If you are a wholesale distributor and have been thinking about implementing an ERP (Read what an ERP is) for your business, your first task would be to research the features you would need and perhaps craft a plan so that it could be implemented and aligned with your vision for the future state of your business.
Each business is unique. Each distributor is unique. While you may want to get inspired by other distribution businesses and how they use an ERP, you will still need to identify your unique processes and ensure that the ERP solution you select supports them.
“Understanding of the standard features would help you identify the unique features for your business and prioritize your requirements”
The majority of the ERP solutions available in the market would support the most common features out-of-the-box, required by distribution companies. Listed below for your reference.
ERP Features for Distributors
- Accounts Receivable (AR)
- Accounts Payable (AP)
- General Ledger (GL)
- Cash Management
- Currency Management
- Multi-entity Accounting (If you have more than one location or entity)
- Fixed Assets
- Tax Management
- Financial Reporting
- Invoice Consolidation
- Inventory Management
- Warehouse Management
- Barcode Reading Capabilities
- Pallets or container management (if you ship or receive as a pallet or container)
- Storage Restrictions
- Cycle and Physical Counting
- Wave and Batch Picking
- Cross-docking and 3PL warehouses
- Carrier, UPS, FedEx, and 3PL integration
- NAFTA documentation (if you are shipping cross-border)
- Kitting (if you perform re-assembly, disassembly, or light manufacturing of your products)
- Vendor and customer inventory
- Vendor part number, cross-reference
- Order Management
- Salas Order Processing
- Purchase Order Processing
- Purchase Approvals
- Customer and Vendor Management
- Pricing and Discount Management
- Sales Quotes
- Vendor Price Matrix
- Customer and Vendor Contracts
- E-commerce integration
Yet what makes or breaks an implementation are the unique features that are also your differentiator–as a business. Understanding of the standard features would help you identify the unique features for your business and prioritize your requirements so you don’t run out of time or forget to explore the features that matter.
Included out-of-the-box with some ERP products, these unique features collectively are also called industry-specific features, which, as well as integration and ecosystem for your specific micro-industry, is what differentiates ERP products.
“Your least risky option would be to find an industry-specific ERP product that is designed for distributors.”
Unless you have a very unique business, a very large IT team as well a budget, your least risky option would be to find an industry-specific ERP product that is designed for distributors otherwise you will not only end up spending more, you are likely to increase the implementation risk as well.
These standard features are what form the foundation of your selection criteria as well as priorities. However, once your executive team is aligned on the core features, you should be spending the most amount of time discussing the unique features during your evaluation process. We recommend the 80-20 rule. 80% of the time on the industry-specific features while 20% on the core ERP features.
“We recommend the 80-20 rule. 80% of the time on the industry-specific features while 20% on the core ERP features.”
ERP evaluations are typically overwhelming as you have a steep learning curve, especially if you have negligible experience implementing an ERP. Also, since ERP implementations are expensive and risky, it only aggravates the pain further. The best way to soothe your team and yourself would be to understand how to prioritize and where to focus. Knowing the standard features you need is the first step toward your ERP evaluation journey.