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Mitigate Import Supply Chain Issues with Distribution ERP

Mitigate Import Supply Chain Issues with Distribution ERP

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Mitigate Import Supply Chain Issues with Distribution ERP

Oct 28, 2021

Ken Weygand
Crane with container

As a direct importer, you know there are pros and cons to the industry.

The pros? You can offer your retail customers the best pricing on a huge variety of imported goods. Because the product is going from the factory or supplier to your customers, you avoid intermediaries. This makes your profit margins higher, and you have greater control over all aspects of each transaction.

The cons? The shipping headaches and inventory management intricacies.

As with any import business, you have a lot of elements to juggle. Not only do you need to manage the infinite complexities of global trade operations but also all the compliance requirements from retailers.

You need to have a strong strategy for addressing supply chain execution. If you’re still utilizing an ERP that uses a virtual warehousing system or soft allocation systems to send and track your direct import orders, this is no longer the right approach.

Aptean Distribution ERP can manage your direct import orders, from start to finish, without any need for trickery.

Why Virtual Warehousing Is a Bad Idea

With most ERP systems, you need to create a virtual warehouse in order to fulfill your import orders. For those of you unfamiliar with the term, a virtual warehouse is a place to store logistics assets such as inventory. Technically, a virtual warehouse allows inventory to be stored anywhere so that it can be distributed on an as-needed basis. Many direct importers use virtual warehouse solutions to “reserve” units of inventory.

On the surface, it seems like a good idea—you can set aside inventory for your customers without the need for an actual warehouse in a physical location. The truth?

Virtual warehousing causes more issues than it solves. You’ll need to make a virtual warehouse for each region, each customer, or maybe even each product. This leads to endless virtual warehouses, with no exact means to track everything. Because there is no actual inventory, you start to have virtual inventory overages and shortages. You then need to start playing around with virtual transfers, which get so complex that your IT team must write an algorithm to manage them automatically. When does the cycle end?

You have painted yourself into a corner using virtual warehousing because you have segmented the inventory virtually to match your demand. The problem compounds as the segments get more granular. There is only one physical warehouse location, but there are a dozen virtual locations in the system. Now, you have virtual inventory fulfillment issues.

The issues and complexities caused by virtual warehousing lead many importers to use soft allocation for inventory management.

Soft Allocation Leads to Inventory Nightmares

Soft allocation sounds like a great way to manage inventory at the outset. Many ERP vendors tout this method as a solution for virtual warehousing—but in the end, it doesn’t solve inventory problems, either.

What is soft allocation? Soft allocation is a term that refers to a quantity of an inventory item that is reserved for use in a specific warehouse. Simply put, soft allocation is just another means of reserving or pre-allocating inventory. The problem lies in over- or under-predicting stock demands.

For most companies, soft allocation falls under the planning and forecasting stages. Your sales team might soft allocate certain items that they know are good sellers, and it’s a great idea at this stage. But using a soft allocation method as a means of order management isn’t a feasible long-term solution. Shortages or overages can occur, simply because of poor demand planning or excess customer take-up. So, here’s the rub—soft allocation is a great way to look at an overall plan for inventory, but it doesn’t work for long-term inventory management and processing.

What is the best solution for direct importers? A distribution ERP that has direct importing processes built into the system. You can make the import management process seamless—all it takes is the right tools.

A Distribution ERP Built for Direct Importers

You know that you need complete visibility into the overseas production process. While most ERPs can help you achieve integration with your current processes, where Aptean’s Distribution ERP stands above the rest is in order fulfillment. You won’t need to create a virtual warehouse or soft allocate inventory. Instead, you will be able to get your customers the right products, prices and quantities at the right time.  

No matter what type of direct import scenario you need to track, our distribution ERP has the capability. If your customer takes possession of the goods overseas and arranges their own transport, you’ll know the second that they take over. If your customer takes possession at the destination port, you can track its entry into the U.S., and you’ll know when their trucks are loaded. Even if they choose to get the order delivered straight to their warehouse, you can trace the order every step of the way.

Everyone in your company can monitor, manage and track your shipments as they move through the supply chain. You will know where your inventory is at all times.

Aptean Distribution ERP includes vessel, shipment and container tracking tools to give you full visibility. This robust tracking capability allows you to capture, track and attach documentation for each shipment. You’ll know your true landed costs before your shipment ever reaches port, which gives you an accurate picture of each product’s profitability. There is no need for endless virtual warehouses, and there is no need to make fake receiving and shipping tickets to get your orders. You don’t need to soft allocate and hope your predictions are accurate—instead, our distribution ERP uses stored historical data to find various trends and patterns in your inventory. This helps you make the most of your resources and products.

You know what a customer ordered last week, last month, or even last year because that data is stored within your ERP. That way, you know how much product you need to get from your supplier to ensure you have the right inventory to fulfill the order. Whether you maintain a warehouse or whether your customer takes the goods to their fulfillment center, you will have best-in-class warehouse management tools right at your fingertips.

If something goes wrong at any point in the process, our distribution ERP will notify you that there is a problem. You can react in real time to get the order on track and out the door on time. The more you track data within Aptean Distribution ERP, the more accurate your projections become.

Aptean Distribution ERP is designed especially for your industry. We know the challenges associated with direct importing, and we can help you meet them head-on.

If you'd like to explore how you can unleash the power of your business with a fully integrated distribution ERP system, reach out. We'd love to talk.

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