VS1 Cloud Blog
Tracking finances, sales, movements, inventory – including any surpluses or deficits – distributors have to wear many different hats. Yet unlike manufacturers and wholesalers, distributors also have capital investments in complex supply chains that must be kept in check. With so much at stake, selecting the wrong ERP for distributors that doesn’t fully match their needs can waste precious time and money.
Medium-sized distributors invest in ERPs (Enterprise Resource Planning) since they usually run a tighter ship and can’t afford needless fluctuation in their stock. They also have a higher spend per inventoried item leading to smaller profits. Lastly, mid-sized distributors tend to be more vulnerable to uncertainties in the business world compared to their larger counterparts.For larger distributors, ERP systems are worth their weight in gold as they uncover opportunities for revenue generation or trouble areas within complex internal processes. For them, the biggest driver for updating their ERP is driven by market pressures and the rise in competition. More recently, the advent of technology and digital innovation has transformed the way data on customers, resources and operations is used.
Choosing the right ERP should be done with care, as it requires far more than going through a system’s feature list or technical abilities. In this article, we’ll share what capabilities to consider, questions to ask during vendor selection, along with some of the top ERP systems for distribution businesses on the market today.
Features to look for in ERP for distributors
One of the main reasons why distributors start looking for a new ERP is because their legacy system falls behind in capabilities vital to operations. By choosing an ERP with features that meet all your requirements, you’ll shield yourself from costly headaches in the future. Here is a list of the ERP software features important to distribution businesses:
Sales Order Management
Modern ERP systems for distributors use sales order management features to automate order processing. This is done by pulling in customer data from omnichannel ordering tools such as POS software. Sales order management functions that a proper ERP for distribution businesses should cover include:
Sales order processing
Sales order promising
Sales order inquiry
Sales order reporting
Self-service for vendor
Self-service for customer
Look for an ERP that paints you a financial picture at the item and customer level. Accounting components can include many financial planning tools. Your ERP should support tax regulations, currencies and automatic cost calculators applicable to your area and sphere of operations.
Order billing and invoicing
Warehouse management functions include order fulfillment and processing, allowing for more accurate inventorying. This helps automate picking, packing, shipping and putaway processes. Look for ERPs that provide these warehouse management features:
Wave and load planning
Customer Relationship Management
Distributors benefit from having account, contact and customer identifiers synced to the ERP. Aside from having insights into customer behaviors, distributors can better respond to customer needs with CRM features like:
Quotes and estimates
Sales force management
Customers expect their items to be in stock, yet inventory is always changing. Your ERP should have real-time stock insights, along with the ability to accurately predict inventory to match demand. Functions of interest to distributors include:
Inventory and stocking costs
Distributors require ERPs with full procurement capabilities to keep their operations running smoothly. These systems assist in managing orders from third parties, drop shipments and scheduling recurring purchases, including:
eCommerce for Distributors
Distributors engage in B2B eCommerce, where they utilize specialized software known as eCommerce for distributors to connect with manufacturers, vendors and wholesalers. Getting accurate, real-time ERP data into your online store leads to a better customer experience. Look for synchronization options for:
Product and description data
Price list and user group data
Order fulfillment data
Invoice and inventory data
Delivery and return data
Now that you’ve decided which features are important to you, it’s time to dig even deeper. Preparing a RFP (request for proposal) will help you formulate the right questions for your vendor. It’s all about your requirements, expectations, and specific pain points your business faces. Your RFP should include things like project scope, timelines, budgets, vendor qualifications, contractual obligations and the award process. This RFP template will get you on the right track to crafting a perfect RFP for your distribution business.
How to properly assess ERP software for distributors
With so many ERP options having similar feature sets, selecting the best one from the pack can be a difficult undertaking. Here are some ideas how to assess your shortlisted ERP for your distribution business:
List all the ways you expect your ERP to add cross-functional and long-term value to your business.
Examine your workflows- talk to providers and consultants to fully understand all the distribution needs your future ERP must address.
Give your ERP provider access to your business processes and a chance to talk to your team as a part of discovery.
Ask your ERP provider for a free analysis or a chance to prove their promised ROI. Gauge their confidence in helping you and the improvements you can expect.
Explore the training, implementation, and management phases and the resources to support them. What can you perform in-house and what will require outside help?
If possible, visit the offices of your contenders and get to know their culture. In-person relationships build trust and tend to iron out misunderstandings.