Our distribution industry customers are our heroes: they fight for their success every day in a competitive landscape that has brought many new challenges in recent years. Our modern, connected, Internet-driven world has made it tougher than ever to stay relevant and grow market share, but it can be done!
Succcessful distributors are finding that they must adapt to a number of new challenges. Their infrastructure must make it possible for them to adapt and pivot when new requirements come at them. Here are five important orperational challenges that modern distributors must take on to stay strong and competitive in today’s environment.
#1 - Inefficient Inventory Management
Distributors that haven’t yet embraced new technology are often using outdated (and inefficient) inventory management methods. What worked in the past no longer provides the ability to be competitive in the age of ecommerce where modern inventory management requires real-time accuracy and visibility.
Modern inventory tracking and warehouse management streamlines processes and provides configurable workflows (with or without eCommerce shopping carts), as well as lot and serial traceability, when needed.
Systems should also empower employees by automating data collection (pick, pack, ship, put-away, and inventory transfer transactions) with barcoding so you know exactly where all stock is located, how much you have, and when it should be reordered.
And, all of this streamlining and automation equals faster quote-to-cash and procure-to-pay processes for improved cash flow and access to working capital, increasingly important benefits in times when margins are tight and costs are rising.
#2 - eCommerce and the Global Marketplace
Just as manufacturers are now selling direct to consumers, modern distributors must gear up to sell online, directly to consumers (as well as B2B buyers) to continue generating revenue from the products they offer. Today, the whole world expects to have the ability to order online, easily.
This reality requires distributors to use eCommerce platforms and connect them to their ERP systems to show buyers accurate inventory availability and automate sales workflows to enable the order fulfillment speed today’s buyer is accustomed to experiencing.
#3 - Shipping Errors and Returns
It’s always been true that good customer service is a key to growing your base of satisfied customers. But in today’s environment of global competition and ecommerce order expectations, it’s more important–and valuable–than ever to stand out.
One of the most useful ways to do that is through fast and accurate order fulfillment. Filling customer orders quickly and correctly means increased customer satisfaction and reduced costs related to errors and returns.
Solving this challenge is about knowing what inventory you have and where it is, and automating ecommerce workflows for speed and accuracy. Your ERP system and eCommerce stores must be connected and providing bi-directional, real-time integration in order to compete in the modern distribution environment.
#4 - Slow, Outdated Reporting
Having clear visibility and accurate demand forecasting is critically important for modern distributors. The classic challenge for distributors has always been having the right amounts of the right products in stock. Too much product reduces cashflow and increases the risk of stale stock, while too little product means stockouts and losing customers.
This balancing act has become even more challenging to manage with today’s super-fast shipping expectations and the pressure to stock a wider range of products, among other factors. That’s why leading distributors are relying on integrated ERP and WMS systems with real-time reporting rather than yesterday’s cyclical reports for insight into what’s happening right now. Decisions must be made quickly, and knowing what’s happening today rather than last month or last quarter is essential for making the right stocking decisions.
#5 - Disconnected Systems
The most effective lever for addressing each of the four challenges above is to find a way to integrate your business systems. Without integration, it’s very difficult to compete in the modern distribution industry.
The easiest way to do this is to move to a cloud ERP system that eliminates many of the integration challenges of legacy systems. However, if your business prefers to stay with an on-premise ERP, there are other ways to tackle the integration challenge by implementing ERP-specific ecommerce integration, EDI integration, and other integrated solutions for legacy systems.
If moving your ERP systems to the cloud is in your future, you’ll find it easier to integrate with other applications your business depends on, and it will be more “automatic” to gain access to new software features and capabilities.
How Kissinger Can Help
We focus on removing the obstacles in the way of our customers’ growth. We do that by helping business leaders take full advantage of ERP systems and integrations that give them the tools and insight to grow and thrive.
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