A guide to distribution software

The importance of distribution software

In wholesale distribution managing the costs of the warehousing operation against revenue is key – which is where distribution software can assist. Distributors have to remain competitive, and this means keeping prices low. Each stage of the supply chain, therefore, needs to be strategically managed.

For example, the warehouse operation must look to contain carrying costs – if overstocking takes place, it can affect working capital and create obsolete stock, damaging ongoing profitability. The procurement team requires good supplier management to prevent stock outages, whilst keeping procurement costs to a minimum. Whilst the logistics department needs to ensure orders are delivered on time. Each link in the supply chain therefore needs to integrate from start to finish, and this requires a comprehensive distribution software package.

But then we can’t forget the wider business operations and how they must integrate with the supply chain 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 a business-wide software package becomes important for remain operationally efficient.

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 lifecycle of each product through to sale.

Supplier relationship management (SRM) software

This software is useful to wholesalers and it enables procurement managers to forge close links with suppliers. This helps them to establish supplier capability in order to predict lead times, ensuring product availability without overstocking.

SRM software also allows procurement managers to negotiate bulk discounts and reduced carriage costs to help them calculate the optimum order size and order points.

Customer relationship management (CRM) software

CRM software manages the customer experience. It stores 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 optimisation; 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, helping to maintain profitability and preserve working capital.

Enterprise resource planning (ERP) software

This software is the system that links most business systems together. An 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, ERP 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, so it’s important to adhere to a set of best practices:

Consider the needs of the organisation

Ensure you carry out a full audit of your business’ requirements – both for today and into the future. Analyse your current business practices and decide whether you need a software system that can be tailored to your current processes, or whether you need a complete efficiency overhaul e.g a new system and new business processes.

Consider a system that integrates with other software packages

The best business systems will allow the addition of software plug-ins and add-ons that enhance specific functionality. This ensures you get can have all the system capabilities you need and that the overall system will have the ability to evolve as your business grows.

For best results, all software functions should connect under one umbrella system; this enables employees to access all information from once single interface. The aim here is to create synergy – all organisational operations should integrate seamlessly to ensure the business is greater than the sum of its parts.

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Originally published February 2017, updated January 2019