No distribution company is too small or too large to implement enterprise resource planning (ERP). ERP software is the heart of a business, and should seamlessly unite data from all departments. Some ERP systems provide business intelligence, so decision-makers can quickly solve problems and take action. The right ERP software can boost production, increase customer satisfaction and help accelerate a company’s growth. On the other hand, an outdated ERP or a limited ERP system can slow business down and set a company far behind competitors. If data can’t flow freely between departments, productivity decreases.
What’s the best ERP for distribution companies? That depends on your needs and objectives. A team of professional consultants can help you determine and implement the most appropriate ERP solution for your business. With that said, you’ll want to consider certain factors when you search the market for new ERP software. Tons of recordkeeping tools exist, but not all of them offer capabilities that promote company-wide growth and efficiency. Here are the top considerations for choosing effective and efficient ERP, whether you’re replacing an old system or adding ERP to an expanding company.
1. New Technology Integration
If you are starting with ERP, choose software that is designed to integrate new technologies like analytics, mobile and the cloud. Consider how an ERP will meet your data needs, such as easy access to data, intelligent insights and secure data storage. Also, make sure you can use the ERP from mobile devices so you and your employees can keep business moving while traveling or away from the office.
Consider a 2016 survey from the Economist Intelligence Unit. The survey revealed employees are 16 percent more productive, 18 percent more creative, 23 percent more satisfied and 21 percent more loyal if they describe their employer as a mobile pioneer. When employees are happy, they are more motivated to do their jobs well. Ultimately, customers experience greater satisfaction and business is better overall.
You’ll also need to consider new technologies such as artificial intelligence (AI), robotics and the internet of things when selecting an ERP. You don’t want to get left behind companies that are already using AI to their advantage. For example, according to a recent Deloitte study, 44 percent of respondents said AI enhances current products, 42 percent claimed it optimizes internal operations and 35 percent said it helps them make better decisions. Meanwhile, 82 percent stated they had gained a financial return on AI investments.
These technologies are not going away, and are designed to add efficiency and accuracy to supply chain activities as well as improve employee engagement. To hone your competitive edge, choose ERP software with business intelligence tools that will help you use the newest technologies so you can make informed decisions now and in the future.
Avoid outdated ERP software, which can make it difficult to access and analyze the data needed for decision making. You also want to be able to make critical decisions and communicate with other departments while you travel, and older software may not offer mobile capabilities. Lastly, outdated ERP systems can be challenging to learn for employees. You don’t want to increase the turnover rate while competitors use new technology and expand their workforce. Choose an ERP your staff can learn quickly. Wasted time equals wasted money.
2. Supply Chain Visibility
How do you know if merchandise is available in a different location? What if there’s a transportation problem thousands of miles away that needs a fast solution? Supply chain visibility enables you to track data from all stages of distribution so you can make the best decisions. It is especially critical to distribution businesses that are growing and are part of the global economy. If your business is on the rise, you want ERP that enhances supply chain visibility, not decreases it.
Businesses may underestimate the importance of supply chain visibility. According to a 2018 study by the Business Continuity Institute, 30 percent of survey respondents admitted they do not thoroughly analyze their supply chain to prepare for disruption. However, over half experienced a supply chain disruption in the past 12 months. Sixty-two percent of the organizations suffered a financial impact as a result of a supply chain disruption. The study concluded the organizations that used advanced technology and did not rely on traditional spreadsheets had more success analyzing incidents among their suppliers. Distribution companies need an ERP system that can help them prevent incidents or handle challenges such as:
- IT outages
- Data breaches
- Loss of talent
- Transport network disruptions
- New laws
- Safety incidents
- Currency exchange rate fluctuations
- Civil unrest
- Environmental issues
- Damaging weather
- Human illness
The goal of improved supply chain visibility is to make data easily accessible to every stakeholder, including customers. With ERP software that integrates supply chain visibility tools, you’ll have access to accurate, real-time data regarding inventory, orders, deliveries and more. It allows you to respond quickly to surprise situations, or prevent problems from happening in the first place. With the right ERP, you’ll always know what’s going on in your business and can react appropriately before it’s too late.
Steer clear of an ERP that makes system integration a struggle or hinders your ability to collaborate with business partners anywhere in the world. ERPs should eliminate data silos and unite departments, regardless of location. Silos increase complexity and lead to duplicate data – affecting the reliability and accuracy of information. You’ll also need software that can connect workforces across multiple cultures and currencies. That means software that translates various metrics into insightful data you can use regardless of exchange rates. You do not want an old ERP system that makes globalization a complicated ordeal.
Another critical aspect of supply chain visibility is customer satisfaction. ERP software should include customer management tools and improve the customer experience. For example, an ERP system should be able to notify customers before and after product deliveries with real-time updates. Customers want control of the items they order, and convenience is essential to them. You can use an ERP to manage existing and potential customers, reduce errors with orders and shipping and quickly respond to customer concerns. Choose ERP that promotes efficient customer interactions, and you’ll keep people coming back.
Imagine keeping track of orders, inventory and payroll on paper. While that system may have worked for businesses in the past, it won’t keep you on pace with 21st-century competitors. Fortunately, ERP software is designed to automate all recordkeeping activities.
Automated processes improve efficiency in every department. Any document or message can become part of a digital ERP system. As a result, employees will have more time to focus on more important tasks that do not involve filing away papers or gathering information. According to the McKinsey Global Institute, interaction workers spend almost 20 percent of their workweek searching for internal information or finding colleagues who can help them with specific tasks. Imagine how productivity would improve for every department if workers spent significantly less time handling paperwork.
Also, workers should not have to wait for another team member to finish a task to get the data they need. This lag slows productivity and wastes time.
Similarly, a new sale should automatically send data to the right places and reduce the need for manual recordkeeping. An ERP system should store the data and enable an easy follow-up with sales-tracking dashboards. With automated systems, you won’t have to waste time searching for lost data or re-entering data that’s already there.
Look for an ERP that automates all business functions and stores data in an accessible, centralized location. It should enable automated communication between different departments, such as finances, human resources, sales and others. Centralized data also enables complex data analytics so every member of the team can make better decisions. With ERP automation features, you can go paperless, increase productivity, reduce errors and get real-time reports. Some software can complete functions entirely without human intervention, reducing labor costs, decreasing the risk of human error and accelerating inventory updates.
4. Inventory Management
One of the key features to look for when choosing an ERP system is its capacity to meet your inventory management needs. Your ability to accurately and quickly fill and ship orders, process backorders and track shipments will determine the level of customer satisfaction. If you run out of a product or ship the wrong order due to inaccurate inventory tracking, customers might take their business elsewhere. You don’t want to keep customers waiting. You need access to real-time inventory to plan for customer demand and to know exactly where everything is. Manually counting inventory and keeping track using outdated spreadsheets is a time-consuming process that could lead to costly errors.
If you do not use ERP for inventory management, it’s time to consider adopting new technology. To grow your distribution business, you need a quality ERP system that tracks what you have in stock and also forecasts what you’ll need based on sales. That way, you can place an order in advance and never run out. You could permanently lose customers and harm your reputation if you run out of stock or can’t grow with increasing consumer demand. It would be hard to attract new customers if you don’t have what they need or if your business has a reputation for low product availability. Also, business partners from anywhere in the world need to be able to access orders and inventory levels easily. An efficient ERP system keeps everyone on the same page regarding inventory.
Improper inventory management could also lead to overstocking. If you overstock a product, you’ll face a range of challenges. The longer a product sits, the less chance it will sell. For example, the product may no longer be in demand, or it might spoil if it’s perishable. There’s also higher risk the overstocked product will get damaged or stolen. Storing and accounting for excess inventory uses energy resources and increases labor costs, and can cost a business thousands of dollars a year to maintain.
Your distribution company does not have to suffer the consequences of major inventory mistakes. Choose an ERP that streamlines inventory management, and you’ll be miles ahead of other companies that rely on old inventory management methods. In the long run, your business will benefit from fewer inventory mistakes, and you’ll be able to use resources more wisely.
If you want your distribution business to grow, it’s imperative you select adaptable ERP software. You need software that can handle increased data, production and customer demand. In other words, the ERP system you choose must be able to change with you, your industry and your customers. New cloud-based ERP software gives your company the ability to change business models to suit an ever-changing market.
Part of ERP scalability is choosing a software vendor that is committed to helping your business grow. A supportive vendor is willing to learn about your business and work with you to ensure you can to use the software to its potential. An ERP vendor should offer regular updates so you can keep up with competitors and technological advancements, and continuously improve your bottom line.
Avoid ERP software that is time-consuming, difficult to upgrade or costly to change. In general, it’s best to avoid an outdated system, because you may find limited resources to help you with updates in the future. Also, if you lag behind competitors with ERP implementation, you miss out on improvements in technology. You’ll lose a competitive edge and waste money maintaining outdated software. You might also run into data security issues.
Lastly, the wrong ERP system could lead to substantial downtime, the costs of which accumulate quickly. For example, unplanned downtime costs manufacturers around $50 billion a year. It’s best to avoid issues down the road and choose ERP software you can depend on through each stage of growth in your company – today and tomorrow.
Contact Clients First Business Solutions to Learn More
Overall, the right ERP can help your distribution business grow, reduce errors and make business activities in all departments an integrated and streamlined process. Nevertheless, choosing the right ERP software for your business is no easy feat. Every distribution business has a unique system, objectives and vision for the future. It calls for ERP software that can meet and exceed your needs, as well as fit your current business model and change with your company as it progresses.
At Clients First Business Solutions, you can turn to us for expert ERP software recommendations, advice and implementation. We are a professional consulting organization offering ERP solutions you can trust. To learn more, contact us today!