5 reasons for a distribution company to use an ERP
A significant number of distribution companies still have only limited access to e-business, be it for lack of resources (human or financial), lack of expertise, or more simply for lack of products adapted to today’s reality.
For both information exchanges and transactions, an SMB’s management systems can now communicate directly with systems used by its suppliers, partners, banks, customers, employees, governments, or even its accounting professional.
An enterprise resource planning (ERP) system is designed to be a fast and simple way to meet these needs. It allows companies to manage most of their operations centrally and provides up-to-date information on critical items such as budgets and revenue growth.
In contrast to silo-based systems, an ERP system serves as a central point of contact to efficiently manage the inner workings of the distribution business. Although this can seem complex, particularly for SMBs, the benefits of this approach can help:
Streamline internal operations
Strengthen customer relationships
Simplify administrative tasks
- Improve productivity
Organizations must then assess which of their distribution activities would provide the best opportunity for cost reductions, efficiency and profitability gains, or more flexibility in their operations. Here are five ways an ERP solution can help you continue to grow your small business:
Enhance financial management performance
Despite their individual characteristics, every company wants to manage its finances as efficiently as possible. Too often, poorly organized systems make this task more difficult.
Management software puts an end to the inefficient tracking which relies on disparate spreadsheets and multiple manual operations that take up a lot of time and create opportunity for human error. An SMB needs accurate information, presented in a systematic and efficient manner, in order to have an optimal overview of the company and its operations.
Payment and billing systems are also a headache for anyone who is trying to get by with outdated software or inadequate tools. Even the best employees have their limits. And so does your accountant.
Too much work eventually leads to more mistakes. Using an ERP system is like hiring an assistant to help you with your daily activities. With the right management software, companies are better equipped to manage payments and automate invoicing, adjusting currencies as needed.
Improve operations and supply chain management
ERP provides a complete view of a company’s operations and enables leaders to drill down on key drivers, such as profitability, cost, and budget management.
Inventory management is a challenge for all growing SMBs. Small businesses must keep enough product in stock to meet demand, while also making sure they don’t over order.
After all, no business wants to be saddled with hundreds of items just sitting in their warehouse. With an ERP system, you can also reserve products that are in the receiving process at the warehouse to handle more urgent customer orders.
For instance, you could set a minimum inventory level to be maintained. This way, you will not be caught unprepared when there is a sudden spike in your sales or a stockout with your main supplier.
A common mistake made by SMBs with multiple branches is to manage inventory in silos. For example, one warehouse may have several products sitting idle, while another may be out of stock for that same product. If the different branches do not have the same inventory management tool, they do not have a way to help each other.
Finding the right balance is not always easy, and there are many hurdles in the supply chain. Learn about some common inventory management mistakes.
Provide a better customer experience
Customers are looking for accurate answers supported by up-to-date information. With spreadsheets, however, your customer service associates may not have the most current information available. Customer service associates must wait for the spreadsheet to be updated at the warehouse, which may cause unwanted delays in responding to their callers.
With management software, every employee involved, from the head office to the warehouse, has immediate access to the most reliable data, which they can then easily pass on to customers.
Clearly, these gains in efficiency on day-to-day activities will improve delivery processing. With automated purchase orders and simplified packing slips, your teams can complete tasks more quickly. Deliveries will take less time to arrive, and sales will move in the expected upward direction.
Secure data storage
Data management relies heavily on keeping corporate records secure and having structured processes in place. Even a single incident of hacked accounts or stolen data is cause for alarm for any business operator.
Hackers intending to steal customer data from an SMB equipped with a management solution will face an exceedingly difficult task. They will have to overcome multiple complex security mechanisms. Conversely, hackers will have no trouble breaking into an employee’s workstation to steal a customer list in Excel format.
Consider the consequences if that information were then published on the Web—reputations could be severely damaged. Essentially, an ERP solution will streamline the way distribution companies manage their current and potential customer information and keep the data secure.
Enable executives to access data remotely
The leaders of fast-growing businesses have too much to do to deal with systems that can’t keep up. Consider a large accounting firm that has grown significantly in recent years. Its executives are constantly travelling on business.
During peak periods, they are out of town about two weeks a month, meeting with customers and monitoring ongoing operations. Because they are frequently away from the office, they need a management system that can be accessed from any device.
Many software systems require a desktop setup and cannot be used with a tablet. ERP solves this issue by enabling users to work from anywhere, provided they have an internet connection. Executives can oversee key business operations from any location.
Is it time to change your ERP system?
Choosing the right ERP system for your distribution business is critical. Implementing an ERP system requires preparation, time, and effort, but the resulting company-wide benefits are undeniable.
An ERP solution is nothing less than a cost-effective platform that centralizes financial, operational, and data management. It allows businesses to track costs and operations, while also simplifying report access and creation.
Take a look at our success stories or contact the ACCEO ERP team to learn more about the Acumatica platform.