Avoid Pitfalls During Your Distribution Software Implementation by Learning From Buyers With Experience

As the owner of a distribution business connecting manufacturers with retailers or consumers, you often manage orders, inventories, and deliveries across multiple channels. Distribution software is built to make you more efficient and productive. It offers a centralized platform to manage everything—from supplier relations and order fulfillment to real-time inventory tracking.

However, to make the right purchase, it is crucial to know what features you need, the average software price, and common challenges faced when purchasing distribution software.

Each year, Software Advice's advisors speak with thousands of software buyers evaluating new distribution software for their businesses. We've gathered insights from these conversations to help small businesses understand the budget requirements, feature needs, and pain points of current users to choose the best tool for their needs.

Prospective buyers and current users prioritize different features

When our advisors asked buyers what methods they were currently using to handle their day-to-day operations, our findings revealed a discrepancy between the priorities of distribution software buyers and users.

• Thirty-six percent of current software users rate order management as the most essential feature in distribution software compared to buyers who are mostly looking for inventory management functionality in a distribution management tool.

• These findings indicate that businesses already using distribution software find immense value in order management functionality. This feature automates tasks, such as order entry, processing, tracking, and fulfillment, ensuring accuracy in every step. It provides real-time visibility into order statuses, inventory levels, and customer information, allowing distributors to manage and address orders promptly.

• Inventory management, on the other hand, automates inventory tracking across multiple locations, helping distributors forecast demand, manage stock replenishment, and identify slow-moving or obsolete inventory items. Users can leverage this feature to gain accurate visibility into the current inventory status and ensure efficient allocation of resources.

Current pain points for distribution software buyers

When our advisors asked buyers what methods they were currently using to handle their day-to-day distribution operations, here's what they found:

• Around 67% of buyers use third-party tools, such as accounting and ecommerce platforms, for their day-to-day distribution management workflows. 

• Nearly 17% of buyers use manual methods to manage their work. While 14% already have a system in place, approximately 13% do not have any method in place at all.

These discussions shed light on businesses' real-life challenges with their existing methods. These include inefficiency (42%), limited functionality (27%), and new updates (10%).

• Inefficiency: Manual methods, such as spreadsheets and third-party tools, lack integration, automation, and scalability. These are not specifically designed for distribution businesses, leading to process inaccuracies and delays. These limitations also hinder the ability to track inventory accurately, manage orders efficiently, and forecast demand effectively. Also, manual methods are prone to human errors, such as incorrect information input and missed details.   

• Limited feature options: Manual methods and generic third-party tools offer limited features that might not be sufficient to address the comprehensive needs of modern distribution processes. These will not include essential features, such as automated inventory tracking, dynamic order processing, real-time reporting, and integration with other business systems, leading to increased errors and higher operational costs.  

• New updates: Compared to manual methods and third-party tools, distribution software simplifies the update process by automating deployment, reducing errors, and ensuring consistency across systems. This transition enhances efficiency, making it easier to track and control updates.

Reasons for switching to a dedicated distribution software

Compared to the existing methods used by professionals, a dedicated distribution software solution offers the following benefits: 

• Specialized functionality: A dedicated distribution system is designed specifically to meet the unique needs of distributors. It offers comprehensive features, such as inventory management, order processing, and warehouse management tailored to the complexities of distribution operations. This specialization ensures that the software efficiently handles tasks that generic tools may struggle with. 

• Improved efficiency: Compared to manual methods or third-party tools, a dedicated system automates several aspects of the distribution process, including order routing, inventory tracking, and customer communication. It reduces manual errors, speeds up order processing, and enhances overall operational efficiency. 

• Scalability: A dedicated distribution tool is designed to accommodate increased transaction volumes, additional warehouse or distribution centers, and expanded product lines as the business grows. Unlike manual methods or third-party tools, the system provides the flexibility to adapt to changing business requirements without significant customizations or disruptions.

Average budget for distribution software buyers across industries

The budget for purchasing distribution software varies from industry to industry based on factors such as the software functionality, customization capabilities, the deployment model, support options, and integration requirements.

However, the average budget across industries for purchasing distribution software was approximately $192 per month. 

The chart below highlights the average buyer budget per user, per month for the top five industries interested in distribution software.

Use cases for distribution software

Based on our advisors’ interactions, these are the top industries using a distribution tool for different use cases: 

• Businesses handling consumer packaged goods need distribution software to manage complex supply chain and logistics operations. They may require features, such as inventory management to track stock levels across multiple locations, order processing capabilities to handle large volumes of orders, and demand forecasting to predict consumer trends and product requirements. 

• Food and beverage businesses require distribution tools to manage perishable inventory, optimize supply chain logistics, and ensure compliance with food safety regulations. Their specific feature requirements may include batch and lot tracking, route planning, temperature monitoring capabilities, and compliance management.

• Industrial machinery and equipment businesses deal with a wide variety of products, ranging from small parts to large, complex machines. Therefore, they may look for features, such as inventory control, order processing automation, real-time shipment tracking, supplier management, and integration with ERP systems in a distribution management system. 

• Businesses handling building materials need a system to manage high volume and variety of materials, including the lumber, cement, and steel they deal with. Key features that they may need in a distribution tool include order processing and tracking, real-time updates, demand forecasting, and supplier and customer relationship management.

• Apparel businesses need a distribution tool to manage diverse inventory and seasonal demand fluctuations. They may require features such as order fulfillment, returns management, automated reordering, and dynamic pricing capabilities in a distribution platform.