You’re caught in the middle of a tug-of-war.
On one side, the customers of your wholesale distribution business pull at you to deliver faster and reduce your margins. They may even expect you to have an e-commerce platform so they can buy conveniently online, just like consumers.
Meanwhile, on the supply chain side, your vendors yank at your bottom line with higher costs and more complicated logistics as you grapple with managing global resources. To make matters worse, some suppliers are cutting you out of the value loop by selling directly to your customers.
How are you supposed to sustain a growing business in the midst of all these pressures?
That’s where Enterprise Resource Planning (ERP) software empowers small and medium-sized businesses like yours to respond efficiently, productively and at scale to business challenges.
How does an ERP system work?
An ERP connects your business functions from end to end. As a result, it centralizes all your data and provides full visibility into your operations in real time. This digital transformation of your business helps drive efficiency and productivity by streamlining operations and delivering data-based insights to help you make better decisions faster.
By following these 8 tips, your business can overcome your business challenges by getting the most out of your digital transformation.
Discover our easy-to-read roadmap for a successful journey through the ERP landscape: “Choosing Your ERP: The Essential Kit.”
1. Support a better customer experience
To keep your customers coming back for more, you need to meet their expectations. These have been shaped by their everyday experiences as consumers, in which B2C online merchants offer convenience and selection in a digital-first buyer’s journey.
With the right ERP, you can offer customers convenience, for example, through a personalized portal into their account. With this 24/7 access, they can get updates on the status of your inventory and their order, place a new order, and consult their sales order history, customized price lists, and outstanding invoices
Personalize your customer response and improve profitability.Your buyer’s activity in your ERP system creates a trove of data on customer needs and buying habits. By mining this data, you can gain a deeper understanding of their preferences, general market trends and how efficiently your operation responds to these needs.
As a result, you can customize products or services for them. Your marketing team can also personalize their targeted promotional messages to improve conversions and profitability.
Through this personalized response to your customers, you reinforce their loyalty to your business.
2. Elevate your inventory management
For a wholesale distributor, stockouts, overstocks and carrying costs constantly threaten profitability. Your ERP can mitigate that risk in several ways.
First, your real-time visibility into your stock situation, no matter how many locations you have, enables your team to stay on top of inventory levels. Furthermore, your ERP enables you to preset minimum stock levels which, when reached, will automatically alert you, and even trigger the issuing of purchase orders if you wish.
Second, your ERP’s forecasting module acts a little like your crystal ball as you plan for customer demand. Through your ERP’s centralizing of sales, purchasing and inventory data, this module uses your historical data to produce various data-based scenarios you can evaluate before making a decision.
Third, to further support your inventory management, your ERP system’s real-time analytics function mines your historical data, such as prices requested and paid, purchase orders, raw materials received and goods shipped. As a result of this data analysis, you can benefit as follows:
- Save on carrying costs
- Cut the cost of rush deliveries for components
- Reduce waste
- Minimize stockouts to support just-in-time inventory goals
3. Profit from new business models and revenue streams
By becoming a digital-first business, you open your business up to the potential of new markets and business models.
For example, by developing your e-commerce platform and online presence, you can present your offer to markets that may not have been previously within your geographic reach. These new customers can, of course, order 24/7 through your customer portal.
You can also reduce your dependence on existing customers by diversifying your sales channels and tapping into online marketplaces such as these:
- A vertical e-marketplace, which focuses on one product category, like electronic devices or construction materials.
- A horizontal e-marketplace, which presents a vast cross-section of goods, like Amazon and eBay.
Furthermore, your ERP enables you to calculate real-time costs for using these, and any other sales channels, so that you can stay on top of your profitability.
4. Add services to add customer value
While distributing products may have been your reason in the past, your new data-based insights into customer trends may also open up new service opportunities.
For instance, customer data may reveal that the experience and expertise of your team can be tapped into to provide services such as:
- Customization of your product
- Help with the assembly and installation of your product
- Maintenance and repair of your product as well as regular quality inspections
- Training about your product
These new services add value to your customer offer, create new revenue streams and help reinforce customer loyalty.
5. Streamline processes and reduce errors
Think of sales orders, supplier invoices and receiving slips. Without an ERP, you might need to manually enter these business documents several times before your team is done with them.
These repeated efforts cost you money and raise the risk of mistakes polluting your data. As these mistakes move through your workflow, they lead to a less profitable order and a potentially unhappy customer.
In contrast, consider what happens when you enter a sales order into your ERP. Your system updates the purchasing, inventory, manufacturing, and shipping modules in an instant. That’s a one-time data entry and the document needs never be touched again.
Similar streamlining of your paper-based processes can be carried out in your warehouse. By equipping your staff with mobile RFID-based readers, they can scan barcodes on incoming and outgoing goods to update your inventory. This scanning eliminates hours of paperwork and the risk of error.
6. Optimize your supply chain
Your company's logistics and distribution are crucial to your business. Fortunately, you can manage every aspect of your supply chain with your ERP system, from purchasing raw materials to shipping and exporting goods.
For instance, the increased insight provided by your ERP enables you to monitor the performance of your suppliers as they respond to your purchase orders. By analyzing shipment and delivery dates, quality control statistics, pricing history and your workforce’s labour, you’ll have data-based insights into how suppliers are performing.
This analysis enables you to quickly identify weak or strong areas of performance in your supply chain. With this knowledge, you can also talk to your suppliers about reducing costs and streamlining logistics.
7. Collaborate better with your business partners
More and more of your customers, suppliers and partners are seeking seamless electronic collaborations with you to set up more efficient communications. In fact, some major retail chains (e.g., Loblaws, Costco) insist on it.
To benefit from this business ecosystem, you need the right ERP to be at the hub.
For instance, by using EDI (Electronic Data Interchange) to link with your customers, you can immediately learn about their product requirements. As a result, your team can respond faster to the order.
When you transmit shipping data, your customer can retrieve it right away. Since no paper is involved in the exchange, there’s also less chance of errors sneaking in through multiple stages of data entry.
Similarly, when you connect with your suppliers via EDI, you gain the same benefits your customers gained.
8. How to accelerate your digital transformation
Over and above the powerful advantages of digital transformation outlined above, there is another major factor your executive team needs to keep in mind when considering an ERP implementation — your competition.
More companies are investing major sums in their technology merely to maintain their market share over the long term. So, in your ROI analysis, you need to include the cost of not being a digital-first business. You’ll find that a digital transformation becomes a practical necessity.
Fortunately, digital transformations can be undertaken in stages so that you can demonstrate quick wins to your executive team. And it’s good to know that the Canadian government has numerous grants and subsidies to support your innovation project.
If you have any questions on the subject, our team is more than happy to help. Connect with us today!
To learn more about government support for digital transformations, read “How to Get ERP Grants to Kickstart Your Digital Transformation.”
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