As some US-based manufacturers move away from domestic manufacturing toward more distribution-based business models, many find it beneficial to find distribution software that better fits their evolving operational strategies.
Distribution companies differ from manufacturers in a number of ways. Instead of requiring capabilities around production planning and product configuration, distributors need to be better equipped to handle functions such as procurement and demand forecasting.
Considerations for Evaluating and Selecting Distribution Software
Purchasing and procurement. Because distributors have more money tied up in finished goods inventory than manufacturers, effective and consolidated procurements becomes increasingly important. Clear visibility to vendor purchases, product costs for different vendors, and other such information becomes very important. An effective distribution ERP system should enable these processes.
Planning and demand forecasting. Given the higher finished goods inventory. accurately planning demand and corresponding inventory needs is very important. This is an area where ERP software solutions vary considerably, so this area should be carefully explored during the software evaluation process.
EDI and customer integration. The increasing importance of business to business sales underscores the need for seamless communication with customers. Integrated and automated communication of areas such as EDI, advance ship notification, and order status updates are very important and should be carefully considered with potential distribution software offerings.
Complex financial reporting. Many distributors expand their product lines as a result of their shifting focus away from manufacturing to distribution. As a result, it can become increasingly difficult to track sales by a number of different variables, such as sales by brand, product line, geography, etc. Your distribution software should contain robust financial reporting to support these needs.
Light assembly. While most distributors do not require sophisticated product configuration or other engineer-to-order functionality, it is still important that the distribution software enable final assembly of products. Packaging and value-add assembly processes are two examples of potential functionality that should be supported.
Each company has it’s own unique needs, but the above should serve as a starting point of things to consider when evaluating potential distribution software solutions.