Selecting distribution ERP software for wholesalers

Successful wholesale businesses have two common traits:  they know what their customers want to buy, and they know what those customers have stopped buying.  With that knowledge of customer demand, they keep their inventory optimized at all times.

Inventory management

Wholesale ERP must be accurate as to the quantity of any item on hand.  Perhaps more important is the location of each of those items. Is every item stored in the best bin location so that it can quickly be picked and shipped when the next order is received?

Wholesale distribution software also must allocate inventory as orders are received. An item might still be on hand after the first order is received. ERP must prevent a sale of that same item when a second order is taken.  

Distribution management software typically includes slotting, where specific quantities of any inventory item are placed in bin locations optimized for particular customer orders on hand now or predicted in the near future.

Check out our ERP inventory management guide available exclusively to ERP Focus

Kitting and assembly

Many wholesalers go beyond merely storing inventory for their customers.  Often they perform final assembly of products. A customer product could be sold in a variety of colors with the same internal component.

The wholesaler snaps a colored skin on the product before shipment. This practice is light manufacturing, and a wholesale ERP will include bills of material and assembly jobs to complete the software required.

Lot tracking

Wholesalers in many industries must maintain lot tracking for their customers.  If there is a product recall, good compliance requires that the lot number chain must connect from the original producer through a wholesaler and finally to the end customer.  Wholesale ERP must keep that chain connected.

Third party warehouses

ERP software for wholesale distributors must allow the use of multiple warehouses, including those operated by other businesses.  Often the same products will be stored in more than one warehouse. ERP for a warehouse business will allow orders to be shipped from any warehouse but generally will default to a single shipment from the same warehouse.

Quoting and order management

Wholesalers frequently must provide quotations to earn business from customers.  Those quotations must be accurate with respect to any promised delivery schedule, based on available inventory and suppliers' receipt dates for items to be purchased.  The correct pricing schedule for that customer is also a requirement for the wholesale ERP system.

Point of sale counter transactions

While many orders are taken over the telephone or through e-commerce, there will certainly be orders taken in person over the sales counter.  Whenever that is an important part of a wholesaler’s business, the ERP should support robust transactions that record the sale and immediately reduce inventory.

Pricing by customer, quantity, and seasonal pricing

Wholesale ERP must allow a business to set pricing unique to specific customers using specific item prices or variable discounts.  ERP also should allow quantity discounts, as many wholesalers offer those to customers. If products sold are seasonal, there might be additional price or discount schedules that override the default schedule.  There are many possible price and discount arrangements, and ERP has to allow a business to use all that is required.

Vendors to consider

Every business must develop its own set of requirements for ERP.  These are a few that are specific to the wholesale industry. Your business will have its own unique requirements.  Agree on those you need and ensure the ERP you choose can meet your requirements.

Specific solutions like SAP Sales and Distribution (a module within SAP Cloud ERP (formerly S/4HANA) offer enterprise-grade capabilities for complex pricing and global supply chains.

Meanwhile, Acumatica distribution ERP provides flexibility for growing distributors, and NetSuite's wholesale distribution edition includes pre-configured workflows, dashboards, KPIs, and business processes designed for wholesale businesses.