Tracking finances, sales, movements, inventory – including any surpluses or deficits – distributors have to wear many different hats. Yet unlike manufacturers and wholesalers, 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 distributors, ERP systems are worth their weight in gold as they uncover opportunities for revenue generation or trouble areas within complex internal processes. For them, the biggest driver for updating their ERP is driven by market pressures 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.
Choosing the right ERP should be done with care, as it requires far more than going through a system’s feature list or technical abilities. In this article, we’ll share what capabilities to consider, questions to ask during vendor selection, along with 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 ERP is because their legacy system falls behind in capabilities vital to operations. 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 important to distribution businesses:
Sales Order Management
Modern ERP systems for distributors use sales order management features to automate order processing. 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
- Self-service for vendor
- Self-service for customer
- Customer pricing
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 should support tax regulations, currencies 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 resources
- Payroll management
- Taxation management
Warehouse management functions include order fulfillment and processing, allowing for more accurate inventorying. 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
- 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. Aside from having insights into customer behaviors, 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
Customers expect their items to be in stock, yet inventory is always changing. Your ERP should have real-time stock insights, along with the ability to accurately predict inventory to match demand. Functions of interest to distributors include:
- Inventory availability
- Inventory and stocking costs
- Demand forecasting
- Inventory replenishment
- Requirement planning
- Multiple warehousing
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
- Vendor management
eCommerce for Distributors
Distributors engage in B2B eCommerce, where they utilize specialized software known as eCommerce for distributors to connect with manufacturers, vendors and wholesalers. Getting accurate, real-time ERP data into your online store leads to a better customer experience. Look for synchronization options for:
- Product and description data
- Price list and user group data
- Customer-related data
- Order fulfillment 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 a RFP (request for proposal) will help you formulate the right questions for your vendor. It’s all about your requirements, 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. 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 ERP options having similar feature sets, selecting the best one from the pack can be a difficult undertaking. Here are some ideas 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. Below is a list of top 8 ERP systems for distributors:
1. Epicor Prophet 21
G2 rating: 3.9/5 (77)
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
Major clients: Bosch Group, Bank of China
SAP Business One is excellent 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
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
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)
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.
G2 rating: 4.2/5 (206)
Pricing: $13k+ cloud and $26k+ on premise
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.
G2 rating: 4.2/5 (148)
Pricing: $25k+ on premise
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
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 for businesses in North America and the United Kingdom.
How OroCommerce can help
OroCommerce streamlines B2B sales with integrations that seamlessly connect your online store with data in your ERP. These and other connectors in the OroCommerce marketplace 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 any ERP system. OroCommerce also integrates with OroCRM out of the box, allowing distribution businesses 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.