If you’ve been running your distribution business on whiteboards, pieces of paper, computer spreadsheets, or using a standard ERP system, then you may already be considering a system that understands the challenges of your industry.
But in a tight economic climate, how do you justify the upgrade and adoption of a new system?
What Does a Distribution System Entail?
Apart from the standard functionality of ERP systems, distributors typically need more tools, such as fleet management, inventory management, marketing and shipping. Also, Distribution ERP systems are frequently combined with business intelligence (BI) and Customer Relationship Management (CRM) systems that provide deep insight into your customers’ buying habits.
3 Reasons to Upgrade to a System that Understands Distribution
Frequent inventory shortages
Are your warehouse shelves full but you often don’t have the right products to deliver the entire order? The distribution business relies on having the inventory the customer wants now, and no more. Distribution ERP keeps stock levels optimised, while fast and efficient order entry allows immediate checking of product availability.
A good distribution ERP can work in reverse too. Too much product on the shelf? Can you return it? Distribution ERP can help you make those decisions with accurate reporting.
Your ERP isn’t integrated into other warehouse or logistic systems
From automated conveyors to scales and scanners, the Internet of Things (IoT) is changing industries. Connecting warehouse systems and devices, as well as external service providers such as courier and delivery companies, requires close integration with your ERP system.
Your business does not support e-Commerce
One of the biggest strengths of your new Distribution ERP system is its ability to adapt to your business processes and give you the agility to modify your business model to meet new business challenges or opportunities.
Enhanced capabilities, such as allowing customers to place and track their orders and pay for them in real-time, will create an entirely new customer experience.
What are the Benefits of Distribution ERP?
Eliminate data errors that cost money and reduce customer satisfaction
Data errors are common when you use different software systems for processing information and orders. With a Distribution ERP system tightly integrated into your business, you get rid of inefficiencies and manage your business better by having complete visibility.
Increase revenue growth by seeing the big picture in real-time
With a fully integrated Distribution ERP system, your sales data is readily available and updated in real-time. You’ll have a deep understanding of business revenue and be in a better position to identify and manage cost variances. You will also be able to allocate financial, human, and operational resources better. This will lead to rewarding outcomes such as upward revenue growth, business expansions, better-engaged employees, etc.
Improve inventory management across the entire business
An ERP system can save you time and money by eliminating manual inventory management. Automated inventory management will allow users to track and manage information across multiple locations, giving them real-time visibility to the current inventory.
Identifying the ROI Payoffs of Distribution ERP Software
Cost-reduction is usually the starting point for the business case.
You can look for opportunities to save money from the elimination of administrative labour through automated billings, streamlined purchasing, or automated financial reporting.
Cost-avoidance represents another opportunity to make the business case for Distribution ERP.
There may be opportunities to achieve significant cost savings through:
- Reductions in late fees and premium freight by improving on-time delivery
- Better accountability and analysis of returned goods
- Better scheduling and delivery based on the visibility of future customer orders
- Eliminate excuses for delayed cash collection
You should also look for savings by reducing errors, due to manual calculations or organisation failures, such as billing rates or missed billings (i.e. revenue leakage). The cost of rework can be factored in too, with a little effort.
Freeing up working capital is the big prize in inventory management. The largest opportunity to reduce costs lies in inventory carrying cost, inventory investment, and inventory obsolescence reduction.
The process changes that help accomplish those savings can occur as a result of:
- Real-time processing
- Better replenishment planning
- Better analytics that highlight slow-moving or inactive inventory
- Improved inventory accuracy
The business case for Distribution ERP is about executing better, smarter, and faster.
Process change is your biggest opportunity to achieve cost savings. A Distribution ERP system rarely provides transaction processing superiority that enables the big savings. Rather, it enables process change, which in turn will drive cost savings.
The sure way to ensure that your new Distribution ERP system delivers on its promise is to look carefully at your current business model and environment, and then determine what it will take to be more competitive.