual tasks, and improving the accuracy of data. As with traders, the reduction in staff time associated with these tasks presented cost savings and efficiencies for intermediaries.

“Technology in our industry is quite outdated, the [intermediary sector] needs a bit of modernising, and not everyone’s for it. But there are so many benefits to having the system. Even simple things like it’s cloud based, so I can just get onto it on my phone, even if I’m at home and one of my team message me and says they can’t get an entry through and I don’t have my laptop. But I can get my phone out and see. Our old system was not cloud based, so you had to login to the VPN to access the server, and we also operate on multiple sites, so it just saves time in itself as it saves everything down from multiple areas in real time.”

Intermediary, small, user

4.6 Challenges of implementing and using systems

Businesses implementing these systems experienced challenges throughout the process, but the beginning was usually the most difficult stage. The process of bringing in a new system was described as time-consuming, resource-intensive, and complex. However, the ease of the process was affected by the size and complexity of the business and the level of resource available.

“It was very costly to install, and we struggled to make some of our processes fit into it, even though we went for a bespoke version. I know when we transitioned individual elements of the business, there were issues. Something failed and we couldn’t supply fresh food on a certain day or couldn’t move flowers on a certain day. Basically we’ve made it so bespoke, we don’t know how to integrate it to everything else.”

Trader, large, user

Steps in system implementation

Typically, there were 3 core steps involved in implementing a new supply chain system into a business, with each step involving different challenges. These core steps are as follows:

1. planning to bring in a new system often took months, usually requiring a separate team to help define the business’s requirements, create a timeline and budget for implementation

2. implementation often involved a system provider or software consultant supporting the internal team. Data needed to be moved or converted from a previous system; the new system then needed to be tested, and staff trained in the use of it. This was a particularly challenging step if it required changes to business processes

3. support was the most intense part of the process, beginning immediately after the system went live within the business and lasted for 2-3 months. At this stage, a business would liaise with the software provider to troubleshoot problems and make adjustments as required

Changing a system once implemented

Once a new system had been implemented, businesses tried to avoid changing the entire system again at all costs, due to the large amount of time and money spent on the process of implementation. These costs were not only those associated with the initial investment and introduction of the system within the business, but those associated with maintenance, ongoing training, costs associated with remedying erroneous inputs into the supply chain system and potential staff attrition caused by its implementation.

Businesses would tend to stick with a new system even if challenges were encountered with it, or it was found not to fully meet the needs of the business. Typically, they would have gained sufficient additional benefits from the new system that they found ways to work around any problems; unresolved business needs would be addressed by either a system add-on, or adjustment.

Only a very few traders or intermediaries could recall any instance of their business removing a system after it had been implemented. This had only happened when a system turned out to be significantly worse than the process it had replaced, where staff found the system to be unusable even after training, or in 2 cases, where the system had been affected by a large-scale data breach that threatened corporate reputation. In these circumstances, the business would generally revert to their previous setup.

“There’s no plans as far as I’m aware for an alternative system. I think at the moment that would break people. To be honest I can’t see us changing, in my lifetime anyway. I’m not sure the people have the energy to do it again because it takes a lot of energy. It takes a big push.”

Trader, medium, user

System interaction and connectivity

Poor connectivity between different systems was seen as an unavoidable challenge. Many businesses’ first investment was in software to handle finance and invoicing; in some cases, software such as an accounting package might be used to manage stock levels. While traders with these kind of smaller software packages outside of their supply chain system generally found they could link to a larger ERP or WMS where it was beneficial to do so, connectivity between 2 large supply chain systems such as an ERP and WMS, or a CMS and FMS, was more difficult due to their size and complexity. Lack of interconnectivity between FMS and CMS was a particularly widespread issue.

The time implication of this poor connectivity for any individual task was not necessarily seen by traders as a major issue, with one trader suggesting it resulted in around an extra 5 minutes for an administrative task. Traders would use a unique identifier for records such as an order or declaration number to allow them to move between systems. However, the cumulative burden of this extra time could be significant, and improved integration and connectivity between large systems was something that many wanted to see developed in future.

“As a management team, in an ideal world, you would want one system, one platform. The challenge you have is the software. You might think that because you’re using lots of different varieties of different software packages, and because you’re not really relying on one particular system where you might have to be tied in for, say, 5 years via a contract like we were with [our old ERP], that’s fine. But the only problem is you’re trying to get all these systems to talk to one another, and that’s probably the biggest challenge that businesses have.”

Trader, large, user

Overall, feedback on ease of use of these systems was mixed. Participants were generally relatively satisfied with their functionality, but sometimes mentioned that the complexity of the businesses they managed made them harder to engage with, for the average user. Apart from frustrations over interoperability, elements of the software had sometimes needed re-work to improve usability. Some more senior participants – those involved in the management of the business – commented that they tried to avoid using the system if possible, saying that it was set up more to assist those at an operational level within the business.

“Our lead times have been cut down - where they used to be 10 days, our lead times are now 3 days. It took us 15 minutes to dispatch an order on the previous system. Provided it is in stock, we can pick, pack, and dispatch an item in 30 seconds. So that’s a huge saving in cost… We can analyse everything from sales to purchasing, right down to what quality of product we received, who specified the order, and where it came from.”

Trader, large, user

“It’s definitely more complex to use – it causes more issues, it’s more likely to go down and have problems. Some restrictions in it make people’s jobs more difficult. If we need to make a change to an order and it’s been submitted to Spain, it can take 3 hours to get IT involved.”

Trader, large, user

But overall, despite the challenges, the problems these new systems caused were not seen as fundamental, and users considered that the systems were worth having on balance.

5. Businesses not using systems

Chapter summary

This chapter focuses on the perspectives of those traders and intermediaries not currently using supply chain systems. It explores the profile of those businesses not using systems and what solutions they are using instead. It covers their perspective on these systems and their benefits, the challenges and barriers that this group faced or anticipated in trying to implement a system and their overall reasons for not implementing one.

5.1. Profile of non-users of systems

Traders and intermediaries not using systems to manage their supply chains encompassed a range of different sectors and circumstances.

What influences non-users

Awareness of supply chains systems was a key influence among non-users. Not all non-users knew of the existence of such systems or understood how they could help a business. But among non-users of systems, a number of common factors recurred, often in combination. Non-users tended to be influenced by:

1. habit – businesses were often used to, and comfortable with, existing procedures

2. cost – there was significant concern among some businesses that bringing in a dedicated management system would incur significant costs. Participants anticipated that CEOs might veto an expensive investment, despite its benefits

3. partial supply chain systems – many businesses already had partial systems in place which delivered some, if not all, elements of their business requirements ^{[footnote 2]}.

4. current size and level of turnover – businesses not using these systems tended to be smaller and less complex in their structure, and were not necessarily intending to grow

5. lack of time – this was clearly a major barrier to implementing a new supply chain system, particularly for small businesses. This especially applied to the time required to research, select and procure a new system, but also the expected time required to bed it into the business

“For a normal business that doesn’t operate at the margin it might be a good thing, but it is a waste of time for me because it doesn’t give me the VAT information that I need unless somebody tailors something for this type of business.”

Trader, Micro, non-user

“Even if you said to me, we could get rid of a few heads using this system, cost is the consideration…I know my boss would say ‘No that is too expensive.”

Trader, medium, non-user

“It’s also time-consuming, because it takes me out of my everyday role to sit with somebody and write something and design something. Then I’ve still got my other work to do as well. So, if you said to me you’re going to have a new database and you’re going to start designing it from tomorrow, I think it would bring me a load of stress.”

Trader, small, non-user

Additional concerns identified

Beyond these overarching factors that non-using businesses often had in common, other barriers and concerns were cited:

1. training requirements – the prospect of needing to organise extensive staff training was a disincentive. It could be lengthy, distract from the business’s core activities and provoke staff resistance

2. lack of organisational change expertise – businesses worried that they lacked experience of undertaking this sort of business transformation process

3. system or supplier fit – participants were doubtful that an external solution would fully suit their business, or that an external supplier could understand their business’s needs

4. resistance from key personnel internally – in some cases, and particularly with smaller businesses, the views of owners, or senior staff, who could be resistant to new ways of working

5. resistance from main clients – intermediaries said that their key clients shaped the way they operated to a significant degree. Resistance from them – perhaps because the client uses a different system – could prevent the business adopting a new system – but their support could also be the spur to make it happen

Smaller businesses not using systems

Smaller non-using businesses tend to be relatively early in their stage of business growth, and at a point where they were closely scrutinising all outgoings that may not be associated with delivering their core product or service. 

This group in particular were dissuaded by what they saw as the significant upfront and ongoing costs and time implications for implementing a system, when the potential for greater efficiencies and better decision-making seemed too nebulous.

There was frequently a perception that nothing was driving a need for significant change within their business. Typically, these businesses had developed processes that met their current needs and allowed them to focus on the day-to-day running of the business.

Unless major changes were in prospect such as taking on many more staff, or moving into a different product or service area, or a major structural evolution such as a buy-out or an acquisition, such businesses often saw no compelling reason to change what was already a stable business environment.

Many of these businesses had implemented procedures using office applications or use of specific software like accounting packages for finance-related data. Use of these types of tools was established within businesses and could be adapted as needed to meet occasional or ad hoc demands for greater functionality. Most saw the adoption of a dedicated supply chain system as expensive, and not a financially worthwhile investment for them.

“If it’s a small cost to make our life more pleasant then it would be worth it, but we’re a small business so it might not be worth it. I’m quite happy with how things are now. I doubt if we even get the minimum wage if I’m honest. Not a huge pot of cash to draw on, we keep our costs low.”

Micro, intermediary, non-user

The progression from non-user to user

In some cases, traders’ and intermediaries’ decisions not to use a supply chain system was not an explicit or irrevocable one, and there was potential for some non-users to adopt systems in due course. Non-users were typically at one of 3 stages in the adoption process:

1. mitigation – where businesses were feeling increased pressure but were broadly satisfied with their current systems and processes, often using common office software such as an office package, or accounting package, they tended to be considering increasing the amount of staff time dedicated to managing these issues. This was particularly the case for small and micro businesses

2. investigation – for those that decided they were open to considering these kinds of systems, they might have received demonstrations or tested out trial versions of possible software, sounded out colleagues internally or members of their wider network about a potential change, and might have considered external costs and weighed them up against the potential investment in software. This appeared to be the most common stage for non-users – receptive, but not actively preparing

3. preparation – businesses that had decided to make a change and were further along in their decision-making journey had often conducted more formalised assessments of upfront costs, staff training requirements and potential ways of addressing organisational cultural barriers to adoption

Intermediaries not using supply chain systems

Intermediaries not using supply chain systems were a small and diverse group of specialist operators. They mostly comprised very small-scale, highly specialised intermediaries working in one particular sector. For example, film and music industry logistics, horse transport or transport for humanitarian aid.

Their very small size and long-established status meant they had ad hoc processes for the transactions they oversaw. In some cases, these were paper-based. In others, they used a common office application or made limited use of software such as an accounting package for finance-related data.

Such businesses felt strongly that supply chain systems were for much larger companies. They saw them as expensive, and not a financially worthwhile investment for them. They typically engaged and relied on third party agents to handle customs. They otherwise did not need to exchange information with third parties systematically. 

Only one larger logistics operator did not have a dedicated supply chain system in place. Instead, they used a patchwork of other systems for different functions within the business such as finance, stock control and duty management. Their use of these systems was mostly driven by what clients themselves used. This caused frustration because these systems were not able to ‘talk’ to each other.

However, this logistics operator did not meet increasing expectations from clients, who wanted a system that offered real-time visualisation of shipments. It was not possible to track shipments to their final destination if this was outside the UK. In contrast to smaller operators, this business clearly saw the need for dedicated software, but reported that there was significant internal resistance due to cost.

5.2 Alternative solutions used instead

Businesses not using supply chain systems typically used one of only a few alternative solutions. Most commonly, they made no use of specialist software and instead adapted commonly available office applications, chiefly:

[Office application] – this was the most common alternative used as it had the advantage of being widely accepted, cheap, familiar, and easy to use for collaboration with others via platforms like [office application].

[Cloud based office application] – these were used for similar reasons as [office application] except they had the added benefit that multiple users could access them at once. However, this also led to downsides such as difficulties with version control and data recovery.

Others accessed more sophisticated software systems but were only using certain functions of them in a very limited way, rather than as end-to-end supply chain management solutions. These included the following:

Accounting packages – these were often an early software investment. They often had additional features and modules which managed additional tasks like purchase orders, and also interacted well with other software.

Individual pieces of specialised software – such as software for contract management or software for procurement.

“It’s all pretty simple really. I’ve got an accounting package - [accounting package]- on which I do all my accounts - sales invoices, purchase invoices statements. I manage all my suppliers and I can generate purchase orders to them and give all the instructions I need to give regarding delivery, installation and all of that type of thing. Then I diarise it quite simply. I’m on an [office application] calendar. When it’s due I give myself reminders - when’s this in, when’s that in? What’s happening with this, chase this up, chase that up.”

Trader, micro, user

5.3 Non-users’ perspectives on systems and their potential benefits

Even if non-users did not see an immediate need to put in place a supply chain system within their business, they could clearly see ultimate benefits to doing so:

1. time efficiency – particularly where systems involved automated data collection or would bring together a number of systems, they were felt to be an opportunity to save time on data entry

2. improved accuracy - again, particularly in cases where a system might replace manually keyed-in information, they were felt to be an effective way to reduce the amount of error in business data

3. greater efficiency - particularly as businesses expanded to involve more complex, perhaps international supply chains, a system was felt to allow the business to manage large numbers of products and supplies more efficiently

4. better decisions - businesses saw the value of having more information at their fingertips. For example, traders imagined being able to know in real-time what stock had sold and what to replenish promptly

“Everything that would make my day to day, my job easier and that I could comprehend. I’d be more than open to it, you know.”

Small, trader, non-user

“It’s absolutely critical to have good support. I guess if we had a system that we created it would allow us to work efficiently- overall its vital to use such a system. If it wasn’t for the cost, we would definitely consider it.”

Micro, intermediary, non-user

6. Internet of Things (IoT) devices

Chapter summary

This chapter explores participants’ perspectives on the use of IoT devices in supply chain management. It looks at how recognised the IoT term was, which businesses were using IoT devices and for what purpose, and how those not currently using IoT devices felt about the prospects for adopting them in future.

6.1 How recognised was the IoT term?

Not only were the terms ‘IoT devices’ or ‘Internet of Things devices’ largely unknown, but it was common that participants were unable to guess what these devices might be based on the term. Only a minority correctly guessed these devices might be things like [virtual assistant home technology] or smart bulbs, examples of IoT technology that are more familiar in daily life.

However, once specific relevant IoT devices were described to participants, for example geo-location devices, smart seals and temperature sensors, they had much higher levels of awareness associated with them. Participants across the sample had heard of these devices or come across their use before.

“Do you mean things like, you would put onto a unit or something so it gets tracked? Yeah we’ve got that.”

Large, Trader, User

“The name suggests it will let us do anything… is this another version of Google?”

Trader, Medium, Non-user

6.2 Who was using IoT devices and for what purpose?

The lack of clarity about what the term ‘Internet of Things device’ denoted, and what it encompassed, meant that it was difficult to determine which businesses were indeed using them. While 14 respondents referred to using smart devices of some description (temperature trackers, mould detectors, geolocation tags) only 6 were clear that they were using internet-enabled IoT devices. These were mostly hauliers.

One large intermediary had issued tablets to their drivers and added electronic tags to track the goods they moved, using older in-house repurposed devices. While they recognised the benefits that the devices had brought, such as the ability to track goods, they also experienced issues with device users not inputting data correctly, meaning data had often been deemed untrustworthy.

The other large intermediary shipped larger freight often weighing between 25-30 tonnes. This intermediary tracked all traders and containers with geo-location devices. They noted a range of benefits, including the devices saving them time when sharing updates to customers, giving them greater visibility of goods’ and hauliers’ movements, and enabling agents to support hauliers with their journey by making calls ahead of their arrival to other parties in the supply chain. The only criticism they had was that they felt unsure of where this technology could be applied next or how else it could be used to benefit them.

“As we sell very bespoke pieces of material it is something we are familiar with. We cannot afford to lose or ‘not deliver’ these costly goods therefore it’s a measure we have taken using geo-location tags.”

Very large, Trader, User

“One of the advantages is that it allows you to track trailers almost in live time. Someone used to phone up and ask where a trailer is, you used to have to phone the driver - now you can do that live on the system. You’re not reliant on talking to the driver.”

Very large, Intermediary, User

6.3 Perspectives on future adoption

There was an assumption amongst non-users that the major users of IoT technologies were intermediaries – and indeed, both large intermediaries in the sample used this technology. A number of traders initially claimed to be ‘using’ IoT devices, however upon further interrogation, it became clear it was the intermediaries they had outsourced their freight movement to that were using geo-location trackers instead.

Typically, those that were not using devices themselves mentioned they thought these kinds of devices were relevant to sectors other than their own, such as:

• the retail sector who needed to move temperature-controlled and time-sensitive produce

• those selling high-value goods where extra security might be desired when delivering items to customers

Participants also said that despite the benefits, perceived to be mostly felt by the customer, it was unlikely they would invest in these devices since:

• scenarios which require these devices are already deemed to be using them, mostly fell under the responsibility of hauliers and air/shipping carriers

• very little is known about the devices and their benefits

• it was perceived that users would incur a substantial cost to roll a device out widely enough that the data was worth having

Therefore, those not currently using IoT devices stated that unless either of the following 2 scenarios occurred, it was unlikely they would take action to bring in IoT devices:

• customers begin to shop elsewhere if their trader does not use IoT devices

• intermediaries or traders are compelled by legislative change to use IoT devices when transporting particular types of goods

“They only have trackers on the company vehicles and that is only because our insurance company wants the cars to have trackers on them. That’s the only reason we have trackers.”

Small, Trader, User

7. Data sharing with HMRC

Chapter summary

This chapter explores participants’ views on of sharing supply chain-related data with the government in order to improve cross-border trade – both from the perspectives of traders and of intermediaries.

7.1 Perspectives among traders on data-sharing with government

Participants were presented with a statement about potential data sharing with government, and asked for their reaction:

‘Government is considering simplifying the process around filling out declarations (for example customs declarations). This would be done by accessing pre-agreed sets of data held on these kinds of systems and IoT devices in an automated way, whereby government systems would connect with your existing systems.

This would mean businesses would not have to manually source and populate declarations. Accessing additional data (again agreed with businesses) held on these systems could also help government to improve processes for checks made at the border.’

In response to this, traders often pointed out that they already shared a lot of relevant declaration data with government, so the proposition did not raise immediate concerns. They felt very comfortable sharing information such as commodity codes, product names, origin of goods, weights and quantities.

Traders typically speculated that sharing data could, over time, lead to benefits like reduced internal admin and further simplification of the declaration process and thus to lower costs to the business, both in terms of lowering staff time and fees to use an intermediary. However, these savings appeared to be seen as incremental, rather than potentially transformational advantages since traders had already adapted their processes to the current system. In the short term, however, there was concern about whether the introduction of this could in fact lead to increased burden for staff and greater inaccuracy in declarations. Many traders currently outsourced this task to an intermediary due to a lack of internal knowledge and expertise on how to move goods across the border in line with customs regulations.

“Anything that simplifies customs or that sort of area, I don’t think we’d have a real issue with because it is a bit of a minefield and anything that simplifies it and makes it a lot easier to understand and make the process flawless, yeah I’m sure we’d be open to that.”

Trader, small, user

Traders also had specific concerns about sharing price and customer data, as they were worried about others in the supply chain potentially seeing this information, or worried about whether this would breach GDPR regulation.

“‘It depends what data. It all depends on what specific data we are going to share. If the data they want goes against our GDPR regulations then this of course would be an issue! [We already share information with HMRC for importing, exporting, and tax reasons.] HMRC are happy to have whatever information they already have access to.”

Trader, large, user

7.2 Perspectives among intermediaries on data-sharing with HMRC

All intermediaries foresaw a number of benefits to the proposition, despite some concerns. Compliance could be made easier, with participants feeling that ‘the more data shared with HMRC, the better’. Some wondered whether they would be audited less regularly by HMRC if they were now sharing data more frequently.

There was also agreement that if the proposition worked in practice, it could help to reduce delays at the border with HMRC having access to declaration data in advance. Some had experience of how this kind of pre-emptive access by HMRC to the details of goods being moved was already helping speed up processes at borders.

Those using the main customs management systems also felt confident that their current systems would be able to link with government since they already submitted declarations to CDS in this way.

However, the current context meant intermediaries worried about government’s ability to accomplish such a large change. These concerns included the following:

1. intermediaries referenced the large number of staff that had been recruited into the sector post-EU-Exit to support increased demand on customs agents. Intermediaries showed concern about how HMRC would resource the management of the data they would be receiving under this new proposed system

2. intermediaries reflected on how some customs processes were a lot more complex than others, particularly when comparing different transport methods and types of goods.  Batteries and refrigerants for example were flagged by one participant as needing particular attention, especially if being shipped by air. Another participant shared concerns over the CHIEF declaration linked import and export of animal and plant goods. There was concern about whether staff at government would be able to act quickly enough within these complex systems to ensure the movement of goods are not disrupted

3. intermediaries worried about how this proposition might impact their businesses and the customs intermediary industry as a whole by encouraging traders to submit their own declarations without the support of experienced agents. In interviews with traders, it was unclear whether this would in fact encourage traders to submit their own declarations. Some traders said they would wait to see how easy and hassle-free the new process would be before deciding

“It’s good that HMRC are commissioning this type of work but really what will they do with all this information – they already have access to 99% of it. In my opinion nothing will change.”

Intermediary, Medium, User

8. Conclusion

The following conclusions were identified in the research:

No common terminology used for systems amongst traders and intermediaries

Within businesses, systems were often referred to either by the brand name of the system itself or by the function they served. Not all businesses saw themselves as having a supply chain, or used this term to define the process by which their goods reached their customers. Communications that focus on the specific attributes of individual systems are likely to be more readily understood: the research suggests that greater clarity would be achieved by focusing on specific audiences (traders or intermediaries) or on the primary function of a system – for instance, ‘freight management system’ or ‘warehouse management systems’.

Functionality of systems used are focused on the specific needs of each business

Systems provided functions that were central to the operations of each business. Traders typically used systems to record information on sales, stock, and orders. Traders often used ERPs or WMS/IMS, sometimes in conjunction, and sometimes alongside a range of other systems. Systems used by intermediaries tended to record data on transit such as the destination, shipping method, and goods status. Intermediaries, meanwhile, typically used FMS and CMS.

Efficiency, productivity and better decision-making capacity seen as key benefits of systems

The key benefits conferred by supply chain systems within businesses were seen to be greater efficiency, productivity and a more robust foundation for decision-making thanks to better management data. These benefits were often recognised even by non-users and seen as the type of considerations that become more important as companies grow and become more complex.

Cost was a key barrier to adoption of new systems by non-users

Not all non-users knew of the existence of supply chain systems or understood how they could help a business. There was significant concern among some businesses that bringing in a dedicated management system would incur both direct and indirect costs. This was a particular issue for smaller businesses at an early stage in their growth. For many non-users, there was a perceived lack of a need for change, as existing processes met their current needs and allowed them to focus on the day-to-day running of the business. What is more, low awareness of these systems meant that many businesses not using them did not have a clear sense of how to begin the process of investigating potentially appropriate solutions. The lack of a clear definition and name for the systems meant that they could find it difficult to research potential options online. Usage of systems appeared to be lower among businesses at an early stage of growth, who may not feel they have the need or budget for a fully-featured system. Such traders would prefer cheaper, more scalable and modular systems to be available to better meet their needs.

A key challenge to use of systems lies in the initial transition to using a system within their business

Businesses tended to have brought in systems to address specific emerging business needs, leaving some with partial systems that slowed their transition to adopting a full supply chain system. A common barrier to the use of systems was the existence of entrenched habits and processes – businesses were often used to existing procedures and legacy systems. Having a well-established legacy system that partially met the needs of the business (for the purposes of managing some supply chain information) was a disincentive to change, as any new system would need to either fully replace this or to work effectively alongside. Transition to a new system would involve migration of data from systems previously used to manage a range of business processes to new, often cloud-based, systems to manage data across the supply chain. This migration process was seen as complex, resource-intensive and expensive and many businesses struggled to handle this. For businesses considering a new, replacement system, the prospect of undertaking such a migration with limited access to expert support from internal specialists or external consultants was off-putting.

Little awareness of IoT devices, and take-up appears low except among hauliers

The terms ‘IoT devices’ or ‘Internet of Things devices’ were largely unknown, and only a small number of interviewees had made use of IoT devices. Users tended to be hauliers, using electronic tags, and geolocation devices. Most assumed that devices would be costly to implement, and more relevant to different sectors such as the retail sector. Businesses assumed that future drivers to adoption would be either competitive, where customers demanded use of devices, or legislative, if there was a need to use IoT devices to comply with government requirements.

Little entrenched opposition to greater data-sharing with government, but some concern from intermediaries over impact on business model

There was little evidence of entrenched opposition to more systematic and direct data-sharing with government for border purposes (for example fulfilling customs declarations) through supply chain systems or IoT devices. However, traders hoped that support would be provided to help them deliver the quality of information required, whether through the establishment of a specialised helpline, the provision of sufficiently detailed but accessible technical guidance, or grace periods while the new procedures were established. There were also concerns among intermediaries about the threat that more systematic direct data sharing might pose to their business model.

Annex 1

Participant sample

A full breakdown of the sample for the research is given below.

Table 1: sample breakdown of 50 interviews with traders

Sampling variables	Sub-categories	Number	Sampling Priority
Use of defined supply chain system	Yes	28	Primary
Use of defined supply chain system	No	22	Primary
Use of IoT devices	Yes	8	Primary
Use of IoT devices	No	42	Primary
Amount of trade (number of customs declarations in a given year)	1-30 declarations	10	Primary
Amount of trade (number of customs declarations in a given year)	31-99 declarations	12	Primary
Amount of trade (number of customs declarations in a given year)	100+ declarations	28	Primary
Transport methods	Road	42	Primary
Transport methods	Air	33	Primary
Transport methods	Sea	33	Primary
Transport methods	Other: Postal consignment, rail Roll on/roll off (RORO)	5	Primary
Type of good traded (business sector)	Agriculture, forestry and fishing	5	Primary
Type of good traded (business sector)	Others	45	Primary
Self-declaration (have submitted their own customs declaration)	Yes	9	Secondary
Self-declaration (have submitted their own customs declaration)	No	18	Secondary
Self-declaration (have submitted their own customs declaration)	Both in-house and outsourced	23	Secondary
Importer, exporter or both	Importer	9	Secondary
Importer, exporter or both	Exporter	5	Secondary
Importer, exporter or both	Both importer and exporter	36	Secondary
Business size (number of employees)	Micro – 0-9 employees	9	Secondary
Business size (number of employees)	Small – 10-49 employees	15	Secondary
Business size (number of employees)	Medium – 50-249 employees	15	Secondary
Business size (number of employees)	Large: 250-5,00 employees	7	Secondary
Business size (number of employees)	Very large, 500+ employees	4	Secondary

Table 2: sample breakdown of 30 interviews with intermediaries

Sampling variables	Sub-categories	Number	Sampling Priority
Use of defined supply chain system	Yes	22	Primary
Use of defined supply chain system	No	8	Primary
Use of IoT devices	Yes	6	Primary
Use of IoT devices	No	24	Primary
Type of intermediary	Customs Agents/Brokers	23	Primary
Type of intermediary	Express Operators/Fast Parcel Operators	8	Primary
Type of intermediary	Freight Forwarders	19	Primary
Type of intermediary	Hauliers	19	Primary
Amount of trade handled (volume of trade using customs declarations as measure)	Low volume declarants: <1000 declarations per annum	9	Primary
Amount of trade handled (volume of trade using customs declarations as measure)	Medium volume declarants: 1,000-50,000 declarations per annum	16	Primary
Amount of trade handled (volume of trade using customs declarations as measure)	High volume declarants: >50,000 declarations per annum	3	Primary
Business size (number of employees & turnover)	Micro: turnover < €2m, 1-9 employees	14	Secondary
Business size (number of employees & turnover)	Small: <=€10m, 10-49 employees	8	Secondary
Business size (number of employees & turnover)	Medium: <=€50m, 50-249 employees	4	Secondary
Business size (number of employees & turnover)	Large: >=€50m, 250+ employees	2	Secondary

Annex 2

Types of data captured within main types of supply chain systems:

While not exhaustive, this is a list of the different types of data captured by the main types of supply chain systems that were mentioned by participants:

Enterprise Resourcing Planner system:

• customer information (name, contact details, location, previous purchase history, notes)
• refunds and complaints management
• sales performance and analysis (including sale margins, identification of bestsellers, overall product demand, historical demand by client and by destination)
• asset tracking
• financial records and invoices
• purchase orders and order processing
• delivery status, delivery information and schedule
• compliance, data trails and audit documentation
• human resources and staff information
• generating sales quotes

Warehouse inventory management system:

• stock levels, including real time stock updates (quantity, location, last movement, movement history etc)
• sales performance
• available assets and asset tracking
• unit cost / material costs
• goods movements (domestic and international transfer of products or goods within the business)
• returns and refunds
• product demand
• commodity codes
• storage location
• resupply information and stock forecasting

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1. The term ‘systems’, within this report, is henceforth used within this report to refer to supply chain systems in general. Where a specific type of system is discussed, such as freight or customs management systems, this will be made clear. ↩

2. One example of this was the usage of an invoicing system to address stock management – a small company interviewed had an invoicing system in place but realised that this could also be used to track stock levels, as the system would not allow them to sell more goods than they had previously purchased. ↩