With a powerful, all-in-one enterprise resource planning (ERP) solution, distributors can serve their customers better and run more efficiently.
The supply chain network is becoming more complex, and your customers want more choices, faster fulfillment, and lower prices. Distributors that choose the right ERP solution meet these expectations by gaining a single, transparent view of their warehouse and distribution operations. Integrated functionality around financials, operations, CRM, inventory, and payroll helps them deliver goods on time, boost customer satisfaction, and optimize inventory.
No matter your distribution requirements, an effectively implemented ERP system smooths your operations and improves your operating margin.
This blog explains why accounting software and inventory management applications can’t keep up with modern business needs. It defines distribution software and explains how successful distribution companies use it to simplify operations with big-box retailers, online stores, Amazon, and eCommerce platforms.
ERP VS WMS
The 'Next Normal'
Take the Next Steps
Features and Benefits
The Right Partner
ERP VS WMS
People often confuse ERP and warehouse management systems (WMS). They’re different but complementary software solutions that make distribution functions run better. The right ERP solution does both—it has built-in inventory management capabilities and can serve as the hub to a complete warehouse management system .
Warehouse management systems control warehouse operations and logistics management, including receiving, inspection, acceptance, put-away, picking, and shipping. Essentially, a WMS handles inventory movement and storage while ERP software handles inventory movement and management. It accounts for the status of goods and automates company-wide customer service, invoicing, ordering, reporting business metrics, and other operations.
Integrating ERP and WMS delivers powerful results. When goods move within a WMS, stock levels are adjusted, inventory accounts credited or debited, inventory variances accounted for, and customer delivery dates and notices updated.
Today’s distribution channels include multiple types of organizations: manufacturers, warehouses, shipping centers, retailers, and the internet resellers. Due to COVID-19, routes to market have also shifted. Direct-to-consumer (D2C) has become prevalent – both via a company’s own website and eCommerce sites like Amazon or eBay - enabling customers to buy goods directly from manufacturers.
Direct Channels for Savvy Distributors
There are many ways to get your products into customers’ hands. As a distributor, your goal is to protect margins and move products quickly to remain competitive. Consider:
- Shopify, Magento, Big Commerce and other eCommerce platforms – eCommerce platforms make it easy for distributors to set up online stores and ship directly to customers. These platforms should be integrated with your ERP systems
- D2C from Amazon, Facebook, eBay and more – These popular shopping sites act as a virtual point of sale for distributors by taking orders and shipping directly to customers. Brick-and-mortar stores also use this method to reduce warehouse costs.
- Direct-to-business (D2B) – If you sell primarily business-to-business (B2B) products, you’ll need a different type of eCommerce site to sell, products directly to your trusted business customers.
Because D2B and D2C now require you to track more information than in the past, you need comprehensive, easy-access views into your stock status, logistics systems, vehicles, and delivery process/vendors—in addition to what you already track. This highlights the need for ERP’s comprehensive tracking and ability to share information across the business.
Amazon and other large retailers can also serve as indirect channels for your distribution business. To avoid juggling too many channels on your own, you may choose a third-party logistics (3PL) provider to perform the distribution functions to your widened customer audience.
Whether you handle it yourself or use a 3PL, electronic data interchange (EDI) is vital to success. EDI solutions, such as SPS Commerce, enable distributors to electronically exchange order information with a supply chain partner without manually entering data—effectively automating any process. The result is fast order completion with no data entry errors.
An effective ERP system leverages EDI to integrate your backend data—including sales, invoicing, production, scheduling, and shipping—and eliminate the manual processes associated with sharing data with business partners.
Our distributor customers use this four-step process:
- A large retailer receives a web order.
- The retailer’s distributor for the product ordered receives the order into ERP via EDI.
- The distributor’s EDI automatically starts 3PL fulfillment actions.
- The 3PL uses EDI to auto-update the distributor’s ERP with customer fulfillment data.
Read this blog to understand the value retailers place on EDI. It highlights EDI’s benefits for retailers and explains how they save time and money by using it to interact with supply chain partners automatically.
Small and midsized distributors face many challenges. The three most common are:
- Having to lower prices to compete. Wholesale distributors have a history of thin profit margins, but lower-than-expected margins mean you have inefficient workflows, low inventory turns, or redundancies. Without a robust forecasting tool, your inventory will dip and spike unpredictably as market demands change. Product lifecycles can range from several months to a decade, underscoring the need for better forecasting.
- Inefficiencies from non-integrated software. Many distributors combine accounting applications like QuickBooks with spreadsheets to manage inventory. Others use inventory management applications with weak QuickBooks integration. Because the data in such cases reside in silos, employees must enter identical information into multiple locations to complete tasks and reconcile systems or risk losing visibility of operations. This wastes time and leads to costly errors.
- Lack of integration with online retailers. Distributors engaged with online and offline retailers, including Amazon, need faster, more accurate invoicing practices. Retailers with Amazon-like models inform distributors of the volume of products sold at regular intervals; the distributor must invoice for the products sold. Add the days outstanding to Amazon’s standard ‘net 60’ payment terms, and you might wait 75 days for payments. Now add the potential for online sales spikes to your cash flow risk, and your business might have to turn down large orders because you lack the cash to fulfill them.
While these challenges are intensified in today’s market environment, modern distribution software lets you handle them with ease. Read the blog to understand how:
Beyond the top three challenges, SMB distributors must address a mix of other challenges to remain competitive.
Inadequate Inventory Management and Control
Robust inventory management helps distributors manage detailed warehouse data while tracking and recording stock movements. If your inventory management solution isn’t integrated with other applications, you can’t obtain reliable, real-time information about inbound and outbound inventory shipments.
This blog explains why manually counting/checking stock is harmful and illustrates the dangers of three common scenarios. It also discusses ERP software for distribution checks and balances, such as detecting discrepancies. Included is a link to an information kit about in-depth inventory management issues and solutions.
This blog assumes inventory is your most significant asset and explains why accurate measurement and valuation are critical for producing meaningful financial statements. It also describes your main inventory valuation options and the effect the right choice has on profitability, taxes, and strategic planning.
Product Traceability and Industry Regulations
Distributors in the food and beverage and pharmaceutical industries need technologies that support a range of compliance standards, particularly in product tracing. However, implementing product serialization capabilities—a prerequisite for product tracing—is challenging. You must enable collaboration with the stakeholders in your supply chain and share the non-standardized data your supply chain partners need to do business with you.
Lack of Visibility and Poor Reporting
Distributors with poor inventory visibility haven’t integrated real-time or near-real time inventory with their sales and purchasing. Because margins are tight, you need strong reporting to optimize inventory turns and tightly manage days sales outstanding (DSO). Many SMB distributors must manually aggregate data from multiple systems before they can report on it—a time-consuming, error-prone process. Integrated inventory operations eases these challenges.
The 'Next Normal'
Our ‘next normal’ arises from COVID-19 lessons and the need to be prepared for unpredictably shifting circumstances, such as social distancing within distribution operations and an unprecedented shift toward eCommerce.
This will offer three new challenges:
- Gaining better access to real-time information
- Developing D2C routes to market for distributed products
- Adapting working conditions for distance, sanitation, and efficiency
Modern customers want an Amazon-type experience for everything they buy, including always knowing what you have in stock and exact delivery dates.
Warehouse Automation for the Next Normal
Warehouse automation is more critical than ever. Even small operations can benefit from features in modern warehouse management systems, including:
- Bar codes to improve accuracy and speed activities
- Advanced picking schemes for higher worker productivity
- Integrated shipping for faster order cycle times
- Bins and locations that reduce picking time/distance and improve the restocking process
- RFID for compliance with customer-specific labeling and shipping requirements
- Container tracking for updated location knowledge and customs status
- D2C features to get manufacturers closer to customers
When integrated with ERP, a WMS can do so much for SMB distributors in the next normal.
This blog explains the significant differences between integrating versus interfacing ERP and WMS. It describes where ERP and WMS overlap and the benefits of complete integration within a single platform.
Take the Next Steps
Take the next step by exploring our product information gallery full of brochures, videos, and more to learn about the different ERP systems Vision33 offers.
You can also browse our success stories to see what our customers have to say about how ERP has helped them run simple, grow fast, and drive profit.
Then let’s discuss your distribution business’s growth challenges and which ERP system will help you reach the next milestone in your mission. Vision33 provides the right balance of software and consulting to maximize distribution businesses’ investment in transformative enterprise technologies. Contact us to chat with a certified Vision33 consultant about your financial management needs.
Features and Benefits
The right ERP solution incorporates a wealth of features that drive distribution business efficiency and position your company for profitable growth. Six key features deliver unsurpassed operational benefits. They include:
Greater efficiency via automated processes and integrated production functionality.
Improved customer service via on-time delivery and fewer shortages/stock-outs, so your customers receive their orders when expected.
Reduced inventory costs via more accurate demand forecasts and improved inventory control.
Higher profit margins via a lean approach to operations and distribution, so you can grow the business without adding overhead costs.
Better visibility via a single, transparent view of operations and inventory across multiple locations.
Faster time to delivery via streamlined order entry processing with real-time available to promise and instant pick-list generation.
The Right Partner
With over 400 employees across North America and Europe, the Vision33 team has unmatched experience delivering solutions and services to the distribution industry. Our Global Services group routinely helps SMBs expand into new geographies, making us the ideal implementation partner for growing businesses.
Post-implementation, Vision33 continues to deliver value through our industry-leading support program, TOTAL Care, and ongoing ideation and implementation of services from our world-class consulting team. The team helps customers innovate using the best distribution industry-specific add-ons and integrations to support new business initiatives and evolving market demands.
To learn more about Vision33’s extensive value-add services, including TOTAL Care, visit our SAP Services Page.
Small and midsized distributors perform better when their ERP systems provide company- and industry-specific features, functions, and workflows. However, many ERP solutions are off-the-shelf applications that can’t be customized. Vision33 has expertise in planning and implementing ERP to enable industry-specific processes that work how you work.
The right ERP solution has a massive collection of customizations and add-ons that optimize the platform’s value. Our certified consultants will customize your ERP solution to maximize your differentiators, speed operations, and maximize efficiencies.
The Saltbox Platform by Vision33 is a cloud iPaaS (integration platform as a service) solution for enterprise integration, workflow, and collaboration between business applications. It provides pre-built connections for many common business applications, including Shopify, HubSpot, and Salesforce as well as technology connectors for SQL Server, JSON Converter, SAP HANA, REST API, and SMTP.
The Saltbox Platform supercharges your ERP environment and increases the value gained from implementing existing applications with your ERP solution.
Customer Portal gives customers a secure, flexible, and personalized self-service gateway to view their accounts in a standard web browser. It’s a convenient way for your customers to make online payments and manage orders in an environment that builds your brand identity.
B2B Marketplace, an extension to Customer Portal, allows companies to offer their customers a complete B2B shopping experience by giving them online access to order and account information in a familiar shopping cart format—anytime, anywhere, on any device.
- Easy access to account information
- Advanced reporting and analytics
- Support for multiple currencies and languages
- Access to order history
- Catalog views
- Multiple payment options
Employee Portal puts your employees in the driver’s seat with a real-time, web-based solution that’s seamlessly integrated with your ERP solution. Employee Portal is ideal for employees who don’t need a named ERP user license but need to access its data. With real-time, on-demand data access, report viewing and modification, and user-level security, Employee Portal gives your staff cost-efficient and flexible tools to get their work done wherever they are.
Vision33 has helped many distribution companies transform their operational agility and efficiency using ERP. Their customers appreciate the strategic capabilities and success in overcoming daily challenges like inventory management, on-time delivery, and product traceability down to the level of component tracking.
These companies recognized the need for an all-in-one solution to manage every aspect of their warehouses and chose the right ERP solution to improve their distribution operations, including inventory, logistics, and forecasting.
Click on the customer video links to see how you can improve your distribution business with Vision33 and ERP.
"Our ERP System has streamlined our processes and helped us become one of the fastest shippers in the industry. Whereas the competition can take several weeks to deliver an order, VIETRI can do it within 2 to 3 business days on average."
- Jody Davis, Customer Service and IT Manager, VIETRI
For a comprehensive set of ERP resources, check out our experts’ information kit. It provides an in-depth look at software and ERP solution briefs, videos, and demos designed to improve your operations.