Boosting Inventory Management Efficiency with a Distribution ERP System - Modern Distribution Management

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Boosting Inventory Management Efficiency with a Distribution ERP System

Amid marketplace complexity, efficient inventory management can guide distributors through the fog. James Mallory advises on how modern ERP can serve as your inventory management beacon.

Today’s marketplace is constantly challenging distributors. Customers, whether they are consumers (D2C) or other businesses (B2B), expect convenience, near-instant answers to questions and a consistent experience no matter how they interact with a company. To meet these expectations, distributors need inventory accuracy and visibility, so they can provide excellent customer service while balancing supply and demand — avoiding overstocking and stockouts. They also have to keep track of and comply with established industry requirements that may evolve as retailers and vendors develop new rules and as governments pass new regulations.

Inventory management, a pillar of distribution management, helps you navigate such a complex environment. If best practices are not adopted, challenges can arise with dissatisfied customers, chargebacks, valuable capital tied up in overstocked inventory and even fines for regulatory non-compliance. Distributors that manage inventory successfully have found a way to leverage best practices while introducing efficiencies into the supply chain. They reap the rewards of their investment, foster resilience and leverage automation opportunities to support their future growth.

The Challenges of Inventory Management

In this dynamic landscape, distributors relying on outdated business management software or error-prone, manual processes may struggle to keep up with the market’s requirements. Most likely, they find it particularly challenging to:

  • Forecast and balance supply and demand. The key to solid inventory management is for a company to have the right stock on hand, at the right time, to anticipate and then fulfill customer demand. It doesn’t pay to have too much too soon or too little too late. Relying on disconnected systems or manual data entry means that distributors find themselves basing forecasts on outdated, inaccurate information or even gut feelings. And skewed forecasts may lead to overspending or understocking. Customer service levels suffer when there isn’t enough inventory on hand when it is needed, but, at the same time, having too much stock that isn’t moving quickly ties up valuable capital.
  • Process, fulfill, and ship orders. Shipping is, of course, part of the definition of distribution. However, processing, fulfilling, and shipping orders can become very difficult if companies don’t have all their order, inventory and customer information available in a single place. The wrong items can be shipped out. Inventory may be miscounted. Customer addresses may be miswritten, so shipments are sent to the wrong places or returned to the company. And regulatory label requirements may slip through the cracks, racking up unnecessary delays and fines.
  • Manage disrupted supply chains. The pandemic years showed just how intertwined and complex global supply chains have become, and the ripple effect of those disruptions is still being felt in the distribution industry. A critical part of inventory management is managing risk and developing contingency plans — such as diversifying vendors, monitoring forecasts and making predictions based on market trends. If distributors don’t have the right data to analyze their current supply chain situation and act out their contingency plans in an informed way—sometimes on the spur of the moment as circumstances change — they can find themselves caught up in fresh waves of avoidable disruption.
  • Maintain accurate, companywide communication channels. Many employees across a distribution company work with inventory management data, including sales representatives, order processors, warehouse managers, financial analysts and more. Because these roles and departments use the same information for decision-making, they must be able to quickly and easily communicate with one another to keep the company moving smoothly forward.

Today’s marketplace is constantly challenging distributors. Customers expect convenience, near-instant answers to questions, and a consistent experience no matter how they interact with a company.

The Answers Lie in the Right Business Management Technology

Often, the answer to navigating a changing market is to make another change: switching out disconnected or manual business management processes for modern technology.

The challenges of inventory management can be solved by adopting cloud-based Enterprise Resource Planning (ERP) software that is specifically designed for the distribution industry. A distribution ERP system boosts inventory management efficiency by:

  • Improving the accuracy of inventory tracking. With all information about stock and non-stock items available at their fingertips, distributors can make improved forecasts and keep the right inventory on hand at the right time. This reduces overall costs and creates satisfied customers.
  • Enhancing order processing and fulfillment. The powerful automation in modern distribution ERP software helps eliminate human errors and ensure that all picking, packing and shipping processes happen accurately and on time. Instead of completing every detail manually, employees are free to focus on more valuable, creative, business-growing activities.
  • Maintaining retail and regulatory compliance. A cloud-based ERP system, as the source of truth for all transactional data, takes the headache out of compliance. With automated labeling and robust customer data management tools, it helps save companies time and money, prevent fines and chargebacks and keep customers and vendors satisfied.
  • Increasing companywide communication, collaboration, and visibility. An ERP system is a single source of truth for distributors. It holds real-time information about the company’s business data that can be accessed at any time from anywhere. This means that employees across locations (according to their roles and permissions) work with the same information. And when employees work with the same information, they communicate more effectively, make more grounded decisions, have a clearer view of the company as a whole and can better contribute to its success.

How to Choose the Right Distribution ERP System

There are many different ERP systems on the market, and some serve distributors better than others. When researching their options, companies should be looking for systems that offer:

  • Procurement planning features.
  • Lot and serial number tracking.
  • Barcode scanning and EDI support.
  • Role-based dashboards,
  • Seamless and tightly integrated shipping solutions.
  • Flexible and configurable pricing and discounting options.
  • Dead-stock detection, inventory classification, and turnover insights.

To learn more about how an ERP solution purposely built for distributors can boost inventory management efficiency and set companies up for sustainable success, visit

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