Top 5 Distribution ERP Software: Key Features and Tips To Select

Selecting distribution ERP software is not a simple task. Like any other industry, the distribution model can grow to a complex structure. While some ERP systems are designed with enterprise-level distribution operations in mind, others are flexible enough to support startups.

Then how do you identify the perfect fit for your unique needs? Find out the core features of ERP for distribution businesses and see our top 5 recommendations to navigate the selection process.

What Is A Distribution ERP System?

Firstly, an Enterprise Resource Planning (ERP) system is packed with a suite of apps that are designed to automate various business processes from sales and marketing to inventory and warehouse control.

The distribution ERP software is developed based on the core ERP system, with specific apps and features for wholesale distribution and those involved in the supply chain. The system integrates and streamlines distribution operations, including inventory control, order fulfilment, logistics, finance, and CRM. This integrated environment provides a centralised data hub with real-time visibility across the distribution network, enabling distributors to respond to changing market demands quickly.

Why companies are investing in distribution ERP software

Numerous wholesale distributors deal with typical challenges that limit their potential for development and profitability. Distribution ERP software addresses these particular pain points:

7 Must-Have Features Of ERP For Distribution Businesses

6A robust distribution ERP software must provide at least the following 7 core features to cover every facet of a distribution business:

1. Inventory Management: One of the most important features of distribution ERP software is enabling users to get real-time access to every item in their warehouses' inventory. It often goes with capabilities like cycle counting and inventory control, demand forecasting and replenishment, and ABC or VED analysis (stock classification):

• Allow users to conduct routine cycle counts and effectively handle inventory changes to maintain inventory accuracy and prevent inconsistencies.
• Utilise historical sales data, patterns, and customer insights to predict future demand, initiate reordering, and prevent stockouts.
• Enable users to prioritise stock categories for optimal inventory distribution and purchasing strategies.

2. Sales and Order Management: An ERP for wholesale distributors helps streamline the sales cycle and boost order fulfilment efficiency with features like order process automation, customer quote management, and backorder control:

• Provide tools to generate accurate client quotations for distributors with product pricing, shipping costs, lead times, etc.; manage order status and give real-time order data.
• Allow users to set credit limits, oversee clients’ accounts, and evaluate creditworthiness.
• Give real-time visibility into stocks for efficient backorder management.
• Enable faster fulfilment by automating order processing and reducing human error in data entry.

3. Supply Chain Management: These features of distribution ERP software help improve collaboration and transparency in the supply chain, such as supplier management, drop-shipment tracking, and logistics optimisation:

• Track supplier performance, automate purchase orders (PO), and simplify supplier communications.
• Provide the latest updates on shipment location and expected arrival timeframes for proactive exception management.
• Enable dropshipping features, to deliver products straight to customers from the warehouses.
• Provide tools to handle international trading terms for overseas shipments.

4. Financial Management: Distribution ERP software simplifies the process of finance management and helps users get real-time data. Typical features are accounts payable & receivable automation, landed cost management, and cost management:

• Automate billing, accounts payable and receivable tasks, and enhance cash flow management.
• Provide extensive financial reports for resource allocation, profitability, and budgeting.
• Allow users to monitor and evaluate operating costs to pinpoint opportunities for development.
• Manage discounts and rebates for distributors based on volume and contracts.
• Offer analysis and records of landed cost; including the whole cost of goods such as freight, import tariffs, and other related costs.

5. Warehouse Management: Distribution ERPs include features like warehouse slotting and put-away optimisation, barcode scanning, and warehouse management system (WMS) to improve fulfilment accuracy and streamline warehouse operations:

• Customise and optimise warehouse layout to minimise picking times and maximise the usage of available storage space.
• Allow barcode scanning to fulfil orders more quickly and precisely.
• Enable integration with a warehouse management system for greater automation and control over multiple warehouses.

6. Customer Relationship Management: Wholesale distribution ERPs enable users to develop a tailored relationship with their customers with features like distributor management, contract management, targeted promotions, self-service customer portal, and more:

• Integrate distributor data, analyse sales history, and allow users to look into purchasing trends to discover high-value clients and enhance sales tactics.
• Provide automated alerts for contract expiration or price adjustments to streamline contract development, pricing agreements, and adherence to terms.
• Allow users to create customised promotional activities and rebate schemes based on past purchases and product groupings.
• Enable users to assign suitable accounts to distributors.
• Give distributors access to a self-service portal to track orders, download bills, post inquiries, and view account data to lower workloads.

7. Integration capabilities: The distribution ERP software can be integrated with other distribution systems such as:

• Transportation Management System (TMS) to optimise logistics operations.
• Business Intelligence tools to develop strategic reports and data visualisations.
• B2B E-commerce Website to streamline distribution operations.

5 Top-Recommended Distribution ERP Software

1. Microsoft Dynamics 365

Microsoft Dynamics 365 stands out as a powerful solution for organisations with highly intricate distribution operations. This can be a great tool for distributors with supply chain networks and warehousing, or those requiring add-ons for industrial verticals.

The best parts:

• Rich capabilities: For complicated distribution businesses, replenishment techniques include bin-level capabilities, licence plate fabrication, and warehouse-level transfers. These are available right out of the box.
• Global ecosystem support: It offers support for numerous European, Asian, and African countries where most products might not work.

2. Odoo

With more than 12 million users, Odoo is an open-source ERP that works with companies of all sizes, which makes it an appealing option for wholesale distributors looking for cost-effective and adaptable software. It offers a wide range of robust inventory optimisation features, such as multi-warehouse management, bulk serialisation and lot tracking, static and dynamic costing, replenishment flexibility, and more.

The best parts:

• High integration capability: Odoo is particularly excellent at integrating with other business apps you already have. Because of the modular architecture, you can install particular modules (i.e. accounting, CRM, sales, and procurement) to maintain a consistent data flow throughout the entire distribution ecosystem.
• Scalability for expansion: Odoo is scalable as it can be customised to meet your demands when your company expands. It is simple to add more users or features without having to completely rebuild the system.

3. Oracle Cloud ERP

Oracle Cloud ERP is designed specifically for global distribution enterprises as it is excellent at handling high volumes of transactions. The system is ideal for businesses that mostly rely on order management systems (OMS), warehouse management systems (WMS) or transportation management systems (TMS).

The best parts:

• WMS & TMS integration: WMS and TMS features are integrated into the Oracle Cloud ERP system.
• Best for large enterprises: Its features are developed to handle the big workloads of large distributors.
• Experienced consultants: Its network of experienced professionals can manage the architecture of complex businesses.

4. SAP Business One

SAP Business One is designed for smaller distribution businesses with a single legal entity and several warehouses. With the goal of streamlining early distribution operations, it provides a comprehensive set of modules that cover warehouse management, sales and distribution, and inventory management.

The best parts:

• Rich financial capabilities: Its financial workflows and global traceability are similar to products in SAP's larger systems, like SAP S/4 HANA.
• HANA support: SAP Business One can process the same workload as the S/4 ecosystem because it uses HANA as the database.
• Robust partner ecosystem: WMS, and shipping solutions are just a few of the industry partners that SAP Business One offers.

5. NetSuite

NetSuite is best for SMB distributors and global businesses. This is a perfect solution for consumerised product-focused business models such as e-commerce and retail. NetSuite will be most appealing to distributors with B2C strategies overall.

The best parts:

• International competencies: It can support 100+ countries that have localisation requirements, and consolidate as well as assist with intercompany transactions.
• Multiple channels integration: NetSuite has one of the largest ecosystems of pre-built connectors that initiate multiple sales channel integration. This is more than traditional channels that connect with third-party logistics (3PL) suppliers.

The Next Step: Assessing ERP Systems

Distribution businesses have specific requirements for network architectures and planning calendars. Without distribution ERP software, employees might resort to using spreadsheets or standalone plugins, which could impede business scalability. If the complexity takes over, consider setting up a meeting with our ERP experts to navigate the selection process.

References

• QuantumBlack, AI by McKinsey (2019). Most of AI’s business uses will be in two areas
• Aberdeen Group. To ERP or Not to ERP: It Isn't Even a Question.