Benefits of ERP Software for Wholesale Distributors
We must approach any given advice with a solid dose of humility. I cringe when I hear someone state a business problem and the first words that come out are “that’s easy…”. The pains and struggles of running a distributing business are real, complex, and not easily fixed. This is where ERP software for wholesale distributors can make a world of difference.
Distribution Trends that Cloud-Based Wholesale ERP Systems Are Perfect for Addressing
From increased competition and changing business models, to a barrage of new, agile ERP technologies, the way distributors do business is starkly and fundamentally different than it was even five years ago. In an age with such pronounced structural change and competitive pressures, to risk not changing is to risk failing. Distributors need to adapt and innovate to the changing industry if they want to remain competitive. The following are five key distribution trends that wholesale ERP systems address:
Your Target Market is Online, and You Should Be Too
The modern consumer, across every part of the supply chain, turns to the internet as their source of knowledge for purchase decisions. That said, a strong online presence is crucial for continued business success, both in the world of B2B and B2C commerce. Ecommerce continues to be a key trend and distributors need to be ahead of it if they want to remain relevant and fresh in the face of major industry changes. No longer is seeking an ideal customer experience restricted to the online shopper—business buyers and online shoppers alike look for the kind of omnichannel experience that gives them flexibility and power in their purchasing. As a business, capitalizing on this customer experience means catering to both your direct buyers and shoppers with an ERP wholesale distribution tool that can provide functionality for each market.
How NetSuite ERP Helped Scale Becker Safety & Supply
Becker Safety & Supply is a perfect example of a company experiencing growth in e-commerce and new B2B markets by capitalizing on new commerce technology. Using NetSuite’s cloud ERP system, Becker’s sales reps seamlessly interact with leads and customers via the CRM. Additionally, a new e-commerce site based on NetSuite’s SuiteCommerce Advanced, linked to Becker’s instance of NetSuite Inventory and Order Management, will expand geographic reach and meet customer demand for 24/7 online self-service. By using ERP systems for wholesale distribution to link commerce, sales, inventory and order management, Becker has greater agility to withstand volatility in its core oil and gas market and grow the business well beyond its current reaches.
Competition is Everywhere and They are Leaner, Meaner and More Tech-Savvy Than Ever
In today’s distribution landscape, it is only getting harder to differentiate. With the ever-growing number of competitors, how do distributors position themselves as unique and stay a step ahead? What trends are affecting the industry, and how can distributors capitalize on them? Assessing and reassessing these questions on a regular basis is absolutely essential for continued success in the constantly evolving world of distribution. Businesses need to remain agile and poised for change at the drop of a hat in order to compete against the fast-moving, innovative competition. If a distributor wants to quickly add a new product line, onboard a new supplier for the same day order or get their product to the end buyer as quickly as possible, then they, without a doubt, need the technologies in place to cater to rapid pivots. There is no leniency to allow for the costly time associated with manual entry, disparate systems and dated technology.
How ERP Wholesale Distribution Software Contributed to Double-Digit Growth
Action Health wanted to take its business to the next level to blow out the competition, but the reality was that the on-premise ERP system it was running wasn’t going to support the goals and plans the company had. When the CEO posed the question “What’s the risk involved in changing the system we are using to run our entire business?”, Sean Cwynar and Phil Negri, the President and CFO respectively, turned it around and asked: “What’s the risk in not changing?”. If they had stayed the same for much longer, they knew they would become obsolete—which is why they turned to NetSuite’s single, cloud ERP to run everything from financials and CRM to inventory and order management. After adopting a new system and positioning themselves for success in the modern world of distribution, Action Health has achieved double-digit growth in the health care market.
Business Models are Rapidly Changing
With companies like Lyft, Netflix, Spotify and Airbnb disrupting business models and changing the way consumers operate day-to-day, it’s not surprising that distributors are exploring new ways of going to market and pivoting their business models to capitalize on new markets. Between the internet’s pervasiveness among modern consumers and the constant flood of technological advances in the business world, companies have to change the way they operate at their core to hold up against their competitors. How businesses sell, source and create their products is constantly evolving—implementing these rapid changes requires business systems that can stand up to these rapid pivots. For this reason, more and more businesses are turning to cloud-based technologies to run their front- and back-end business processes. With an ERP cloud solution, businesses are always running the most up-to-date version of the product and accessing real-time information about their business—which is hugely important for a modern distributor trying to stay agile.
Managing Growth While Reducing Waste with ERP Systems
PACT | ORGANIC started out selling through its B2C website and through retail partners, like Whole Foods and Target, but it had set its sights on bigger things. Leadership wanted to pursue a more expansive go-to-market strategy. PACT is refocusing its retail presence on larger B2B retail partners and is working on expanding e-commerce initiatives to improve offers and retargeting, all the while further enhancing business intelligence with more detailed analysis. PACT turned to NetSuite’s cloud ERP to manage its fair trade-certified supply chain and to oversee complex financial relationships and inventory at every step, from organic cotton procured by manufacturing partners in India to finished goods at 3PL locations, to ensure visibility across the supply chain. PACT also uses NetSuite to manage growth and to amplify its footprint across its e-commerce channel and international markets, while simultaneously minimizing waste through a true Just-in-Time (JIT) inventory model.
Investing in Tech is Not Just for the Amazons of the World
In order to remain competitive, distributors need to continue upgrading their work environments and stay on the cutting edge of technology. Gone are the days of paper pushing, Excel spreadsheets and manual processes—tablets, warehouse scanners, B2B portals and cloud systems are changing the game and making the modern distributor warehouse sleeker, cleaner and more efficient. Based on where we are today, simply thinking about making these changes is no longer an advantage; rather, it is imperative for survival. When your competitors are constantly evolving, to be complacent is to risk failure.
Unification Leads to Innovation and Growth
Choosing a unified, modern cloud platform over SAP Business ByDesign and Microsoft Dynamics GP cleared Big Agnes’ path to innovation and growth. The company was swayed by NetSuite’s flexibility and scalability; in the aftermath, Big Agnes has doubled productivity in order and inventory management, fulfillment, and accounting, freed up staff resources while avoiding hiring additional people, gained real-time visibility into the business and improved customer support quality. With this new technology at its fingertips, Big Agnes is able to power the processing of orders from Big Agnes’ retail partners and its consumer-facing website, while NetSuite partner Oz Development’s OzLINK shipping solution further accelerates fulfillment. At the same time, investing in NetSuite’s scalable cloud ERP has Big Agnes ready for expansion into 20 countries.
Employee Productivity – Particularly in the Millennial Generation is Critical for Success
Tech upgrades like new ERP wholesale distribution software — although very important — are useless without the employees to act on the efficiencies they bring. Employee productivity for the modern distributor is key to long term success, and much of that productivity can be facilitated with new technologies. Warehouse automation, CRM, e-commerce, pricing, and analytics are just some of the updates modern distributors implement to streamline their processes while increasing employee productivity to improve the output of their operations and free up their employee time to focus on improving the business versus performing manual processes. With more and more millennials now holding B2B purchasing roles, the way B2B purchasing is done is starkly different from previous generations. Although some distributors may be slower to hire the next generation, the reality is that their customers are not. That said, equipping millennials with the technology that they are comfortable with to be successful is key for achieving the most productive work environment possible and to sell most effectively.
A Mini Case Study on ERP Software for Wholesale Distributors
Miles ran a pet food distribution company. Between Peachtree FilePro and Excel, he managed inventory, purchases, and accounting. The company had a number of issues to deal with, like the fact that:
- inventory was not always true to report and data was stored in spreadsheets;
- the catalog of products did not reflect what they were now selling;
- there was no way to measure supplier performance, and
- accessing any information was time-consuming
Products came from China and were shipped out to major outlets — ie: his competition — before shipping goods to his organization. The biggest pain point of all was dealing with backorders. Since the sales team did not have access to real-time information, reps frequently oversold the same products. One order had back order quantities. Dealing with backorders was done through a number of processes that were manually created because neither system was effective at managing it.
How ERP Software Helped Wholesale Distribution Management
As a wholesale distributor Miles’ story probably rings true to you. Without adequate business applications, it is difficult to run your business effectively. But having a good system is not enough. After all, spreadsheets are a very good business tool and QuickBooks is a very good accounting tool too. Many issues arise because these two systems are disconnected. Each does its tasks well but fails to render the bigger picture of the organization.
The solution lies in deploying an integrated system, like an Enterprise Resource Planning (ERP) software specific to wholesale distributors. Many people, when they hear ERP, think of complex and expensive software. They are complex if you tackle all business functions at once because they do it all – inventory, CRM, accounting, vendor management, supply chain, logistics, HR. But when you work in your own sphere, they are not complex. Secondly, they are more expensive than your entry-level accounting package. What many fail to understand is that when you deploy an agile ERP solution, countless hours of manual labor are eliminated. So your accounting package may cost you only $600/year but it also requires one to two full-time employees to handle all the manual workarounds. For example, at $50,000/year, your software may now cost $50,600 or $100,600.
Benefits of ERP Wholesale Distribution Software
What good can really come out of an ERP solution? The best way to explain it is to take Miles’ example and see how his business changed.
- Managing the inventory brought the biggest relief and savings. When goods arrived, they were received in the ERP solution and it triggered a payment to be processed.
- The sales team, when they were quoting customers, consulted a database with live inventory and were able to sell what was on hand without going into backorders.
- As soon as a sales order was confirmed, the product was deducted from inventory and when a product reached the safety stock limit, a purchase order (PO) was suggested to the Purchasing Manager.
- Tracking all POs to their supplier made it easy for them to adjust to the supplier’s delivery pattern and in one case, eliminated the supplier altogether.
- Once a quote was turned into a sales order, there was an instant notification to the warehouse and the goods were picked, packed and shipped. As soon as they were marked shipped, it generated a notification to invoice the customer.
As you can see, many of the steps that the ERP system automated were once manual. Aside from immediate benefits to efficiency and productivity, this automation freed up time to fine-tune the business across other areas. The Purchasing Manager was able to use real data to decide on suppliers, the Sales Director had real-time data to track their best customers and the executive team had real data to make smarter business decisions.
A wholesale distribution ERP solution will improve forecasting, cashflow, fulfillment rates, purchasing, supply chain, and accounting — ultimately optimizing your business from top to bottom. Too big of a dream you may think. What’s stopping your organization from reaping the benefits of a 360 degree integrated ERP solution?
Contact an ERP consultant online or give us a call at (609) 514-5587.