The Guide to Distribution Software
- The Importance of Distribution Software
- Distribution Software: Types and Capabilities
- Choosing Software Systems: Best Practices
The Importance of Distribution Software
In wholesale distribution, managing the costs of the warehousing operation against revenue is key – which is where distribution software assists the wholesale operation. Distributors have to remain competitive, and this means keeping prices low. If overstocking takes place, it can reduce working capital and create obsolete stock, affecting ongoing profitability.
Each stage of the supply chain will need to be managed. Procurement will require good supplier management to prevent stock outages, and procurement costs will need to be kept to a minimum. The warehouse operation will look to contain carrying costs while the sales operation will need to ensure orders are filled. Each link in the supply chain needs to integrate from start to finish, and this requires a comprehensive distribution software package.
The support operations also need to integrate with the main business operation. HR will need operational oversight to control staffing costs, and business intelligence and director-level functions will need to have real-time information to steer the business in a rapidly changing market. This is where the business-wide software package becomes important.
Distribution Software: Types and Capabilities
There are a number of software systems that are commonly used in distribution operations:
Product Lifecycle Management (PLM) software
PLM software is used most often in manufacturing; it helps to manage a product’s life from inception through to sale, incorporating designing, prototyping, manufacturing and marketing along the way.
However, it is also used in wholesale operations to identify potential new products and to manage the life of each product through to sale.
Supplier Relationship Management (SRM) software
This software is useful to wholesalers; SRM enables procurement managers to forge close links with suppliers. This helps them to establish supplier capability in order to predict lead times; this ensures product availability without overstocking.
SRM software also allows procurement managers to negotiate bulk discounts and reduced carriage costs; this helps them to calculate the optimum order size and order points.
Customer Relationship Management (CRM) software
CRM software manages the customer experience at the point of sale; it keeps order and customer data and automatically generates invoices. By collating order information, it facilitates supply chain management and enables the operation to maintain a high fill rate for orders; this is essential for retaining customer confidence.
Warehouse Management System (WMS) software
This is the most important software used in warehouse operations. WMS software automates the warehousing system, so stock levels can be monitored in real time. This facilitates stock optimization; stock can be kept at a level where there is sufficient stock to fill orders without creating excess stock. It also enables surplus stock to be moved to where there is a potential outage without the need for more stock; this helps to maintain profitability and preserve working capital.
Enterprise Resource Planning (ERP) software
This software is the system that links the previous software packages – the ERP system collates the data from all other packages to give a complete overview of the core operations. As well as integrating the supply chain, Enterprise Resource Planning software will enable support functions to gain reporting data from the whole operation. The data that the software produces improves the quality of decisions made at the executive level.
Choosing Software Systems: Best Practices
When choosing suitable software, businesses may be overwhelmed by the choice of systems on offer. It is important to adhere to a set of best practices:
Consider the needs of the organization
Rather than buying a software system and changing procedures to fit, it is best to buy a system that can be tailored to the operation. This means considering where there may be deficiencies in information and reporting, and selecting a system that offers these functions.
Consider a system that integrates with other software packages
The best systems will allow the addition of packages that deal with specific functions; this enables the business to tailor the package and gives the overall system the ability to evolve with the growing business.
For best results, all the specific software functions should connect under one umbrella system; this enables personnel to access all information from once single interface. The aim here is to create synergy; all organizational operations should integrate seamlessly to ensure the business is greater than the sum of its parts.
If you’d like to find out more about distribution software, check out our free white paper “Guide to ERP Systems” to discover more about the ERP industry, what else to keep in mind when purchasing an ERP, and the top ERP software distributors in the US.