What ERP Software For Distributors Can Do For You?
The economy is struggling, inflation is out of control, you cannot find good employees, the supply chain is still very challenging, geopolitical issues abound and we're heading for a global recession. Facing these conditions many distributors' first reactions are to hunker down, scale back and try to wait the challenges out. This is shortsighted - you have to adapt to this environment and, if you do, you will be stronger and better positioned competitively when things improve. Your distribution business has to cut costs, improve processes and productivity so that you can operate with fewer employees, increase inventory efficiency, diversify suppliers and better track goods through the supply chain. How can ERP software for distributors help you do these things? Good ERP software for distributors can help you accomplish all of this through: (1) better inventory management, (2) centralized data management which gives you better visibility into all of your processes, (3) labor-saving process automation and (4) supplier diversification and better purchasing tools to mitigate supply chain problems.
Inventory Management, Inventory Control and Inventory Tracking
Distributors’ largest investments are in inventory. Better inventory management will help you with better inventory control and better inventory tracking. Good ERP software for distributors provides the inventory control to see exactly what you have in each warehouse by group, by category, by sub-category, by product, what is committed, what is available to sell, where the products are located in the warehouse, what is coming in on purchase orders, etc. Once you have this visibility you need ERP software for distributors to fine tune your replenishment to cut down on safety stock, optimize purchasing and turn your inventory faster. ERP software for distributors can also track inventory from your supplier through the Supply Chain to your warehouses and/or from your warehouses while they are en route to your customers. Improving these mission-critical processes will help you reduce the investment in inventory, increase inventory turns and increase your ROI.
Business Intelligence and Data Analytics
One of the primary benefits of ERP software for distributors is in being able to centralize all your data in one system. With this you can then apply business intelligence to uncover insights that if acted upon could greatly increase sales. You can query your data using business intelligence tools to determine where you can upsell, what opportunities you may have overlooked, what customers aren’t buying, how customer purchasing is changing, etc.
In addition, by analyzing your data you can find out which processes are consuming the most resources in terms of time and employee effort. Warehouse operations in particular are very labor intensive and understanding where time is being spent and what the bottlenecks are can go a long way to improving and streamlining your processes. Identifying and benchmarking these problem areas is a first step that enables you to explore further process automation.
Process Improvement and Automation
Many smaller distributors still rely on manual and paper-based business processes which are inherently inefficient, costly and error-prone. Good ERP software for distributors can help you automate all of your processes. There are many examples where this process automation can substantially increase efficiency. For example, implementing software that automatically tracks special orders that are linked to POs, helps you increase drop-ships and cross-docking, which in turn helps cut down on inventory and warehouse personnel. Another example is in warehouse operations which are notoriously manual and labor-intensive. Moving to a wireless WMS system that allows employees to complete pick, pack, ship, PO receiving and put-away processes using handheld barcode scanners instead of printing and hand-writing forms, will reduce staff, increase efficiency and throughput, and cut down on errors. Yet another example is in manually managing payables and writing checks which is very slow and costly. The benefits of AP Automation can be eye-opening in terms of reduced headcount needs and the substantial savings that can be generated. This is even before the financial benefits of paying within terms and claiming all the payment discounts available and cutting down on incorrect payments. Having the right ERP software for distributors opens up all these and many more areas for possible process improvement.
Supplier Diversification and Improved Purchasing
The Supply Chain is very challenged at present and expected to become more so given the geopolitical environment and continuing Covid issues in China. This is not something that can easily be addressed, but you can and should take steps to diversify your supplier base. With good ERP software for distributors, you can seek out, evaluate and prequalify new suppliers. Where you used to rely on one or two go-to suppliers only, you can change your processes to make a practice of sending RFQs (Requests for Quotations) to multiple suppliers. This will help you build relationships with a wider group of suppliers. With the right ERP software for distributors, you won’t need to negotiate pricing and terms with suppliers on a one-to-one basis, which is very time consuming. With an automated RFQ processes you can target multiple vendors for quotes, which will get better results and save time. With RFQs, you will get information not only pricing and terms but also on availability, which may be as (or more) important to your customer than pricing.
Improving your purchasing by automating the capturing of your reordering parameters will also have a big impact financially. Using out-of-date reorder parameters based on assumptions rather than actual data can lead to purchasing errors. To get the best results, your ERP software for distributors must be able to automatically update all the reorder parameters based on actual sales rates and actual lead times. Once you place your purchase orders you need to track where goods are at all times through the Supply Chain. Your ERP software for distributors should be able to track POs by vendor, by container, by vessel, by voyage, as well as record departure port, departure date, arrival port, arrival dates and much more.
The Right ERP Software for Distributors
If you’re convinced and are starting to look for ERP software, what do you need? As outlined above good ERP software for distributors will provide all of these capabilities:
- Strong Inventory Management, Inventory Control, and Inventory Tracking
- Built-in Business Intelligence, Data Analytics and Reporting
- Powerful Special Orders functionality to link sales orders and POs
- Wireless Warehouse Management System
- Exceptional Purchasing Management and Purchase Order Tracking
- Powerful RFQ functionality that allows broad sourcing of goods
- Built-in General ledger with Accounts Payable and Account Receivable
- Accounts Payable and payment automation
Let us show you how Accolent ERP software for distributors delivers all of this and much, much more in a Cloud-based solution built specifically for wholesale distributors.