Enterprise Resource Planning (ERP) systems are business management platforms that businesses, manufacturers, and distributors use to collect, store, manage, and communicate data across all functions of the enterprise. By integrating information from all areas of a business (including product planning, development, HR, manufacturing processes, sales and marketing and more into one complete enterprise system, ERP systems allow data to be shared across departments in real-time in order to streamline processes and automate common tasks.
Often times, ERP systems are closely related to the manufacturing and distribution industries, but it’s never really discussed how or if they differ. For this article, we’ve chosen to focus on explaining distribution ERP software and providing some of the reasons why you need it.
What is Distribution ERP Software?
ERP software represents a bold new vision for distribution and how distribution companies operate. If you look at Manufacturing and Distribution business processes from a macro-level, they seem undeniably similar. The order to cash process, identification of potential customers and management of the supply chain are very much alike. However, when you start to peel back the layers, order quantity and order volume is where they differ. Small manufacturers typically deal with small orders; small distributors deal with large orders and generally have a greater volume of orders to manage.
Distributors place bulk orders with the manufacturer and then sell far smaller quantities to either retail stores or end-user customers. Distributors handle the logistics and marketing requirements that manufacturers don’t want to or aren’t able to handle in house. Since the two verticals work in different areas of the supply chain, their technology must conform to different needs.
Distribution ERP tools are typically built with (or combined with) business intelligence and Customer Relationship Management (CRM) capabilities that provide valuable insight into customers’ buying habits. Distributors technically need more tools as they provide end-to-end solutions. Features such as fleet management, inventory management, marketing and shipping are all necessary for a successful distributor to run their business, but are not necessarily important to a manufacturer.
Why Do You Need It?
Regardless of size, an ERP system should provide functionality for all of your business processes by streamlining them from one single database. But what happens if something goes wrong? Say, for a distribution company, if your run out of stock, or one of your delivery trucks gets a flat tire, or you miss a delivery date? Having an ERP system can alert you of any issues you may run into immediately, potentially saving you thousands of dollars.
From an economic standpoint, an ERP solution helps distributors keep track of pricing. Forecasting elasticity and pricing demands is virtually impossible to do manually, so an ERP is critical to staying competitive in the distribution market.
Benefits of distribution ERP
- Eliminate Data Redundancy and Errors: Data repetition and errors are a common sight when you use different software to deal with such data. With an ERP integrated to your distribution business, you can get rid of such inefficiencies and manage your business better by having complete visibility of all your procedures and operations.
- Increased Revenue Growth: Since an ERP is integrated with your business, most of your sales and revenue data are readily available and are updated in real-time. With this information, you can get a deep understanding of business revenue. You will be in a better position to identify and manage cost variances. You will also be able to allocate financial, human, and operational resources better. This will eventually lead to rewarding outcomes such as an upward revenue growth, business expansions, better-paid employees, etc
- Improved Inventory Management: An ERP system can save you precious time and money by eliminating the daunting task of manually process inventory management. Automated inventory management capabilities can improve your management processes by allowing end users to track and manage data across multiple warehouses – giving you real-time visibility to current inventory in transit and costs.
Looking for more? Download our ERP Buyers Guide for free to compare the top-24 products available on the market with full page vendor profiles, key capabilities, an ERP software market overview, our bottom line analysis, and questions for prospective buyers.
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