VS1 Cloud Blog

VS1 Cloud Blog

Selecting distribution ERP software for wholesalers

29th Apr 2021 | Wholesale

Successful wholesale businesses have two common traits:  they know what their customers want to buy, and they know what those customers have stopped buying.  With that knowledge of customer demand, they keep their inventory optimized at all times.

Inventory management
Wholesale ERP must be accurate as to the quantity of any item on hand.  Perhaps more important is the location of each of those items. Is every item stored in the best bin location so that it can quickly be picked and shipped when the next order is received?  Wholesale ERP also must allocate inventory as orders are received. An item might still be on hand after the first order is received. ERP must prevent a sale of that same item when a second order is taken.  Wholesale inventory management includes slotting, where specific quantities of any inventory item are placed in bin locations optimized for particular customer orders on hand now or predicted in the near future.

Kitting and assembly
Many wholesalers go beyond merely storing inventory for their customers.  Often they perform final assembly of products. A customer product could be sold in a variety of colors with the same internal component.  The wholesaler snaps a colored skin on the product before shipment. This practice is light manufacturing and wholesale ERP will include bills of material and assembly jobs to complete the software required.

Lot tracking
Wholesalers in many industries must maintain lot tracking for their customers.  If there is a product recall, good compliance requires that the lot number chain must connect from the original producer through a wholesaler and finally to the end customer.  Wholesale ERP must keep that chain connected.

Third party warehouses
Wholesale ERP must allow the use of multiple warehouses including those operated by other businesses.  Often the same products will be stored in more than one warehouse. ERP for a warehouse business will allow orders to be shipped from any warehouse but generally will default to a single shipment from the same warehouse.

Quoting and order management
Wholesalers frequently must provide quotations to earn business from customers.  Those quotations must be accurate in terms of any delivery schedule promised based on available inventory and receipt dates from suppliers for items to be purchased.  The correct pricing schedule for that customer is also a requirement for the wholesale ERP system.

Point of sale counter transactions
While many orders are taken over the telephone or through e-commerce, there will certainly be orders taken in person over the sales counter.  Whenever that is an important part of a wholesaler’s business, the ERP should provide robust transactions that record the sale and reduce inventory immediately.

Pricing by customer, quantity, and seasonal pricing
Wholesale ERP must allow a business to set pricing unique to specific customers using specific item prices or variable discounts.  ERP also should allow quantity discounts as many wholesalers offer those to customers. If products sold are seasonal, there might be additional price or discount schedules that override the default schedule.  There are many possible price and discount arrangements and ERP has to allow a business to use all that is required.

Every business must develop their own set of requirements for ERP.  These are a few that are specific to the wholesale industry. Your business will have your own unique requirements.  Agree on those you need and ensure the ERP you choose can meet your requirements.

By: Tom Miller