As distribution business models continue to evolve, many wholesalers are discovering that enterprise resource planning (ERP) solutions are a vital part of their strategy to keep pace with changing industry demands. Outdated ERP systems often deliver limited functionality and prevent organizations from improving collaboration and efficiency through a lack of integration with other critical systems. However, there are newer solutions that are good alternatives to on-premise ERP—developed specifically to facilitate differentiation, promote growth, and prepare a distribution business for the future.
In the increasingly competitive distribution landscape, staying up-to-date with new technology is paramount to meet evolving buyer behavior and customer expectations. It is critical to be aware of what customers truly value, and understand the nuances of what drives their behavior. That is where profitability lies. ERPs are the meeting point between this and the flexibility required to adjust business practices to meet these needs.
It’s important to keep in mind that distribution has specific requirements as an industry that set it apart. All distributors, regardless of industry, face similar challenges, including fast-changing customer demands, complicated product inventories, and changes in the supply chain. Overcoming these is best achieved with the implementation of a suitable ERP solution. But what is an ERP solution and how does it benefit day-to-day operations for a wholesale distribution business? Let’s find out.
ERP – The Element that Ties Everything Together
ERP is essentially a type of software that integrates all information transferred between departments (internally) and vendors/suppliers (externally). An ERP system comprises enterprise resource planning applications (“ERP modules”) that are connected to each other and share a database. This allows distribution managers to eliminate information silos between departments and give everyone a single source of truth. You can then automate your core business processes and ensure regulatory compliance, reduce risk, fast-track reporting, and so much more.
When you think about all the core processes needed to run a company—finance, HR, manufacturing, supply chain, services, procurement, and others—it becomes apparent that integration is imperative. And that is precisely what ERPs do. At its most basic level, ERP integrates these processes into a single system. New ERP systems have significantly improved to provide visibility, analytics, and efficiency across every aspect of a business. The core objective is to facilitate the flow of real-time information across departments so that wholesale distributors can make data-driven decisions and manage performance in real time.
ERPs are used by organizations in wholesale and distribution sectors for a wide range of influence. Some of the advantages of deploying an ERP is being able to standardize both front- and back-office procedures through the built-in procedures for:
- Accounting and Financial Management
- Order Management
- Inventory Management
- Delivery Fulfilment
- And Others
It’s all about aligning the goals of organization and ERP to ensure streamlining of operations along with the perfect user interface for the customer. Many cutting-edge ERPs offer specialized features like demand planning and forecasting for wholesalers and distributors. Another key advantage is eliminating holding costs and ensuring sufficient product levels to meet the demands of the market. Leading ERPs can actually help produce higher revenues and profits by incorporating best practices in the company’s environment.
ERP solutions – a rising trend among distributors
ERP systems provide a convenient and holistic starting point, with the expectation that they can be aligned with established business processes. Today’s modern ERPs offer options for customization of features as a great alternative to requests to modify older ERPs. When using business systems created expressly for the wholesale and distribution industry, there is now complete support for the unique attributes of products that are sourced and sold. Some solutions extend further with specific functionality, allowing distributors to benefit from modules and capabilities designed around their business and niche market. These types of ERP systems speed daily operations because they support that distributor’s particular inventory types, while also delivering capabilities for specialty and non-stock order items, and the vast amounts of product data that must be captured and disseminated by distributors each day.
Examples include applications for accounting, human resources, sales CRM, and supply chain management. What’s more, you can combine different modules to better meet your needs. For example, you could add ERP components for e-commerce, inventory and order management and fulfillment. Or include applications designed for a wide range of industries, from manufacturing to retail.
Modern ERP solutions provide flexible integration options that help businesses create an enterprise-wide view of processes. Distribution managers are given tools that allow them to achieve visibility across previously unconnected systems of vendors and suppliers. With insights into operations outside their own department, they are equipped to make better informed decisions.
What do distributors want out of their ERP software?
Now more than ever, wholesalers and distributors realize the importance continuous improvement to streamlines processes. This can help them improve the measurement of ROI and further extend ERP functionality by adding wholesale and distribution specific modules in an ERP.
The most reliable ERPs offer ample functionality, which is necessary for end-to-end supply chain management. Comprehensive warehouse software solutions are designed to meet the unique needs for supply chain management and customer relationship management.
Benefits of ERP adoption for distributors
The outlook for today’s distributors remains challenging with rapidly changing consumer expectations, fierce competition, control over inventory, and competition for talents. A modern, integrated ERP environment can not only help with all of that, but also streamline operations and reduce costs. Replacing or updating legacy ERP systems is necessary for distributors if they want to experience the benefits of:
Business Intelligence: Collecting critical data in one central location derives actionable insights for your organization. The BI automatically analyzes the collected data, transforming it into valuable information, so distributors can effectively spot trends.
eCommerce: 24/7 access to a customer portal is particularly useful for wholesale distributors as it allows them to view past documents, balances, due dates, received payments, and order online. ERP software provides all of those features and more.
Mobility: Mobile devices have become ubiquitous these days not just to conduct business, but to communicate. ERP solutions offer full integration and mobile functionality for access to accurate, business-critical information on any device, anywhere, anytime.
Pricing: Wholesale distributors offer multiple prices for the same item based on the quantity of units, completion timeframe, and additional discounts. It’s important to have the pricing freedom you need in your decision- making process and ERP offers pricing flexibility and real-time insights into industry trends.
Shipping: When shipments are not properly organized, wholesale distributors know the resulting consequences can be catastrophic. This makes accuracy one of the utmost priorities. ERP is able improve overall shipping accuracy.
There is a host of other benefits in the adoption of ERP technology for wholesale distributors. But the main argument in favour of the implementation of this new technology is that it aligns with the industry’s unique strengths, needs, and challenges, especially in an increasingly digital domain. Regardless of the products of services offered, ERP systems are turning into the go-to solution for flexible integration with other critical systems that allows distributors to capitalize on additional social, mobile and analytics tools. When combined, these applications create the agile, collaborative and intuitive environment necessary for distribution managers to optimize operations across all verticals, better meet customer needs and remain key players in the market.