Distribution ERP - What Kind of Distributor Are You?

Evaluating advice and information relating to ERP and distribution requires first that you understand exactly what portion of the distribution spectrum you are interested in, and then, what portion the information – vendor claims, ERP implementation consulting experience, etc. - you are evaluating is referring to.

Distribution can refer to channels – retail or web or wholesalers, for example. It can be shorthand for the primary function of administering transportation routes and freight management. If distribution is used in context of manufacturing, then it may be limited to getting finished inventory off the loading dock and on to a truck. In all of these cases the functionality requirements of distribution ERP software are significantly different, and the vendor selection process can and should be different.

Channel Distribution

Managing channel distribution is largely a matter of marketing strategy. How you choose to sell your products, and to whom, must be a well thought out approach, or you can end up alienating your customers. For instance, if your primary channel strategy is to get your product to market via regional distributors, then later decide to also offer your product directly to consumers via a website, that could put you in direct competition with your distributors. The types of ERP solutions that help manage this sort of distribution have more elements in common with customer relationship management than traditional supply chain management.

Logistics Based Distribution

Companies which make their money primarily from the transportation of goods from one point to another are dead center in the distribution spectrum. These companies deal with a very unique set of business problems and need a very unique set of ERP utilities as a result. Distribution companies are extremely sensitive to fuel costs and fuel consumption, and the effect changes in either can have on costs and productivity. Transportation companies operate in a highly regulated arena, in which the hours drivers can work is rigidly specified, and can sometimes complicate the planning for long hauls. Truck and trailer (asset) management requires its own unique math formulas and logic. And all of this occurs in an environment that is chronically short of qualified drivers. Distribution ERP software for this segment needs to integrate smoothly with these business problems.

Manufacturing Distribution

Manufacturing operations often have a distribution function that is almost entirely a warehouse function, whether the warehouse exists as a part of the factory, or as a separate distribution center facility. Warehousing issues typically involve picking strategies, inventory movement, financial control and cycle counting, bin location, safety stock management, and document creation for bills of lading, shipping labels, and packing lists. Again, the ERP packages that handle these things effectively probably aren’t effective at handling the previous two categories of distribution.

The conclusion is to be well versed on what distribution requirements you have as you do your research for the right ERP vendor. No distribution ERP system on the market is all things to all organizations, and finding out the right fit for you will take self-knowledge and patience.