Distribution Management Software
In this article, we look at what distribution management entails, what distributor management software does, and what are its benefits for distributors.
What is Distribution Management?
On its face, the business of distribution sounds straightforward – distributors purchase products from manufacturers that they then sell to wholesalers or retailers who, in turn, on-sell these products to end-consumers. In practice though, this flow can be extremely complex involving tens or hundreds of thousands of products, thousands of suppliers, and thousands of customers. Often the goods are purchased in bulk then repackaged for end-consumers. Distribution industries include food service distribution, restaurant equipment distribution, industrial machinery, fasteners, hard goods, building materials distribution, auto parts distribution, etc.
Distributors must (1) manage their purchases of products from suppliers, (2) manage and keep track of these products in inventory, (3) manage their salesforces that obtain orders for these products, (4) manage their warehouses to fulfill orders from customers and then (5) get the goods from the warehouse to the customers. Often the shipping, transportation, and delivery of goods from the warehouse to the customer are handled by logistics providers. Sometimes the warehousing is also carved out to a 3PL (third-party logistics provider). The whole end-to-end process is referred to as distribution management.
Trends Affecting Distribution Management
These days, because of increasing inter-connectedness and sophisticated logistics, the world is moving in the direction of just-in-time inventory and just-in-time supply chains. This further increases the complexity of the distribution management process.
What is driving this just-in-time trend, might you ask? Well, primarily this cuts down on the cost of investing in and storing inventory – traditionally the largest cost component for distributors. If implemented, just-in-time allows distributors and manufacturers to run leaner and be more responsive to demand trends. This can create huge cost savings for distributors but comes at the cost of greater complexity. In a just-in-time supply chain, everything becomes time-sensitive. Distributors need goods to arrive on time, be consolidated, packaged, and delivered to customers on time. Powerful distributor management software is critical to executing this successfully.
Another trend is the increasing acceptability of eCommerce solutions. Generational changes in business' workforces have made eCommerce very widespread. You have only to look at the success of Amazon to see this. In addition, it is likely that the Coronavirus pandemic accelerated this already fast-moving societal change. Distributors must have eCommerce strategies and channels to give their customers access to self-service online portals and market themselves through online stores.
What is Distributor Management Software?
Distributor management software provides the tools and enterprise-wide data sources needed to keep all the pieces of the distribution management process moving in sync.
Good distributor management software should do all of the following:
- Manage purchases and replenishment of goods from different vendors and allow the evaluation of different vendors’ pricing and performance in terms of lead time and ability to fully fill POs. Allow for unlimited landed costs and tracking of POs by container, by vessel with easy updating of arrival dates.
- Deliver comprehensive views of your inventory by product, by product groups, categories, sub-categories, by different inventory statuses (e.g., on order, in fulfillment, on backorder, on PO), by warehouse, by warehouse location. Your distributor inventory management software must be able to make this information available simultaneously to salespersons, warehouse personnel doing fulfillment, and purchasing personnel doing restocking.
- Provide powerful (customer relationship management) CRM, order entry, and order management capabilities to close customers’ orders and provide customer service information.
- Provide a full set of eCommerce strategy options including customer self-service online portals and online stores.
- Allow for a complete (warehouse management system) WMS that facilitates and optimizes all the picking, packing, and shipping operations of your warehouses. In the case of outsourced 3PLs, your distribution management software should be able to easily integrate with other systems.
- Provide direct interfaces with shipping carriers and other logistics providers to deliver goods to customers.
Benefits of Distributor Management Software
Many distributors, particularly small and mid-sized distributors, relied on multiple systems and processes that weren’t all integrated. By bringing all your processes into one comprehensive solution, distributor management software ensures that there is a single source of truth for all your disparate data. Coordinating different elements of the distribution process becomes easier and automation such as linking special order sales line items to specific POs becomes possible. This becomes particularly important as your business moves further out along the just-in-time spectrum. Having all your data in one system allows for running complex data analyses to highlight areas of weakness and improve overall efficiency. This can translate into quicker turnaround, and quicker fulfillment and delivery of orders and ultimately improved profitability for your business.
What to Look For?
Not all distributor management software is the same. As you evaluate options, consider these factors closely:
- Look for a software publisher that is not all things to all people but rather focuses specifically on distribution.
- Get the most current Cloud-based software that can run on any device with no software required on the device other than a web browser. Do not get misled by a front-end interface on old, repurposed, client/server-based software that claims to be Cloud software.
- With all the Ransomware in the news go for Cloud software, that runs in the most secure public cloud platforms such as AWS.
- Ensure that the solution you select is auto-scalable.
Consider ADS Solutions
ADS Solutions has been delivering distributor management software optimized for small and mid-sized distributors, for decades, Contact ADS Solutions today to demo Accolent ERP Cloud-based software for wholesale distribution.