Distributors are a vital link in the supply chain. With the heavy emphasis on warehousing and logistics, successful distributors know that their businesses depend on their ability to track and organize their data. A robust ERP system with adequate warehousing and inventory management tools gives them ability to reduce errors, control costs, make sales, and stay competitive.
Control of your physical inventory is essential. You need to know where every part is located and how many items you have in your stock at any given time. Discrepancies can indicate carelessness or theft. The time your employees spend resolving errors is time wasted. Reducing errors in your inventory streamlines your business and makes it more profitable.
A conventional database is helpful, but a complete ERP system gives your staff even more powerful data management tools. An ERP package integrates your warehouse database functions with other departments while still offering a robust set of organizational tools. Barcode locations, serialized parts, movement tracking, and cycle counts are typical features that have become the industry standards.
Controlling Carrying Costs
The actual warehouse processes themselves are not the only place you may experience losses. The cost to keep product in storage adds up. You must pay for the shelves your inventory sits on and the real estate your shelves are located at. In addition to these costs, production costs are tied up in these components. Until you sell and make deliveries, you must pay finance charges on the cost to produce the inventory you are storing. You also absorb the cost of depreciation on items as they age.
Forecasts from past performance and industry trends helps you anticipate your carrying costs. This data is accumulated by your ERP system as you perform your normal daily functions and becomes useful when developing process improvements. Changing your ordering schedule or rearranging financing to coincide with your order fulfillment strategies can reduce your expenses by eliminating some of your carrying costs.
Lean operations are becoming more popular, but you can only scale your operations back so far before you start missing out on sales. Your ERP system helps you to identify and maintain the optimal level of inventory. Knowing what is available gives your sales people the ability to immediately answer questions and respond to your buyer’s demands. The faster your items sell the lower your carrying costs will be. Marketers are able develop strategies to generate interest in items that are aging, and your procurement department uses the inventory information to make purchasing decisions.
Distributors receive a number of other benefits as well. Some mundane tasks can be automated to free your staff up for more productive purposes. Instantaneous reporting keeps you informed and helps to plan new processes that further lower costs. Integrating the functions of different departments encourages teamwork and builds a sense of community in your company. With the highly competitive nature of the industry, successful distributors cannot afford to operate without an ERP system.