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Distributors sit in the middle of the supply chain, providing a connection between manufacturers and, ultimately, consumers. They must track products and terms for multiple suppliers and multiple customers, including such diverse things as economic order quantities and cooperative advertising dollars, for both suppliers and customers.
The complexity in the business is mirrored by the complexity in its supporting enterprise software vendors, as evidenced by the almost 100 different available wholesale distributor software options on the market. We wrote this buyer’s guide to help buyers better understand what to look for when assessing distribution software reviews in this market.
Here’s what we’ll cover:
Distribution software covers the systems used to run operations, including accounting, inventory management, customer relationship management, order management, purchasing, warehouse management, and front counter operations. While small operations can use generic accounting and inventory management systems, distributors and distribution centers (DCs) require the special functions available in distribution management systems.
|Front counter operations||Automates the point of sale if the distributor does pick up sales for wholesale or even retail. Functions include order processing, tax calculations, receipt printing. Interfaces with inventory and customer relationship systems. Example vendors include Microsoft, Counterpro, and Activant.|
|Customer management||Used to maintain customer contact information, preferences, reorder points, and credit information. Functions include generating mailing lists, maintaining sales history, and tracking co-op sales. Example vendors include SAP, Oracle, and SugarCRM.|
|Order management||Prepares bids, prepares quotes, and processes customers orders. Functions include quote to order, preparing shipping information, creating return materials authorizations. Example vendors include SAP, NetSuite, and Microsoft.|
|Purchasing & procurement||Used to order inventory and track discounts offered. Functions include preparing purchase orders, tracking economic order quantities, and preparing receiving reports. Example vendors include Gilliani, Geneva, and Microsoft.|
|Inventory management||Used to count, track, receive, and locate parts and materials. Functions include tracking assets, processing advance notifications, tracking inventory value, and tracking reorder points. Example vendors include Sage, Epicor, and Oracle.|
|Warehouse management||Tracks the quantity and stock of inventory items within the warehouse. Warehouse distribution management functions include slotting analysis, preparing pick information, and location tracking. Examples vendors include Royal4, S2K, HighJump, and Geneva.|
|Distribution accounting||Automates the general ledger, accounts receivable, accounts payable, and other accounting functions with special emphasis on the unique requirements of distributors. Functions include keeping ledger balances, tracking client debt, and calculating available discounts. Example vendors include SAP, Oracle, Microsoft, and Intuit.|
|Demand management||Used to adjust inventory levels according to fluctuations in the demand forecast to ensure that supply coordinates with demand. It will include functionality to track customer delivery schedules, manage customer rebates, and process order returns. Example vendors include SAP, Epicor, and NetSuite Distribution.|
Before evaluating distributor software, you’ll need to determine what type of buyer you are. Over 90% of buyers fall into one of these four groups:
In the age of on-demand, custom-built products; overnight shipping; and Internet disintermediation, the distribution sector is under pressure to reestablish its value proposition and increase efficiency. One of the ways distributors can do this is by utilizing advanced features included in software for distribution business needs.
As distributors feel pressures from increasing demands to restock as the economy recovers and to reassert value in the supply chain, they need concrete benefits to justify system expenses.
The chief issue with wholesale distribution software systems is lag time. Even when the various modules and components share a database, which is the norm now, there is a time lag between when events occur and when they are recorded. This can lead to improper decisions. Most systems are written with the assumption that changes are made and transmitted instantly; reality is different.
For example, when a customer places an order, ideally the value of that order should be immediately moved from current inventory and appear in accounts receivable. What really happens is that the order is entered, the inventory is tagged as “Allocated”, the pick list is generated, the inventory is picked and packaged. If the shipment is free on board (FOB) origin, once the order is picked up, the items should be removed from inventory. The inventory system’s recorded location of the inventory at any given time has important tax and floor planning considerations, which can affect cash flow.
The other limitation is expense. Even basic warehouse distribution software systems use bar codes, mobile readers, and a wireless network. More advanced systems require an extensive infrastructure that potentially requires every location on every shelf to have some form of hardware installed.