Life on Planet Earth has been a bit difficult lately, to say the least. As we all continue to adjust to the new realities of a global pandemic, many are looking for ways to make good use of their changed business routines. Some business leaders are using “extra time” to do internal assessments, looking for ways to improve processes and get more competitive.
If you’re a distributor, you might be looking for ways to make improvements in the warehouse, in your order processing, in your back office, and in customer service. To that end, we thought it would be good to share 11 ways distributors could get more competitive and highlight some areas that are especially important right now due to the coronavirus pandemic. Let’s get right into it with an overview of 11 improvement possiblities for distribution companies today.
1. Diversify procurement sources to mitigate risk
If you have the option to diversify your sourcing based on geographic location, doing so may help you avoid supply chain disruptions today and in the future. And while you might incur additional overhead costs to add or change sources, these costs may be well worth the benefit of being able to supply your customers with the products they need, when they need them.
2. Streamline the purchasing process
If your procedures for purchasing are not currently integrated with your ERP system or your processes are not connected to your inventory via automation, now is a great time to implement these integrations. Consider the cost-savings of being able to automatically generate purchase orders based on stock levels and inventory replenishment algorithms. Or, how much time could it save if you could easily place orders with the vendor that best meets your price and delivery time requirements?
Purchase order management systems with online sourcing can automate the entire purchasing process from vendor quotes to paying invoices, and this can help you tremendously by reducing costs and improving vendor relationships.
3. Automate data collection
Many warehouses and distribution centers are using automated data collection today, and if you have not yet adopted these technologies, they represent a huge opportunity to save time, cut costs, and reduce mistakes. Automated data collection is easier and cheaper than ever before thanks to barcode scanning technology that transforms your smartphone into a handheld scanner. Your data is transmitted over the internet to your ERP system and provides instant inventory system updates.
When you automate warehouse activities, you’re reducing the number of steps that must be managed, and you’re increasing the accuracy of your inventory information.
4. Move to hands-free order selection
Go beyond barcode scanning with preprinted smart scan sheets that allow warehouse workers to perform all necessary system interactions with just a scanner or smartphone. By using smart scan sheets (with commands like complete shipment, next/previous box, and remove item), there’s no need to stop and switch to a typing interface, which can slow things down and introduce error. Audible and visual indicators and warnings can be set up to provide immediate feedback when incorrect items or more units than purchased are scanned.
5. Categorize your inventory
Conducting an analysis of your inventory to create a hierarchy of items can be an essential element for maximizing the profitability of your inventory investment. Having clarity on which items are the most valuable and which are the least valuable (and everything in between) gives you the most informed position from which to make decisions. From this analysis, you can determine how to focus time and resources in support of the items that bring the most value.
6. Turn the EDI mandate into a competitive advantage
EDI continues to be a non-negotiable technology for wholesalers and distributors selling to big-box retailers, eCommerce merchants, and other customers that require the use of EDI transactions to exchange business documents.
Companies who choose to integrate EDI processing with their ERP system can bring valuable competitive advantage to their business. Benefits of EDI automation include the elimination of data entry (and data entry errors) when processing EDI orders, strengthened customer relationships due to faster order processing and access to order status information, and shortened payment cycles due to faster invoicing.
7. Systematize your processes with automated workflows
Right now could be an ideal time to examine the processing steps that are repeated over and over across your business. Look for processes that are bloated, containing unnecessary steps that could be eliminated or replaced with automation. You may already be tuned in to ways to reduce the number of steps or touches that happen in the warehouse each time a shipment is received or an order is placed, but have you considered the back office automation improvements you could make?
Many ERP systems provide workflow automation, which can be used to eliminate unnecessary steps when orders are processed. For example, does your system give users the ability to configure order status, status changes, actions, notifications, and alerts to automatically trigger during order processing, even allowing users to process an order in one click? Modern ERP systems have features like this that give your company an edge.
8. Enable anywhere access to vital information
Now more than ever before, we are all realizing the necessity of having access to our business data from any location, at any time, and on all kinds of devices. With the global pandemic we are experiencing, many are finding that ensuring business continuity for customers, partners, and employees depends on anywhere access.
If you haven’t already investigated the opportunity to move your business data to a cloud-based ERP system, this may be a good time to learn more about your options and the factors to consider. You may also want to find out how to give your customers the ability to perform account-related activities, such as balance inquiries, support requests, and access to product documentation, from wherever they are working.
“What really made [Acumatica] more appealing to us was the fact that it’s cloud-based. We had VPN service before … but it was slow and clunky, and because this is cloud-based I can work from anywhere at any time.”
9. Use CRM for a 360 degree view of your customers
Many distributors do not have the systems to allow employees to see all of a customer’s activities across the company’s operations. This means front line customer service staff must operate with limited or outdated information.
The ability to see a customer’s interactions with your organization from initial contact through purchase and support provides valuable information about customer behavior and offers your company opportunities for upselling, proactive actions, reduced support costs, and greater customer satisfaction.
Modern ERP systems offer integrated customer relationship management (CRM) tools. Customer interaction details from quotes, orders, shipments, invoices, payments, and service calls is retained and available to all of the company’s staff.
10. Shorten the quote-to-cash cycle
Many distribution companies are using multiple sales channels, requiring the ability to receive orders through online storefronts (Shopify, BigCommerce, Magento, etc.) and/or platforms (e.g, Amazon, Wayfair, and countless others), phone orders, and in-person purchases at retail locations.
The complexity involved with managing pricing and discounts, item availability, delivery options, and other related details that may be unique to particular sales channels can be overwhelming. To stay competitive, distributors must find ways to respond quickly to customer needs while at the same time improving cash flow.
The most successful distribution companies will find ways to take orders accurately, ship quickly using customer preference, avoid mistakes in billing, and rely on reporting that signals slow payers. This all sounds simple, but without modern automated systems, these tasks are time-consuming and prone to errors.
Modern ERP systems can be used to reduce errors and the time it takes to receive your cash from a sale. Customer orders can be automated in many ways, including websites, phone orders, and point-of-sale devices. Today’s systems can automatically apply discounts (and manage discount tiers based on sales history), display item availability, and offer delivery options. Customer orders are then sent to shipping and invoiced—without requiring the initial information to be rekeyed by a human.
You can provide further flexibility and accuracy with invoicing by offering flexible terms and conditions, contracts, deferred billing, and recurring billing to meet your customer’s needs. In cases when the customer is slow to pay, visual dashboards can alert the customer service team to inquire about the issue before it becomes a significant problem. In these ways, modern ERP systems help you speed customer payments, shortening the quote to cash cycle.
11. Invest in technology that adapts easily to change
Your customers want faster and better service. They demand products with the features they want, answers to questions immediately, and access to you anytime via the web or phone. Older ERP technology does not support these capabilities. Few systems support true cloud computing, eCommerce websites, and mobile applications. Older systems tend to be more expensive to maintain and may make it more difficult for companies to stay competitive.
For today’s distribution companies, the ability to adapt and grow with change should be designed into critical ERP applications. Companies using modern technology should find that everything they need is included in one integrated and highly tailorable package that meets today’s requirements while still being able to scale for future changes.
Implementing best practices like the ideas listed here can be key to increasing effectiveness and profitability at any time, and even more so during times of crisis and instability.
Are there other areas you think we should have included in this list? Add your thoughts in the comments.
Is your business suffering from the cost of doing nothing on outdated systems?
Contact us for a free, customized business review to see how you can operate more efficiently by automating processes, connecting employees and providing insights into what’s happening in your business.