5 Distribution Industry Challenges & How an ERP Can Solve Them

The pandemic caused all sorts of new challenges for distribution industry everywhere. With little control over availability, it put many businesses in a tough position. Why did some survive and thrive, while others did not make it? How do you ensure that products get to their correct destination and on time? These are not the only problems the distribution industry faces. We’ve seen more manufacturers and retailers investing in their own distribution networks, providing products directly to consumers, cutting out the distributor. Many distributors are finding themselves stuck in a difficult position because of this. They are right between manufacturers who must increase prices to keep up with rising costs and retailers who want to purchase larger quantities and pay less to keep up with consumer demands. These are just a few of the issues distributors are facing. So, how do you keep up and get ahead in the ever-changing world of distribution? Here are a few challenges and how a modern ERP solution can help you to overcome them.

Inventory Management ​

​Inventory management issues can be complex and are nothing new to distribution industries. Businesses are constantly trying to find the best way to track everything coming in and going out of the warehouses. Tracking your supply is essential because if you don’t know what you have, or what you need, how will you know what to restock? And, if you don’t have what customers want, they will go elsewhere, which means you lose a customer. How do you track inventory? Many businesses rely on manual counting methods, which are inaccurate and can overwhelm your employees. Others have gone the way of RFID tags, but those become a huge expense for your business. Modern ERP software, such as Acumatica, has inventory management built-in for your business. No matter the size and budget of your business, you can now track items on hand, in real-time, and stay on top of your inventory supply. Along with built-in reports, you can make accurate predictions on trends and stock counts.

Warehouse Operational Efficiency

​Beyond inventory management, the right ERP solution can help increase the efficiency of your warehouse. For example, and ERP system can help give your team picking orders that move them more efficiently in the warehouse and helping your employees pick orders more accurately. Not only the picking order, but an ERP solution can automatically update picking orders with new locations when bins are moved or tell people to pick overflow first. Along with efficient use of space and layout of your warehouse, and ERP solution can help overcome warehouse operational issues.

​Online Sales

​Ecommerce has become a needed force in the distribution industry. Online sales are growing by 15 percent every year and distributors around the world are scrambling to set up online stores. This is not an easy task, even for distributors who have been around for 10+ years. Most distribution companies are not website experts, let alone eCommerce people, but now, to stay competitive you need an online store that is aesthetically pleasing and lives up to the expectations set by big businesses like Amazon. Modern-day solutions are providing smaller distributors fully optimized eCommerce stores, just like the big businesses. The focus has shifted entirely from “just” having a website to using eCommerce solutions to attract and retain new customers. Along with these web-based stores, security has become a major concern for all businesses. Cybercrime and hackers continue to haunt organizations around the world and major data leaks continue to happen. You are not alone thinking that your business might be next. Modern-day solutions, like Acumatica and BigCommerce or Shopify, give you both, a current eCommerce solution with top level security. All without having to be an expert.

​Keeping Up with Customer Expectations

​Perhaps the biggest challenge for distributors now is keeping up with customer expectations. Millennials, growing up in the digital era, have online store expectations. Millennials grew up using a mobile phone and ordering things online. They are accustomed to a standard of customer services that online sites have been providing for years.
​Now, they are advancing in the workforce and expecting the same kind of service in the B2B market. This might be something different for your business, since wholesale industries didn’t have to worry much about this in the past, nor did you have to have the value-added services you’re being asked for now. The industry is changing and businesses who want to survive need to adapt to these expectations. The good news is that more ERP solutions, like Acumatica, are now offering easy, eCommerce solutions that are modern and able to keep up with the current digital expectations.

​Shrinking Profit Margins

​We are all concerned about margins, it’s the bottom line. Profit margins determine a business’s revenue and overall profitability. With online sales, manufacturers are providing customers with direct access to their products and services. No more middleman needed. What does this do for your bottom line? A 1% price decrease requires the business to increase its sales by nearly 6% to achieve the same profit outcome. For large distributors, losing a key supplier can mean a reduction in product line, an increase in competition and a huge drop in revenue. For small and mid-sized distributors, losing a supplier can lead to extinction. ​​Technology is the main cause, enabling customers an easy, online way to get in touch with manufacturers directly. Coincidentally enough, technology is also the solution to this concerning problem.
You, as a distributor, must now aim to provide time and money saving services that a manufacturer simply wouldn’t be able to. One such service is VMI (Vendor Managed Inventory) which automate the elements of distribution. These automations include the order lifecycle itself, wherein the retailer simply has to specify reorder points in advance and the distributor delivers the order as requested. ​This means the retailer never runs out of stock and gets countless other benefits which only a wholesale dealer could provide.
Find out more about Acumatica and all it has to offer distribution businesses like yours, through its modern platform, eCommerce solution, and more. Click here to request more information, or give us a call at 440-498-9920.

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