WHAT GOOD DOES ERP BRING TO WHOLESALERS?

We have reached the age where eCommerce has grown in leaps and bounds. Compared to a decade ago, it has reached its peak, putting pressure on companies to keep up with the demand of today’s clicking generation. 

And with today’s pandemic forcing people locked into their homes, and with more time in their hands, consumers are sweeping away retail store chains, jumping from one site to another, to kill boredom and find the latest valuable item on sale. As a result, the US saw a massive uptick of 68% in the retailer’s year-over-year (YOY) revenue growth compared to last year’s mid-April records. 

Undeniably, COVID-19 has forever changed the retail arena, pressing an insurmountable challenge to wholesalers and distributors and the way they operate, regardless of which industry they belong to.

Figure 1. US retailers see online growth YoY in April similar to recent holiday season

Source: https://ccinsight.org/

Online shopping taking the world by a storm lingers a question of operational efficiency to our wholesalers—uncertainties ascribed to illegal practices and unscrupulous traders breaching security protocols as if adding insult to injury.

Cost-effectivity, security, quick turnaround times and access to seamless multi-channel experience remain atop shoppers’ list.

That should go without saying that online businesses and wholesalers should closely work hand in hand to create a seamless experience for consumers. 

Unfortunately, only those companies who have embraced ERP technology have a fighting chance of surviving carnage that is the online marketplace. 

But what’s ERP, to begin with?

In layman’s terms, an ERP system acts as an access point that allows one to see, integrate, and automate all critical functions of a business. 

ERP is a proven method to tackle the common challenges faced by the distribution industry, providing control, visibility, and process efficiency, which are crucial to future-proofing businesses. 

A lot of companies have unlocked their potential with this. In a study conducted by the Aberdeen Group in 2018 entitled ERP in Wholesale and Distribution, 83 percent of the wholesalers and distributor respondents have been using ERP. The data they obtain from the ERP systems give them a holistic view of their policies that pave the way to informed decisions.

6 Benefits of ERP to Wholesalers

There are numerous benefits to an ERP system, regardless if a fledgling company or a veteran moving towards expansion. Here are some of the glaring benefits one can experience upon triggering ERP systemization:

Enhanced Productivity and Cost Reduction

Of course, companies want to save on costs. They want to increase the bottom line profit, and one way to achieve that is through increased sales coupled with reduced operational costs. Here is where we can see the impact of having an ERP. 

By automating essential business functions, whether in logistics, operations, finance, human resources, and sales, companies can free up costs on manual, tediously repetitive tasks. Employees will no longer spend too much time manually tracking inventory. They can also minimize errors, if not eliminate them. 

Furthermore, since a suitable ERP solution provides valuable business intelligence data and insights, decision-makers can allocate resources to increase productivity and efficiency. They can drive further cost savings through smart inventory management, accurate forecasting, and communication with leaner supply chains. 

Real-time Visibility

There are significant risks when business owners make decisions off of stale, atypical, and disparate data. Data gathered from a month ago would be of little use to companies, especially if consumers are expecting fast turnaround times. With an ERP system in place, companies can reduce these risks because they can access data in real-time by keying in secure login credentials through multiple platforms. 

It doesn’t matter if they are on-site or mobile. Employees can work remotely and access information from cross departments anywhere, anytime, when the need arises. That way, companies will be able to address the logistical concerns of retailers when consumers order online. 

This explicit business visibility opens doors to an understanding of what goes on inside the business, which empowers innovative and proactive distribution.

Tight Inventory and Logistical Management

One of the significant problems wholesalers have is the challenges in keeping track of the real-time quantity of inventory. 

And with multiple locations, that could pose an even bigger problem. Wholesalers must ensure that the right stock is available and in what warehouse, once a customer places an item. These companies must also be able to shift stocks and track them seamlessly from one warehouse to another. 

Compared to when companies use standard protocols, ERP systems offer a far more strategic approach to managing items. 

Automation processes are much quicker, resulting in paperless, error-free outcomes, which also translates to cost reductions. 

It allows for smooth end-to-end inventory management, which is fundamental in wholesale and distribution operations. 

This way, companies are then more empowered to respond to customers quicker since they have a full view of their inventory. 

Decision-makers can also minimize overstocking and have a leaner warehouse network since they can free up space for in-demand items. Deep analytics unlock ways to grow the product portfolio and predict the lifecycle of individual products systematically.

Accurate Reporting

Compared to manual methods, ERP systems produce more precise reporting. Compiling complex data into timely and accurate reports will no longer take months to generate but minutes. 

As a result, companies will be able to respond to internal requirements. This will pave the way to a more personalized, fast, and quality customer service, which will generate more sales and repeat clients.

Improved Forecasting and Demand Planning

With the demand-planning capabilities of an ERP system, companies can forecast seasonal requirements and prepare for disruptive economic events that create unpredictable production demands. 

Because you have clear and real-time visibility of your inventory, you will be able to facilitate customer orders in a pinch. Like psychic powers, sound ERP systems have predictive analytics to empower companies to make decisions based on past demand for sustainable growth. 

Improved Departmental Communications

Since most companies now store data in a central repository within an ERP system, employees are updated with all the new product inputs across departments. 

Everyone in the company will have access to product information and life cycles, including but not limited to product launches, product performance and ratings, customer relationship, and interaction thread, order, and delivery status. 

That way, there are no lapses when it comes to customer request fulfillment since the fragmentation risks are already out of the picture. 

Now how do we choose the right ERP platform?

In a survey conducted by the Aberdeen Group in 2017, survey takers chose 1) ease of use, 2) functionality, 3) total cost of ownership (TCO) as the top three criteria in purchasing an ERP software. 

Fig 2. Top ERP Selection Criteria for Manufacturers, The Aberdeen Group

One of the concerns companies have with ERP in the olden days is the cost. An on-premise system is an item of hefty capital expenditure, and it might not be a practical choice for small to medium-sized companies.

But with the advent of cloud systems, companies can now avail of the service through subscription at affordable costs, or run an open-source ERP platform for free. 

As sales globalization evolves, ERP platforms become critical in a wholesaler’s arsenal to have a competitive edge. Consider functionality over cost, because saving on costs might be useless if the solution fails to work as required.

Choose one that is cost-effective, robust, scalable, easily interoperable with other applications to maximize your company’s potentials.