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ERP for Distributors: How to Choose The Best One?

September 9, 2022 | Oro Team

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Tracking finances, sales, movements, inventory – including any surpluses or deficits – distributors have to wear many different hats. Yet unlike manufacturing companies, distributors also have capital investments in complex supply chains that must be kept in check. With so much at stake, selecting the wrong ERP for distributors that doesn’t fully match their needs can waste precious time and money.

Medium-sized distributors invest in ERPs (Enterprise Resource Planning) since they usually run a tighter ship and can’t afford needless fluctuation in their stock. They also have a higher spend per inventoried item leading to smaller profits.

Lastly, mid-sized distributors tend to be more vulnerable to uncertainties in the business world compared to their larger counterparts. For larger wholesalers and distributors, ERP systems are worth their weight in gold as they uncover opportunities for revenue generation or trouble areas within complex business process management.

For them, the biggest driver for updating their ERP is driven by market pressures, marketing automation trends, and the rise in competition. More recently, the advent of technology and digital innovation has transformed the way data on customers, resources, and operations is used.

ERP-Dashboard

[Source]

Choosing the best ERP for distributors should be done with care, as it requires far more than going through a system’s feature list, advantages, or technical abilities. In this article, we’ll share what capabilities to consider and questions to ask during vendor selection. We’ll also spotlight some of the top ERP systems for distribution businesses on the market today.

Features to Look for in ERP for Distributors

One of the main reasons why distributors start looking for a new business management solution like ERP is because their legacy system falls behind in capabilities vital to operations. An obvious sign to consider an ERP investment is when your company faces challenges in its current fulfillment processes or warehouse operations. Or when your product catalog expands quickly, and your current systems can’t scale to support this growth.

Another sign comes from the sales teams. If your sales can’t create and price quotes and manage reorders easily, it can definitely benefit from an ERP system that automates these business processes and accelerates the sales funnel.

erp-software-for-distributors

By choosing an ERP with features that meet all your requirements, you’ll shield yourself from costly headaches in the future. Here is a list of the ERP software features to help with your ERP business desicions:

Sales Order Management

Modern ERP systems for distributors use sales order management features to automate order processing, sales analysis, and sales channels management. This is done by pulling in customer data from omnichannel ordering tools such as POS software. Sales order management functions that a proper ERP for distribution businesses should cover include:

  • Sales order processing
  • Sales order promising
  • Sales order inquiry
  • Sales order reporting
  • Shipping management
  • Return management
  • Document management
  • Self-service for vendor
  • Self-service for customer (e.g.a customer portal)
  • Customer pricing

Financial Management

Look for an ERP that paints you a financial picture at the item and customer level. Accounting components can include many financial planning tools. Your ERP platform should support tax regulations, currencies, payments, and automatic cost calculators applicable to your area and sphere of operations.

  • Profitability analysis
  • Cost-to-carry optimization
  • Asset management
  • Accounts payable
  • Accounts receivable
  • Budget forecasting
  • Order billing and invoicing
  • Financial reporting
  • Debts management
  • Human capital management
  • Payroll management
  • Taxation management

Warehouse Management

ERP with a warehouse management system manages order fulfillment and processing, allowing for more accurate inventory information. This helps automate picking, packing, shipping, and putaway processes. Look for ERPs that provide these warehouse management features:

  • Slotting optimization
  • Picking procedures
  • Demand correlation
  • Pick-to-light optimization
  • Shipping management
  • Kitting functions
  • Tagging functions (barcodes and RFID)
  • Outbound processing
  • Wave and load planning
  • Container packing
  • Multiple warehousing
  • Off-site equipment

Customer Relationship Management

Distributors benefit from having account, contact, and customer identifiers synced to the ERP. Using this data correctly can play a significant role in driving customer satisfaction. Aside from having insights into customer behaviors, manufacturers and distributors can better respond to customer needs with CRM features like:

  • Contact management
  • Inquiry management
  • Quotes and estimates
  • Promotions management
  • Sales force management
  • Opportunity analytics

Inventory Management

Customers expect their items to be in stock, yet inventory is always changing, with the looming risks of overstocking. ERP software for distributors should have real-time stock insights, along with the ability to accurately predict inventory to match demand. Functions of interest to distributors include:

  • Inventory control and availability
  • Inventory costs
  • Demand forecasting
  • Inventory tracking & replenishment
  • Requirement planning
  • Multiple warehousing

Procurement Management

Distributors require ERPs with full procurement capabilities to keep their operations running smoothly. These systems assist in managing orders from third parties, drop shipments, and scheduling recurring purchases, including:

  • Bid management
  • Purchase orders
  • Purchase management
  • Multiple shipments
  • Procurement planning
  • Supplier relationship management
  • Supply chain planning

eCommerce for Distributors

Distributors engage in B2B eCommerce, where they use specialized software known as eCommerce for distributors to connect with manufacturers, vendors, and wholesalers. Whether you’re operating an electronics eCommerce platform or selling medical supplies through an online ordering portal, you’ll need the product, pricing, customer, and order data in the right place.

ERP ecommerce

Getting accurate, real-time ERP data into your cloud-based eCommerce software leads to a better customer experience. Look for a solution that lets you integrate via an API with an eCommerce website for distributors. The synchronization options should include:

  • Product and description data
  • Price list and user group data
  • Customer-related data
  • Order fulfillment and packaging data
  • Invoice and inventory data
  • Delivery and return data

Now that you’ve decided which features are important to you, it’s time to dig even deeper. Preparing an RFP (request for proposal) will help you formulate the right questions for your vendor. It’s all about your requirements, expertise, expectations, and specific pain points your business faces.

Your RFP should include things like project scope, timelines, budgets, vendor qualifications, contractual obligations, and the award process. In the process of exploring your requirements, you may discover that a multi-channel eCommerce, or marketplace management solution is what you should be aiming for.

This RFP template will get you on the right track to crafting a perfect RFP for your distribution business.

How to Properly Assess ERP Software for Distributors

With so many options having similar feature sets, selecting the best ERP for wholesale distribution from the pack can be a difficult undertaking. Here are some ideas on how to assess your shortlisted ERP for your distribution business:

  • List all the ways you expect your ERP to add cross-functional and long-term value to your business.
  • Examine your workflows – talk to providers and consultants to fully understand all the distribution needs your future ERP must address.
  • Give your ERP provider access to your business processes and a chance to talk to your team as a part of discovery.
  • Ask your ERP provider for a free analysis or a chance to prove their promised ROI. Gauge their confidence in helping you and the improvements you can expect.
  • Explore the training, implementation, and management phases and the resources to support them. What can you perform in-house and what will require outside help?
  • If possible, visit the offices of your contenders and get to know their culture. In-person relationships build trust and tend to iron out misunderstandings.

Top ERP Systems for Distribution Businesses

One ERP doesn’t fit all, so picking something that doesn’t carefully match your needs can lead to costly consequences. Start by determining whether a cloud or on-premise system is right for you. While a cloud solution may be cheaper, on-premise systems afford greater control over your data at the sake of higher maintenance costs. Choose the best ERP system for distribution from the list below:

top-erp-systems-for-distributors

1. Epicor Prophet 21

  • G2 rating: 3.9/5 (77)
  • Pricing: $200/user/mo+
  • Installations: 1,800+
  • Major clients: Nippon Telegraph and Telephone, FEMSA

Epicor 21 is a cloud-ready solution and business system designed for distribution processes in today’s dynamic supply chains. Offered on-premise and on the cloud, it features one of the most extensive customization engines on the market. Additions include warehouse, inventory, profit, buying trend and human capital analyses.

2. SAP Business One

  • G2 rating: 3.8/5 (48)
  • Pricing: $25k+ on premise
  • Installations: 28,000+
  • Major clients: Bosch Group, Bank of China

SAP Business One is an excellent tool for distributors who want operations, financials, purchasing, inventory, sales, and CRM data in their ERP, having them reflected in reports. SAP Business One was originally designed as an on-premise system, hosted and managed on a Microsoft SQL server (Windows), SAP HABA (linux), or on the cloud.

3. Oracle NetSuite

  • G2 rating: 3.9/5 (1,083)
  • Pricing: $15k+ on premise
  • Installations: 40,000+
  • Major clients: Berkshire Hathaway, USPS

Being one of the leaders in ERP, NetSuite is designed to streamline warehouse management, inventory planning, and sales order management. NetSuite also has a strong CRM component. It offers multi-location support, runs on various servers, and is compatible with the widest range of database platforms in the industry.

4. Microsoft Dynamics GP

  • G2 rating: 3.5/5 (221)
  • Pricing: $10k+ on premise
  • Installations: 40,000+
  • Major clients: Bosch Group, Compass Group

Microsoft Dynamics is great for enterprise or medium-sized businesses that prefer to use Microsoft’s integration marketplace. It has a solid feature set in accounting and works particularly well in the financial side of distribution processes. It’s offered on the cloud, Microsoft SQL server, IBM DB2, Oracle and other platforms.

5. SAGE 300cloud

  • G2 rating: 3.3/5 (36)
  • Pricing: $69/user/mo
  • Installations: 40,000+
  • Major clients: FedEx, Vokswagen

SAGE is one of the more affordable ERPs, well suited for medium sized distributors or light manufacturers with domestic operations. It has the necessary tools for managing payables, receivables and purchase orders. It comes with a relatively simple CRM component and is only offered via cloud on Microsoft Azure.

6. Acumatica

  • G2 rating: 4.2/5 (206)
  • Pricing: $13k+ cloud and $26k+ on premise
  • Installations: 6,000+
  • Major clients: EMC, State of Connecticut

Acumatica has a Distribution edition with features such as sales order, inventory, requisition, purchase and warehouse management complete with financial data. It’s particularly useful in planning and scheduling for warehousing. Deployment is offered on the cloud, hosted or on-premise via Microsoft IIS or SQL.

7. SYSPRO

  • G2 rating: 4.2/5 (148)
  • Pricing: $25k+ on premise
  • Installations: 15,000+
  • Major clients: ZF Friedrichshafen, Anheuser-Busch

Syspro’s strengths lie in production such as requirement planning and quality management for accurate shop control. It also has accounting and process functions important for both distributors and manufacturers. Syspro is available on the cloud, on premise, Microsoft SQL. It’s made for companies of all types and supports over 50 languages.

8. Infor Distribution

  • G2 rating: 3.7/5 (65)
  • Pricing: $25k+ on-premise
  • Installations: 1,000+
  • Major clients: Hon Hai, Hewlett Packard

For those only considering on-premise options, Infor is a proprietary-platformed ERP made specifically for distributors. It’s excellent for supply chain management, including demand, transportation, and warehouse management. It’s mostly aimed at businesses in North America and the United Kingdom.

How OroCommerce Can Help

OroCommerce, a B2B eCommerce platform, streamlines B2B sales with integrations that seamlessly connect your online store with data in your ERP. These and other connectors in the OroCommerce extensions store help keep customer, product, inventory, price, or order-related changes reflected across all channels.

Due to its flexible and robust open-source nature, OroCommerce can easily integrate with a general or industry-specific ERP system. OroCommerce also integrates with OroCRM out of the box, allowing wholesale distributors to easily access customer information, transactions and activities.

Top ERP for Distributors: Final Words

Distributors maintain networks impacting every area of business, be it accounting, inventory, orders, human resources or customer relationships. That’s a lot of things to manage, keep track of and optimize. Therefore, the right ERP must not only match your requirements in features and capabilities but also radiate a business philosophy and communication culture that matches your own.

When narrowing down your ERP selection, remember the importance of working with someone who not only understands your unique business needs, but also shares your long-term company vision. With heightened odds of selecting the right ERP partner, you’ll set yourself up for a smoother implementation and grow a profitable, efficient distribution business.

Frequently Asked Questions about ERP for Distribution

Which ERP software is best for distributors' businesses?

Distributors generally deal with large orders and manage a greater volume of orders. At the same time, they often handle the logistics and marketing requirements that manufacturers aren’t able to handle in house.

Best distributor ERP tools help manage this complexity and ensure scalability. Such ERP provides features relevant to distribution processes, like:

  • Warehouse management
  • Inventory management
  • Marketing and CRM
  • eCommerce platforms integration
  • Shipping

What are the top ERP systems?

Among the top ERP business applications for the distribution industry are: 

  • Epicor Prophet 21
  • SAP Business One
  • Oracle NetSuite
  • Miscrosoft Dynamics
  • SAGE 300cloud
  • Acumatica
  • SYSPRO
  • Infor Distribution

How to choose the best ERP software for distributors?

When researching the ERP options, base your decision on these crucial factors: 

  • An ERP should meet functional requirements for your business. Map out key processes a new ERP should support now and in the future.
  • The vendor should have experience implementing ERP in your industry. Ask vendors to provide case studies or testimonials.
  • It needs to be within your business budget. Identify the total cost of ownership for shortlisted solutions.
  • An ERP solution should easily integrate with your existing IT infrastructure. You need a system that works across your entire business rather than many disparate systems.
  • It should support customization. 
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