Easily Shortlist Distribution ERP Solutions For General, Wholesale & Retail Distributors

Best Distribution ERP Solutions For Wholesalers & Distributors

What Is Industry-specific Distribution ERP Software?

Distribution ERP Software is an enterprise resource planning system equipped with specialised features focusing on distribution management activities such as inventory control, warehouse management, and order fulfilment. It is used by:

• General distributors
• Wholesale distributors
• Retail & commerce distributors
• Manufacturers using a direct-to-consumer (D2C) model
• Manufacturers using a direct-to-store-delivery (DSD) model

ERP systems are implemented with connectivity and collaboration in mind – 71% of businesses use ERP data to improve operational efficiency.

For distributors, ERP aims to eradicate the disconnect between departments that use different systems to manage processes. Using multiple systems presents challenges like poor real-time inventory management and a breakdown in relationships with consumers and manufacturers.

Instead, with ERP, all business departments – from sales and finance to HR and warehouse – operate using a unified system. The same goes for smaller distribution companies, who typically use applications like QuickBooks for their processes.

Distribution management systems combine general ERP features like accounting, HRM, and logistics with specialised features suited for indirect distribution activities like distribution planning, order management, demand forecasting, and integrated ecommerce.

Why More and More Distributors Are Implementing ERP Systems

As well as strengthening supply chain processes and embracing technology, there are three driving factors leading distributors to embrace Distribution ERP Software;

1. Increase consumer satisfaction and brand/manufacturer relationships
2. Provide a seamless and efficient process from manufacturer to consumer (reducing the risk of losing manufacturers to direct-to-customer models)
3. To strengthen and increase profit margins

A study claimed that 92% of wholesalers and distributors use ERP Software. A Panorama study showed distribution and/or wholesale in the top three industries to implement an ERP – behind Manufacturing and Healthcare.

Image: 9.9% of ERP adopters operated in Distribution and/or Wholesale industries

To achieve a strong supply chain and stay competitive, distribution ERP systems enable distributors to focus on key areas such as:

• Inventory control: Including accurate and real-time visibility.
• Warehouse management: Ensuring deliveries are on-time and orders are accurate.
• Cost-saving strategies: Demand forecasting and smart inventory systems enable improved planning to reduce over-stocking, under-stocking, and surplus wastage.

Specialised ERP for distribution ensures vital distribution management tasks are aligned. That includes picking and packaging, inventory management, sales and accounting, warehouse management, transportation, and logistics.

By unifying these activities, distributors can focus on delivering the right product and quantity to the buyer at the right time in the most sustainable and efficient way – ensuring customer satisfaction and protecting profit margins.

3 Modern Challenges of Distribution Management

1. Manufacturers Operating a D2C Model

A supply chain consists of several moving parts that enable manufacturers to get their products to consumers via distributors, wholesalers, and retailers. It looks like this:

Manufacturers -> Distributors -> Wholesale Distributors -> Retail Distributors -> Consumers

By operating with a direct-to-consumer (D2C) model, manufacturers are changing the supply chain fundamentals. Now, with D2C models, the supply chain looks like this:

Manufacturers -> Distributors -> Wholesale Distributors -> Retail Distributors -> Consumers

In a Barclays survey of 500 UK manufacturers, cutting out the ‘middlemen’ is projected to increase revenue, grow customer bases, and increase the speed of taking products to market.

But, while D2C accounts for 16% of all UK manufacturing sales, it is problematic. Take Nike for example; CFO, Matt Friend, openly admitted that the company’s D2C strategy had added ‘complexity and inefficiency’ to operations. This resulted in the global brand pivoting on its direct-to-consumer model following a decline in digital sales.

2. The Amazon Effect

The ‘Amazon Effect’ is being felt throughout the supply chain. So much so that 77% of distribution companies are now prioritising personalised user experience.

Distributors are facing more and more pressure to deliver an experience that matches that of Amazon, Alibaba, Walmart, and eBay in areas such as:

• Price competitiveness
• Delivery standards (time, effectiveness, and environmental sustainability)
• Return management
• Product/stock availability and variety

3. Shrinking Profit Margins

Rising outgoing costs are impacting distributor profit margins, with some operations working with a profit margin of as little as 3%.

Without the means to track overheads, direct costs, stock control, and wastage, distributors have no clear visibility of their outgoings. Without this understanding, finance admins struggle to forecast spending and implement cost-saving strategies.

How Can Distribution ERP Software Combat These Challenges?

To compete with direct-to-consumer models, distributors need to make the connection from manufacturer to consumer as efficient and smooth as possible. To do so, they must embrace technology – something that most manufacturers lack.

Essentially, these real-world challenges stem from deeper process-based challenges such as:

• A lack of real-time visibility in operations and warehouse management
• Poor inventory management systems
• Supply chain management limitations

Distribution management solutions provide the tools to face these challenges head-on, with state-of-the-art integrated ecommerce platforms, end-to-end customer communication channels, and smart inventory and stock systems.

General & Specialised Distribution ERP Features

As with ERP systems for manufacturing and small businesses, distribution and wholesale systems are packaged with general and specialised features.

General ERP Features For Distributors

• Finance and Accounting: Used by Controllers and CFOs to maintain financial transactions such as sales and purchases, while managing product costs, pricing, discounts, and profit margins.
• Inventory Management: Used to optimise inventory levels and avoid under-stocking and over-socking scenarios. Provides capabilities to enable dynamic stock replenishment techniques, match sales and orders to inventory availability, and implement methods such as first-expired first-out (FEFO).
• Customer Relationship Management (CRM) Module: Used primarily by sales and product teams to track and build relationships with manufacturers and customers (wholesalers, retailers, and consumers).
• Warehouse Management: Track items across multiple locations from when they arrive at the distribution centre to when they leave the warehouse using barcode and RFID systems.

Specialised Distribution ERP Features

• Integrated Ecommerce: Easily integrate inventory data (stock levels, item variety, shipping and pricing details, etc.) with a front-end ecommerce platform through third-party connectors.
• Demand Forecasting: Using data analytics to reduce inventory surplus and wastage costs by planning and predicting the goods needed to meet demand.
• Distribution Planning: Improve planning for quantities, location storage, and delivery processes concerning purchasing from manufacturers and selling down the supply chain.
• Integrated POS: Distribution ERP Software provides the capabilities to integrate a POS system that handles payments and processes sales while tracking real-time inventory levels.
• Order Management/Fulfilment: Streamline the ordering process between consumers, retailers, and wholesalers by gaining a holistic overview of the order lifecycle from inventory planning to returns management.
• Kitting and Assembly: Forecasting, inventory, and warehouse management capabilities combine to provide a streamlined picking, kitting and assembly process.
• Matrix Items: Easily track and record inventory items throughout warehouses using categories such as size, colour, type, weight, style, and more.

Industries Using Distribution ERP Software

The advantage of specialised ERP systems is having access to specific toolsets designed for unique tasks, instead of manipulating more generalised toolsets to fit your needs. Because of this, disruption management systems can be designed for various industries responsible for durable and non-durable goods, including:

• Chemicals
• Automotive
• Machinery
• Agriculture
• Furniture
• Fashion and apparel
• Food and beverage
• Industrial