4 key components of ERP software for your wholesale distribution business

ERP solutions for manufacturing or retail operations don’t always cover the needs of wholesale distributors.

Two of the most crucial parts of your distribution channel are the wholesalers and distributors. Forming an intrinsic link between manufacturers and retailers is of a great importance to the whole supply chain, but this doesn’t mean that they get the level of specialist recognition that they require from software vendors.

These days, there are quite literally thousands of different software solutions out there which are designed with the needs of manufacturers and retailers in mind, yet the needs of the wholesale and distribution industry seem to have been somewhat left behind.

Wholesalers and Distributors

The business of wholesalers and distributors is to sit somewhere between manufacturers and retailers in the supply chain. To put things simply, a wholesaler is responsible for fulfilling orders that come from the retailer, via an inventory that is acquired in bulk from other industry suppliers.

A distributor acts as a sort of intermediary while offering additional services such as added product value, promoting sales of the product, and processing any returns.

The reality of the industry is that the distinction between wholesalers and distributors is a little blurred, and there are often overlaps in the services offered and the tasks carried out for each. A good example would be that there are times when a wholesaler will provide distribution services, and there are times that a distributor will provide wholesale services. This has resulted in many companies choosing to call themselves “wholesale distributors” in an effort to bring the two areas of the industry together in synchronicity.

An ERP for manufacturing or retail-only purposes, usually doesn’t cover the needs of either the wholesalers or the distributors, as it requires in-depth functionality that is not usually a requisite in the manufacturing and retail industries. As such, there are four main areas of business that every ERP for wholesalers and distributors should consider.

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1. Distribution Process Management

This component can be divided into an additional six areas as follows:

  • Distribution Requirement Planning (DRP) which is a planning engine that is designed to handle the specific needs of wholesalers and distributors.
  • Sales Management which automates customers’ orders and status tracking and provides management of complex pricing agreements, support for returns, and inventory allocation processes.
  • Purchasing Management which manages the purchasing of raw materials, partly finished, and completed products as well as tracking contract compliance of suppliers.
  • Quality Management is the set of actions or the process that ensures a company produces and then delivers top-quality products. A company must comply with national and international regulations, as well as internal requirements for quality control.
  • Customer Relationship Management is the way in which campaigns, leads, sales force automation, customer service, and support are handled and processed.
  • Barcoding and Radio-Frequency Identification (RFID) are very important parts of the ERP. All products must be packed properly and labelled with barcodes to ensure an efficient movement through a supply chain.

2. Supply Chain Management (SCM)

SCM is the way in which all business operations between every part of the supply chain is managed for optimum efficiency. ERP for wholesalers and distributors aim to provider a much more in depth SCM functionality than a standard ERP.

In particular, it should cover these four key areas of the supply chain: Warehouse Management Systems (WMS), Transport Management Systems (TMS), Global Trade Management (GTM), and Supplier Relationship Management (SRM).

3. Retail and E-commerce

In order to sell goods and services to business and clients, a company needs an effective retail and e-commerce software solution. A truly comprehensive software solution should include Web-Based Multichannel Commerce and Retail POS software.

4. Back Office Operations

While back office operations can include a vast number of different components, there are three areas that are particularly applicable to a wholesale and distribution company. These are:

  • Financials application – this manages the financials and resources of an organisation including reporting, accounting, payments, budgeting, risk management, etc.
  • Contract, rebate, chargeback processing – these are particularly important to wholesale and distribution companies as such companies often need to manage multifaceted contracts as well as a complex network of buyers and sellers. 
  • Human Resources – HR applications are needed to manage personnel, benefits, payroll, health and safety, and employee self-service.

If you are in the business of wholesale and distribution, you really should be considering these four key components when you are looking for an effective ERP solution. Find out how Acumatica ERP can take your wholesale distribution business to the next level.