Navigate a Changing Landscape with the Right Distribution ERP Software
The distribution industry has experienced a period of dramatic change in the last 15 years and it doesn’t look like stopping now. With the culmination of increased consumer demand alongside significant advances in technology, distributors wouldn’t recognise the 1999 version of themselves if they walked back into their old operating environment.
These changes in consumer behavior are presenting new challenges for distributors to compete while maintaining profitability. There is perhaps no better example of this than the impact of eCommerce.
Looking back over this time, as some distributors provided drop ship services to end users via online resellers, it facilitated for increased competition between online stores and their bricks and mortar counterparts. When this occurs, pressure gets placed at all levels of the supply chain to improve the customer experience and meet their resultant high expectations.
Today, we now have a marketplace that looks to purchase in small order sizes with same day dispatch and free delivery, which is making the role of distributors quite challenging.
Why software is only part of the solution
As the market moves to continually meet customer expectations, margins can get pushed to a level where the impact of stock loss and mis-shipments could be catastrophic. Therefore, trying to compete in the modern marketplace with anything less than best practice technology will make growth a gargantuan task.
If you are concerned with the quality of your software, then you are not alone. 80% of organisations agree that ERP software is critical to their business—but half characterise the performance of their current ERP system as merely ‘adequate’ or 'basic'.
This illustrates that such businesses could be either using ERP software that does not have the required functionality, or software which restricts the user from generating value from its capability.
A 2015 Telsyte report highlights that two thirds of CIO’s believe their organisation takes advantage of less than half their current ERP system’s features. The report found that there are a number of factors which CIOs identify as restricting their company from using their ERP system to its full potential, including high complexity, poor integration, and difficulty in use. It is therefore clear that optimum performance is underpinned by not only the software system’s functionality, but the capacity for the user to realistically generate value from it.
ERP software for growth
Success in business today is driven by the combination of effective planning and using the right technology.
To use a football analogy, there is no point kicking the ball to where your teammate is standing, by the time it gets there they will have moved on. Choosing technology platforms is much the same. You need to be able to plan for the future needs of your market and your business and continually adapt your technology platforms accordingly.
If you start by reviewing your operational, tactical, strategic, and contingency plans, you can then consider what functionality you will require in the future.
With this insight, you can then begin evaluating potential replacement systems with an eye for flexibility, agility, integration, and scalability. This is important because while your plans will no doubt be derived from considered analysis and forethought, it is important to have a capacity to be able to pivot and adapt to the unknown and unexpected. Therefore, while it is imperative that your selected distribution ERP software is a good fit for your current and projected future requirements, it is also important that you have confidence in the software vendors’ commitment to innovation and continuous improvement.
Technology will continue to impact the distribution industry both directly and indirectly, so it is important that your business can evolve.
Whether it is a consumer looking for instant access to their delivery status, a customer looking for real-time access to stock levels, or suppliers looking to partner with distributors who can provide systems integration, technology will continue to open doors for progressive distributors.
When you operate in a space where price, stock on hand, and delivery times are primary criteria for winning and maintaining business, it is important to develop alternative services which can form part of your value proposition. Therefore, if your organisation can adopt the right ERP software system, then you can approach innovation with the confidence that your technology will provide you with the tools you need to grow your business.
Posted by Vince Randall, Regional Vice President, Epicor Software ANZ