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Distribution ERP Software: 6 Must-Have Features
Distribution ERP Software: 6 Must-Have Features
Oct 13, 2021Ken Weygand
Consumer goods distributors must manage many moving parts, both literally and figuratively. The ability to streamline these moving parts is crucial to your company’s success. Fulfilling correct client orders on time is no mean feat, which is why having the right software is invaluable.
What is the right software?
An industry-specific ERP for distributors that coordinates and connects all the disparate parts of your organization is imperative. Nonetheless not all distribution ERP systems are made equal. When looking at extensive feature lists from potential vendors, it can be difficult to distinguish the wheat from the chaff. That’s why we’ve created this handy checklist, to help you prioritize the functionality that will push your business to the next level.
What to Look for in Distribution ERP Software
At the end of the day, your main job as a consumer goods distributor is getting products to your customers in the most efficient way. The first thing you want to ensure when you’re shopping for a distribution ERP is that your vendor has experience in your industry. A generic ERP solution will not work for you; while it will help with some processes and organization, it will not support the complete supply chain and inventory management that is the lifeblood of your business. For that you need specialized distribution ERP software.
You also want to think about whether you want a solution that is on-premise or cloud based. While on-premise entails a larger up-front investment, they don’t offer the same security options as cloud-based. On-premise deployments do give your company more control over the system, so if you need unique customizations, this might be a better option for you. However, if your sales team works remotely, cloud-based has better built-in mobile access. There are pros and cons to both types, so be sure to discuss your needs with your vendor.
The main thing to look for in a distribution ERP is whether it has the features you need. You need a system that can grow with you as your requirements change. For example, if you decide you want to branch out into direct-to-consumer fulfillment, an ecommerce storefront and a stout, secure customer portal are essential. If your ERP system has those features built-in and easily integrated, even better.
Must-Have Features in Distribution ERP Software
You know that an ERP provides your business with a centralized solution that regulates processes and the flow of activities, and gives you more control over your operations. You also know that consumer goods distributors need specific tools and features to help them be effective. What are the must-have features that will help you achieve all this and thrive in your complex industry? We’ve given you an overview of the top six features below.
1. Forecasting and Demand Planning
As a consumer goods distributor, you know that you need to keep the correct inventory levels to meet current and anticipated demand—not an easy task. If you try to do it manually, the various processes involved leave far too much room for human error. Most organizations use spreadsheets and rely on the sales team for order input data. This process cannot work long-term, because not only is the data often inaccurate—it may not be current. An ERP with demand planning is a necessity, as it helps you meet customer demand, minimize excess inventory and avoid supply chain disruptions.
Distribution ERP software with demand planning and forecasting tools integrates both historical sales data and sales forecasts to help you optimize purchasing decisions. With capabilities like supply plans and automated purchase and supply orders, this tool streamlines the inventory management process. Because your distribution ERP has synchronized all functions of sales, supply, and purchasing, you get precise forecasting. You can react swiftly to market changes, improve overall inventory management, and increase customer service levels.
2. Warehouse Management Functionality
Your warehouse is the heart of your supply chain. You need to stay competitive in the new fulfillment economy, because customer expectations are higher than ever, and supply chains are growing in complexity. With warehouse management capabilities built into your ERP, you can support even the most complicated, multichannel fulfillment processes.
A distribution ERP can help you optimize warehouse processes and analyze the best use of floor space based on characteristics you set.
Your team won’t waste time trying to locate products because with RFID scanning capabilities, they’ll always know where everything is. You’ll know current inventory levels at a glance and can rely on those counts being accurate. These automated processes boost pick, pack and ship accuracy and reduce mis-picks. Using lot, batch, and serial numbers, you track products from incoming orders to outgoing shipments.
3. Electronic Data Interchange (EDI) and Retailer Compliance
If you’re not familiar with EDI, you should be. EDI is the transfer of business data between business partners without the need for human intervention. Manual transactions are susceptible to human error. EDI creates and transmits all documents and information electronically, including items like 850 purchase orders, 810 invoices, 856 shipping invoices and manifests, customs documents, and others. This reduces the risk of data loss and errors, and increases accessibility, security, and transaction speed.
If you are a large-volume consumer goods distributor and you’re currently managing supply chain communications through email or any manual processes, you’ll benefit from ERP with built-in EDI. In addition, many retailers require their partners must have EDI before they will conduct business with them. In simplest terms, EDI allows documents to go straight through to the correct application on your end—like the order management system—which means that processing can begin instantly. EDI also ensures that all documents are standardized, so there is no need to figure out complex documents from overseas suppliers.
Many retailers have a robust list of compliance requirements. Whether that’s for every EDI document, shipping labels or on-time, in-full shipments, there is a lot to remember and manage. And often, your business will get hit with fines or late fees when you don’t meet retailer compliance requirements. A distribution ERP helps manage all of these guidelines and specifications to ensure you are always in compliance—helping you reduce fines and safeguard relationships.
4. Sales Order Management
Sales order management automates every step of the sales process. This includes receipt, approval, fulfillment and tracking. You see customer interactions, order status, detailed inventory, and shipment information in real time and can create specific rules on how your business receives, fulfills and delivers orders. What’s more, you get real-time cost information, which means that your financial team knows the impact on gross profit as sales come in.
For consumer goods distributors like you, the sales process presents many challenges. But distribution ERP software allows you to conquer them with ease. With automated workflows and real-time monitoring across inventory, you get accurate quotes and billing errors are eliminated. With the touch of a button, you can obtain approvals and determine the best fulfillment options. And with self-service customer portals, your clients feel in control of their order as they can track progress and make changes at any time. Therefore, you maintain better profitability and improve customer satisfaction.
5. Profitability Scorecards
Do you know how profitable your partnerships are? Do you know how much you’re accruing in costs like freight, allowances, commissions, chargebacks and royalties? With Aptean’s exclusive, built-in profitability scorecard tool you’ll know the profit margins of every single customer and supplier you have, down to the most minute details.
Let’s say you work with Macy’s. Sure, they bring in huge margins for gross revenue, but that is just one piece of the profitability puzzle. You need to know what their discount percentage is, if any. You’ll have to factor in chargebacks, royalties, commission and allowances. If you add all that in and you’re only making 4% on your margins, you’ll know it’s time to reevaluate that partnership and negotiate a new deal.
You’ll also be able to proactively minimize chargebacks. In your business, chargebacks happen. It’s a simple fact. But if your accounting team is simply accepting the deductions without analyzing the reasons for them, that presents a problem in the long run.
With the profitability scorecard tool, you get an in-depth analysis of where these chargebacks are happening, and then you can proactively implement a process to make operational improvements and eliminate the issue in the future. For example, it could be as simple as a warehouse printer printing the wrong UCC-128 labels. Once that issue gets corrected, the chargebacks cease.
6. Business Intelligence
Your distribution ERP is already an awesome tool to grow your business. If an ERP is a screwdriver, keeping the nuts and bolts of your business intact, business intelligence, or BI, is a massive power drill. Where an ERP helps keep main operations and processes running smoothly, BI goes one step further. It gives your company strategic insights into performance metrics and helps you uncover trends. You apply these trend analyses to map out actionable strategies and grow the business.
When you’re making business decisions, you need accurate data. The vast amount of data involved in the daily operations of your consumer goods distribution company is mind-boggling. You need a way to organize, store and analyze this information. Distribution ERP software with BI converges everything, and helps you convert mountains of data into clear insights.
If you want to grow your distribution business, you’ll need robust BI capabilities. With Aptean Business Intelligence, you clearly see trends and patterns, you anticipate market shifts and then proactively adjust plans. Perhaps your warehouse struggles with timely deliveries. You know this by getting reports through your ERP; however, with BI integration, the warehouse manager can identify the issue almost instantly and make the necessary changes to the delivery process.
Now Is the Time for Distribution ERP Software
A distribution ERP offers your consumer goods business some profound benefits but be sure to look for one with essential industry-specific features that complement and enhance your operations and business processes.
If you want to thrive in today’s competitive marketplace, you need to be nimble and have the best technology solutions. We get it—an ERP is a huge investment; but it is the tool you need to boost efficiency and agility and enhance customer service at every level.
Aptean understands that your company is unique and that a generic ERP will not be a perfect fit. As the distribution market niches down, your solution needs to do the same. Our industry experts know the issues that you face, and we have designed our distribution ERP to give you the features that you need. Our distribution ERP software includes all the features covered in this blog, as well as powerful functionality, superior implementation and an unparalleled support team. We pride ourselves on being a technology partner throughout the life of the software.
Talk to one of our industry experts and we’ll help you find the right solution to meet your specific challenges head-on. Are you ready to get started? Find out how, now.