Did you know four out of five consumers change their mind about buying a product after reading a negative review online? And since there’s not a lot businesses can do to take down bad reviews, providing great service is one of the first lines of defense against them. This makes distribution support, a core type of ERP functionality, even more important in the digital age. Distribution software is critical for getting products out to your customer base in the most efficient and accurate way possible.
These systems manage the supply chain operations that support the final distribution of goods. But what should you be looking for when shopping for a new system? To help you answer this question, we’ve created a checklist of popular distribution ERP software features and requirements. Use it to create your own list of requirements to help you find a solution perfect for your company.
Questions to Ask Yourself
Along with the requirements you need to gather, you should also think about other factors before choosing a software solution.
Does This Vendor Have Experience In My Industry?
Distribution systems are built for a variety of industries. Therefore, it’s improbable that you won’t be able to find one built with your specific industry in mind. For instance, a company that produces pharmaceuticals is going to need a very different system than a company in higher education.
How Much Functionality Do I Need?
The biggest systems on the market are certainly impressive but aren’t the right choice for everyone. You want to make sure you choose a system that can handle your current operations and projected growth. However, keep in mind ROI as you shop around. Having an oversized system could make it harder for your workforce to use, lowering your adoption rates. Those extra features aren’t worth the price if nobody uses them.
Is a Cloud Solution Right for My Business?
Along with functionality, you should also think about deployment. Cloud products can often solve the issues discussed in the paragraph above. Cloud-based products offer scalability, meaning your company can scale modules up or down depending on current needs. Cloud solutions also offer lower costs upfront. However, on-premise solutions provide more control and work offline. Businesses operating in remote locations or that deal with especially sensitive data may find this a more suiting option.
Sales Order Management
Essentially, sales order management turns information into orders. Distribution software automates order processing by taking data input from a customer and creating a formal order for products. Many systems provide omnichannel order entry tools as well, like Point-of-sale or POS software. POS software facilitates payment processing in brick-and-mortar locations, which helps offset some of the stiff online competition.
Additionally, these tools see orders through fulfillment and even returns in some cases. Users can easily see where an order is at any point in its lifecycle with real-time order status updates. When customers inquire about their orders, it’s important to have quick access to the answers to their questions. See if orders are still being prepared for shipment, in-transit or if a problem occurred along the way.
Order promising and inventory commitment can help prevent hiccups in the warehousing part of the process. These tools reserve inventory for orders based on priority. This way, more important orders are fulfilled first so your most valuable customers aren’t disappointed. You can also choose a distribution solution that provides self-service portals for both vendors and customers to keep all parties in the loop when it comes to orders.
Automated Order Processing
Real-Time Order Status
Order Promising and Inventory Commitment
Self-Service Vendor Portal
Self-Service Customer Portal
Customer relationship management (CRM) software helps companies get to know their customers. These tools provide access to data on customer identifiers like credit limit, order status, order history, billing and shipping address. Further, these tools provide some insight into behavior by maintaining data on past purchases. Users can also manage marketing campaigns and incentives to attract and retain customers. This type of innovative tool may be a part of a dedicated distribution software system. However, some systems require users to integrate a CRM if it’s not inbuilt.
Estimates and Quotes
Sales Force Automation
In order to stay competitive, distributors need to incorporate efficient methods of obtaining the goods necessary for business. Today’s sales and distribution software provide an interface to centralize procurement functions such as purchase-order and bid management. Procurement management also handles drop shipping for products that your company doesn’t handle directly. Procurement software provides users with assistance in issue requisition requests as well. These solutions allow users to match POs with accounts payable to facilitate payment processing.
In addition to handling the procurement lifecycle, procurement modules provide variance reporting tools. Users can set up alerts if any discrepancies are present after the final calculation.
Warehouse capability is a no-brainer for distributors. An ERP dedicated for distribution has the tools needed for the heavy lifting of order fulfillment. First, warehouse management software takes care of your inbound and outbound processing. This ensures accurate data on your inventory, allowing for smooth warehousing processes thereafter. If your inbound and outbound processes are sloppy, all the following tasks will be much harder to manage, since you’ll be constantly correcting errors.
Warehouse management automates the pick, pack and ship process along with putaway. These activities support a streamlined warehouse, enabling your employees to perform their daily tasks in the most efficient way possible. This is made possible with tools like slotting optimization, which calculates the best physical placement of goods in your warehouse based on demand correlation. It’s also made possible by pick-to-light, a system that utilizes light signals to make the picking process practically foolproof.
Distribution resource planning software may also include kitting capability within its warehousing tools. Kitting (or bundling) is the process of packaging two or more products together when demand calls for it. In order to do this effectively, your distribution software needs to also be able to support multiple warehouses and location tracking. These functionalities allow items from one warehouse to be sent to another for the kitting process while maintaining user visibility of all inventory. These will have visual interface components to help see where things are happening and how distribution has to occur across the entire chain of business locations.
Putaway and Receiving
Wave and Load Planning
Multiple Warehouse Support
Virtual Yard for Off-Site Equipment
Production management provides businesses with all the tools needed for the manufacture of goods. These tools include a bill of materials for products or parts of products. Staff can also utilize production planning, cost management, quality management and shop floor control.
Manufacturing tools are common among distribution requirements. As long as you aren’t shopping for a standalone system, you don’t have to worry too much about this capability’s inclusion in your distribution software. However, if you do go with a best-of-breed system and need manufacturing software, make sure you can easily integrate the two.
Bill of Materials
Product Data Collection
Shop Floor Control
Work Order Management
Shop Floor Document Management
These tools are what warehouse managers use to optimize and manage inventory levels. They give users a level of visibility over products that allow for analysis of product pipelines, demand analysis and manufacturing analysis. These predictive features can help a company know when to order items through a supply chain and how fast those stores will be depleted. These tools can often be found under a Distribution Requirements Planning (DRP) module.
Visibility is provided by intelligent inventory tagging using RFID tags or barcodes. These tools allow users to track inventory throughout your warehouse. Inventory management tools also allow users to assign serial numbers based on which lot the product came from. From the serial number, you can quickly find out important product data, like geographical origin and time of production. Data points like these are extremely valuable in the case of a product recall. With serial numbers, you’re able to recall only the affected product instead of recalling all product on the shelves.
Inventory Demand Forecasting
Inventory Bin/Location Control
Distribution Requirements Planning
Lot and Serial Number
RFID/Barcode and Intelligent Inventory Tagging
This suite includes financial planning, analysis, bank reconciliation and fixed asset depreciation calculation. Additionally, many systems support accrual-based accounting to better understand the profitability of your company during a given time period. Further, financial management may support multiple tax regulations, multiple currencies and automated calculations.
Distribution software may also help decision makers evaluate cost centers. Costs will be attached to everything that happens in the course of distribution and surrounding business processes. Users can look at costs from a variety of precise vantage points to identify which investments are really bringing value and which may be changed or updated.
Billing and Invoicing
Budgeting and Forecasting
Debt and Discounts
Setting up an online presence is an excellent way to distribute goods. ECommerce tools allow you to set up the shopping experience that will satisfy your website’s visitors and encourage them to become customers. Use real-time data to give your shoppers accurate prices, order status and product catalogs. Many systems don’t typically include eCommerce tools, but they are easily integrated if not built-in.
eCommerce Transaction Management
eCommerce Order Fulfillment
Supply Chain Management
Ineffective communication is likely the biggest reason why nearly half of all supply chain collaborations fail. Thankfully, many of today’s supply chain management suites contain collaborative tools to solve this issue. These include web-based portals that both external and internal parties can use to communicate. These portals also allow vendors to onboard themselves into the system, eliminating the constant back and forth typically required to process partners.
Moreover, users can access visibility into the supply chain. Users are able to track functions along with the involved items across planning and execution. This breaks down the information silos that hinder collaboration, as everyone has access to the same data.
Supplier Relationship Management
In addition to collaboration, distribution software components include transportation and logistics management. These solutions allow businesses to streamline operations, cut costs and increase customer satisfaction. They do this by optimizing freight planning using factors like travel distance and route congestion. Users have access to freight calculation based on rates from multiple carriers as well.
Total Logistics Cost Modeling
Better understanding the features distribution software offers is the first step to choosing a system with confidence. Equipped with this knowledge, you can now compare the vendors you think might benefit your business the most. But simply knowing what you need from a solution doesn’t make the comparison process easy by any means.
Which is why we recommend using our distribution software comparison matrix. It lets users compare top systems against the features above and includes scores from our analyst team all in one place. We also provide a customizable requirements template if you need more time putting together your own list requirements.
Which requirements will you gather for your business? Are there any major ones that we didn’t list here? Sound off by leaving us a comment down below!