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Opportunities for Wholesale Distributors to Efficiently Manage Their Business With Software

February 14, 2024

Wholesale distribution is a fast and dynamic business. Constantly fluctuating inventory, complicated supplier relationships, complex logistics, and slim profit margins put organizational agility and efficiency under the spotlight. What practical steps can companies take to improve these areas?

In recent years, distributors in the construction and lumber and building materials (LBM) industries have begun modernizing their processes, moving away from clunky paperwork and Excel spreadsheets to purpose-built software solutions.

Modern software platforms like Epicor ERP bring functions like inventory management, accounting, and customer relations into a unified workflow. Instead of jumping between disparate systems or digging up the right logbook from the filing cabinet, you log onto your ERP, and everything is organized in one place.

Let’s explore how ERP solutions can transform your wholesale distribution business:

ERP Software Streamlines Wholesale Distribution

ERP software integrates critical functions into a unified digital platform—including inventory and warehouse management, supply chain/logistics monitoring, customer relationship management (CRM), accounting, reporting dashboards, and more.

For LBM and building supply wholesalers, this means consolidating data on products, customers, and suppliers across the enterprise onto a single portal.

ERP centralizes visibility and control to optimize stock levels, pricing strategies, order processing, invoicing, delivery route planning, forecasting, and vendor communication. You gain actionable, real-time insights by tracking every functional area of your distribution business via automated workflows.

Hardware integrations digitize manual processes like scanning warehouse bins and tracking fleet locations. Executive dashboards centralize operational stats for swift and informed strategic decisions.

These features come together to support your business, its operations, and growth in three key ways:

1. Improving Inventory Management

Efficient inventory management is a top priority for wholesale distributors, especially when handling extensive inventories across multiple locations.

Accurate inventory forecasting, in particular, has become essential for building a resilient distribution business, and the mismanagement cost is high. According to a study in the International Journal of Engineering & Technology,  because materials account for about 55%-60% of the total construction cost, “efficient material planning is the key to successful construction projects.”

Managing inventory with an effective ERP solution is a practical means of avoiding unexpected stock-outs and improving lead time and delivery accuracy.

Real-Time Inventory Tracking

To help you see the big picture, ERP software supports inventory management with real-time tracking and analytics tools.

In one study, 44% of ERP users ranked improved lead time and inventory level accuracy as top benefits. Another study showed that inventory management was one of the primary drivers of return on investment from ERP systems.

ERP can help you track your inventory with significant detail:

  • Understand which products have the highest demand and inventory turns by individual SKU.
  • Match customer orders to incoming inventory to know what can be fulfilled and when.
  • Manage outgoing inventory in real-time as loads are being built and orders are prepped for delivery.

Statistics from Epicor demonstrate how ERP-enabled inventory management can increase inventory accuracy by 95%+, particularly when combined with license plate and cart tracking, real-time receiving, work order processing, and credit processing, all of which Epicor ERP supports.

Integrating Advanced Technologies for Better Tracking

Cutting-edge ERP also works with inventory technology tracking devices, such as RFID (radio-frequency identification), mobile devices, and scanning guns, which give pickers and stockers instant access to product and storage information.

Integrating technologies like RFID within ERP systems helps provide real-time tracking of products through the supply chain. This improves the accuracy and efficiency of order fulfillment processes, enhancing operational efficiency and boosting customer satisfaction.

2. Enhancing Profit Margin and Pricing Strategies

Material and project prices are climbing, with 1 in 3 construction projects now exceeding their budget. With expenses spiraling upwards, cost management has become a greater challenge—only 39% of building organizations are confident in controlling their overheads.

Robust ERP systems offer a powerful solution to combat price volatility and supply chain disruptions, providing real-time data and analytics for informed decision-making.

Real-Time Market Data and Dynamic Pricing

Modern ERP systems enable real-time analysis of market trends and material costs, allowing you to adjust prices dynamically to reflect current market conditions.

Collecting your transaction and accounting data under one interface allows you to inspect top customers, the products they buy, and when.

Here’s how it works:

  • Automated tracking of the cost of goods sold (COGS), including materials and labor, is simplified with ERP systems. This monitoring is crucial for accurately setting prices and protecting profit margins.
  • Predictive analytics in ERP helps you forecast future cost trends and set proactive prices, preparing you for market changes and enabling your pricing strategies to remain competitive.
  • ERP systems centralize supplier data, enhancing your leverage in negotiations. The depth of data available enables procurement teams to have more productive conversations with suppliers to achieve preferable pricing and terms.
  • ERP systems help you identify your best-selling products at any given time of the year and plan your stock to help ensure they’re available when demand starts to climb. Conversely, you can identify when product demand drops to reduce procurement accordingly.

Jason Delgado, Executive Vice President at Dartmouth Building Supply, an Epicor customer, explains how these capabilities come together to tangibly impact profit: “We have achieved a minimum of 10% per year growth in terms of both expanding our customer base and increasing order size. Epicor BisTrack helped enable that growth and has liberated resources to invest in new equipment.”

3. Strengthening Customer Loyalty

Long lead times and price pressures are tempering customer loyalty. Delayed or canceled materials orders leave companies scrambling, unable to complete contracted jobs on schedule.

Each impacted project chips away at decades-long customer trust. And in an increasingly competitive market, disappointed builders and contractors now have more options to consider.

Talking to LBM Journal, Charlie Parks from Parks Lumber & Building Supply highlighted how these challenges also present an opportunity to digitally-enabled businesses. “We as suppliers have an opportunity to lend a hand and go the extra mile to ease the process. We can do what everyone else has been telling them cannot be done.”

Nothing retains customers like meeting expectations when adversity strikes, which is where ERP plays an important role.

Customer Management

Modern ERPs connect sales, marketing, and accounting functions to customer data.

By understanding customers in the context of their purchases and interactions, you can design more effective marketing and customer engagement strategies.

While not explicitly designed as a marketing tool, some 26% of businesses use ERPs for marketing functions, and 41% aim to integrate customer data with the platform.

Here’s how Epicor ERP solutions can bolster your customer relationships:

  • Streamlining Order Fulfillment: ERP systems enhance the efficiency of the order fulfillment process and offer integrated solutions for managing orders, enabling LBM businesses to adapt to customer demands.
  • Enhanced Transparency and Communication: ERP systems help you see the big picture with accurate, real-time information on order status and inventory levels. Transparency is crucial for managing customer expectations regarding lead times and product availability. Clear and proactive communication facilitated by ERP data helps build client trust, even when facing delays.
  • Improving Decision-Making with Real-Time Data: ERP systems help provide comprehensive insights for informed decision-making based on up-to-date information. This data-driven approach enables LBM businesses to promptly make strategic decisions, adapt to market changes, and meet customer needs.
  • Efficient Returns Management: Handling returns is another area where ERP systems excel. Your business can quickly address customer issues by processing returns effectively, enhancing high customer satisfaction, and automating restocking and redistribution.

Epicor ERP is designed with businesses and their customers in mind. According to Joel Russell, VP and COO of Millard Lumber, “We've picked up margin and efficiency using the Epicor BisTrack solution, but the quality of the service we can give our customers has also been greatly enhanced.”

Elevate the Customer Experience 

Epicor software is a powerful means of enhancing wholesale distribution businesses. It consolidates essential functions like inventory, accounting, and CRM into one system, improving efficiency and decision-making across the company and its networks.

For wholesale distributors, this means better stock control, pricing strategies that bring in more revenue, and customer relation insights that delight and retain buyers. To experience the full force of these benefits, you need an ERP solution designed specifically for wholesale distribution companies like yours. Contact us for a demo today.