ERP Software Helps Advance Distribution Businesses
The appetite for innovation and new technology is growing among distributors in the jan/san industry. And as a result, software manufacturers have been hard at work over the last couple of years feeding updates of their enterprise resource planning (ERP) systems to help satisfy distributors’ hunger.
Newer versions of ERP systems are more comprehensive than ever, managing most daily activities of a jan/san distributorship. From accounting, inventory, purchasing, sales and marketing, business analytics to customer relationship management, delivery and fleet management, and even e-commerce, software providers are giving distributors just about everything they need to run their businesses in one package.
Although some of today’s trending features aren’t necessarily new, manufacturers have made significant advancements to their systems to better manage distributors’ sales, drill down into their businesses more with analytic tools, and are even making systems tailored specifically to small businesses. And as technology continues to ever-evolve, manufacturers are answering distributors’ requests for new mobile platforms and browser-based formats so they can access their business’ key information from virtually anywhere and at any time.
Traditionally, weekly product inventory reports were printed for salespeople. It was counterproductive, though, as reps still were forced to call the office for up-to-date pricing and inventory numbers while on sales calls. Nowadays, however, because of ERP software, information is accessed in real-time, so sales reps have the most accurate information right at their disposal while in front of customers.
Distribution software can now be accessed not only from a salesperson’s laptop, but also now through upgraded mobile devices such as smartphones and tablets.
So, when a sales rep accesses the system, he can find complete information about each of his accounts. In a matter of seconds, the rep can also check inventory, stay abreast of price changes and schedule deliveries, says Chris Raffo, president of Somerville, N.J.-based Universal Business Systems Inc.
Today’s software systems are even helpful in increasing sales. These systems now are able to anticipate a customer’s ordering needs based on order history and automatically prompt a salesperson to ask about reorders.
“Sales reps can actually sit down with a customer at a site and drill down into the metrics and understand and be able to gather more business,” says Bill Johnston, product manager for ECi Software Solutions, Fort Worth, Texas. “Then the rep is able to place an order right then and there. So he’s placing the order and then giving the customer an order confirmation in an e-mail right out of the system prior to leaving. It just drives more efficiency.”
Salespeople are able to run their own reports on customers and have the ability to be alerted if buying patterns have changed for a particular customer. Up-to-date reporting also allows reps to keep tabs on buying patterns and address problems sooner than later.
“The software senses any customer that may be starting to buy an item from a competitor,” says Bob Hestenes, Step1 Business Products, Newbury Park, Calif. “It will check their usage trends on every item on every consumable."
Not only does this feature help distributors, but it is also beneficial from an end user’s perspective as well. For example, when a customer makes a purchase, whoever is keying in the order on the distributor’s end, can look up the customer’s order history and ensure that the products that are usually ordered are being purchased and in correct quantities. This helps reduce customers running out of product. It also reduces the amount of emergency orders with customers who forgot to order a particular line item on their order.
Sales managers also enjoy these systems because they are able to monitor sales and stay on top of their reps. At any given time, managers can see how each sales rep is stacking up to their projected goals. Sales managers can use this information to conduct performance reviews. Not only can a manager evaluate a rep’s current sales numbers, he can also compare them against previous months and against other employees’ records. They can also evaluate how any individual account is performing compared to previous months or even years.
Distributors are also able to analyze margins on every sale made. If there is an irregularity such as margins aren’t being met, the system will alert management. Management can then determine whether the price needs to be adjusted.
With today’s ERP systems, software providers have given distributors the ability to not only look at sales numbers, but also dissect each part of their business to remain profitable. This includes being able to call out different market segments, individual customer accounts and even individual product categories.
By being able to drill down into these select areas, distributors have a better control on preserving their margins. One area that has historically hurt distributors’ pocketbooks is managing customer pricing. With today’s ERP systems, however, this task is taken out of distributors’ hands. All they have to do is set margin parameters.
“If you’re selling the same item to 100 different customers, it could easily be at 100 different prices,” says Hestenes. “So what this does is it tracks whatever special price you happen to have given to this customer and it saved whatever margin was associated with that price. But if the cost jumps up from the vendors, it automatically preserves those margins and then in order entry distributors see what the customer paid on their last bill and what they need to be paying this time.”
Because many small distributors in this industry are still primarily using accounting software to manage their businesses, software providers are now tailoring packages — although scaled back and significantly cheaper than traditional ERP systems — to help the small companies better streamline their operations.
“A lot of the times, these small businesses adopted these accounting software systems at the advice of their accountants,” says Adam Waller, president of DDi System, Sandy Hook, Conn. “They’re definitely meeting the accountant’s criteria for quality, but they pretty much ignore customer pricing issues and inventory management issues.”
When distributors build an order, they’re generally not running from a pre-set price list where every customer pays a certain amount for a certain product. Customers pay a different price based on the salesperson’s judgment or what the market will bear or a contract. So, if a distributor has 500 different customers, buying the same item at a different price and the cost for the item goes up, distributors who are using only accounting software to run their business, are forced to manually enter the price hike into their system and make sure that they are still meeting their margins for each customer — a method that often is riddled with mistakes.
“You can do that when you’re doing 20 sales a day, but when you get to 50 sales a day and you start to make mistakes, you start to have margin leakage,” says Waller. “One, two, three percent on your margin. And as your business grows, it starts to become real money.”
Waller says small businesses software often will recoup the costs of software implementation by correcting the customer pricing issues in just the first year.
Responding To The Trends
With the introduction of smartphones and tablet devices software manufacturers say more and more distributors are beginning to utilize them in their business operations.
“[Software access via] mobile devices is probably the number one request that distributors are asking for today,” says Johnston. “Primarily, they’re looking for their sales force to be able to quickly, through a handheld device, place orders or answer questions for customers.”
Software providers say that there are customers who are also looking to do business analysis on these mobile devices. So, software manufacturers have made it a goal to set up access to their ERP systems via mobile devices.
“Our goal is really to allow our users to access all of their company’s data with any device they want, so we really are trying to become agnostic as far as the platform our customers have to use,” says Diane Dunbar, industry segment manager with Minneapolis-based Epicor Software Corp. “Of course, we started with the iPhone, iPads and Androids because those are the devices that everybody uses, but our goal is to really make it a plug and play, so whatever device you want to use, you can use to access your business."
Software manufacturers interviewed for this article even have gone as far as developing apps or have them on the drawing board for the near future. New to the market are apps that give distributors the ability to access their product catalog from a tablet device — replacing a printed product catalog and price list.
Distributors can upload all of their product offerings with pictures and categories, up-to-date pricing and their current inventory. So, sales reps in the field are able to see each item’s picture, it’s availability, links to the company’s website and related products, says Waller.
Besides mobile devices, another trend expected to grab hold in the industry is cloud computing.
Today’s software manufacturers are going as far as allowing their distributor customers to access their ERP systems via a browser-based platform, otherwise known as the “cloud.” So, distributors don’t have to tie up resources with a client-serve configuration or download software to their network.
Raffo says the product can be used seamlessly across a network to provide the latest information on inventory, purchasing, accounting and logistics, just as if were set up in-house, but all the distributor employee needs to do is have a secure login and password.
Although there are still distributors currently who may not be comfortable moving to the cloud for their core ERP systems yet, Raffo, expects the trend to intensify as more people have become receptive to the technology on the consumer level.
“That’s the new wave of what’s happening out there,” says Raffo. “If you have to load something onto a PC, that’s old technology. Using the browser as the interface is the way it’s going.”
It is an exciting time in the tech world and software manufacturers will continue to play a major factor in distributors’ success. Distributors just have to make the investment.