Distributors must pay attention to the costs of ordering, selling, transporting, and holding inventory. Success depends on keeping these factors at minimum or optimum levels and ERP is a primary tool leading to that success. Here we explain some ERP features important in the distribution business.
Distributors should have an internet portal for their customers to use. Each customer’s portal will be designed to allow for quick placement of orders based on previous orders, also suggest products based on the items ordered as well as similar items another customer mixed with similar items. Those orders load directly as sales orders in ERP. At the same time, with no user-required transactions, the order will schedule for picking in the warehouse automatically. The shipping transaction and shipping schedule follow as well. A portal will reduce the cost of selling dramatically.
Distributors ought to select suppliers that provide portals to their ordering systems. Unlike the customer portal, a distributor can customize their ERP to signal the portal directly with purchase requests based on customer demands and carefully planned inventory levels. Many, but probably not all, human purchasing transactions can be automated by linking the distributor’s ERP with the supplier’s ERP through EDI, XML, or similar machine connections.
Quick inventory movement
Keep your inventory moving so it can provide the return on investment needed. Your ERP will have a generic sales order picking report. Use technology and communicate with warehouse workers via a notes/message using an instant chart system. Throughput will increase because the worker can now move along the warehouse racks taking a linear path and the transactions are completed in real time. Warehouse management system (WMS) technology will direct new receipts to optimal locations based on requirements into the future while limiting the selection to those with the capacity to store the new receipt.Use the business intelligence (BI) module in ERP to identify inventory with no demand and suggest immediate action. Those items possibly could be returned to a supplier or offered to a customer with a reduced price for immediate sale and surplus inventory is minimized.
Accounting and finance
Distributors must have accounts payable, accounts receivable, and general ledgers, and other accounting and finance modules within their ERP. Consider paying and collecting cash via electronic fund transfers controlled by ERP. Avoid the cost of preparing checks, carrying deposits to the bank, and negotiate discounts at the same time.
Point of sale
When a distributor sells over the counter, they should use modern point of sale tools. Barcode scanning will ensure the precise item is charged, updating inventory and the customer’s purchase history simultaneously. Distributors can go further. Their customers have sophisticated POS tools of their own. When the customer sale reduces their inventory below a trigger point, that POS device will send a replenishment order directly to the distributor. The distributor scores a free and immediate sale. The customer is satisfied when their inventory is replenished quickly so they can increase sales too.
Many distributors gain advantages through eCommerce. You can provide your own web storefront and sell directly to internet users. Another excellent option is to collaborate with another web seller. They maintain the storefront and deal with customer credit cards, mobile payments(M-Pesa, Tigo-Pesa etc). They signal your warehouse to drop ship the merchandise to their customer.
Drop shipping offers a couple of options. One, you simply ship a box to the customer. Another profitable option is to provide light assembly service for the storefront operator.
Warehouse Management System(WMS) helps distributors keep their inventory organized so it always is ready for the next transaction. Active items should be near the front for easy and quick access. Some inventory comes in small packages that require a basket and another distributor inventory is large, bulky items that require floor storage. ERP will direct your inventory to its proper place. When something is kept on a rear shelf but is needed soon for a shipment, your ERP will signal a move to a bin location close to the shipping dock.
A delivery truck arrives at your receiving dock. One pallet in that trailer is needed for an outbound shipment while the remaining pallets will be broken down and stored a little longer. Cross-docking is a process used by distributors. ERP signals the receiving personnel to move that one pallet directly to the shipping dock and record the transaction so the inventory on that pallet is available immediately for a shipping transaction.
ERP today provides mobile access to users. The screen is much smaller but all the data is available no matter what the screen size is. Who needs mobile access more than a distributor? Your customer is visiting their customer. They learn of an immediate need. Because they have mobile access and can check on available inventory at your company, they can place a purchase order through their cell phone and get delivery this afternoon. Your customer is happy and their customer too. You made a sale without lifting a finger.
Mobile access is more. Your CFO can check on the cash position as of now using a BI dashboard that shows exactly what is needed on a five-inch screen. The CEO can check a mobile device and watch as orders and shipments accumulate during the day.
Users in the warehouse might find a product with a damaged label. Their cell phone app can still read the bar code section of the label and precisely identify what that item is so that a proper label can be prepared.
So, As long as you are in distribution business, Logistics business, the above mentioned features are most important to consider when inventing on business information system that has to incorporate these features. The Business information System so called ERP have to be so flexible and scallable enough to accommodate your business processes you operate within.
Singo Africa Limited would be happy to help you on your investment when considering buying and/or implementing an ERP, we can help you from Business process structuring, vendor selection, implementation (project management) as well as Benefit realization(ROI) and you will never regret working with us.