The 6 Key Features of Distribution Software
For a product to successfully travel from Point A (the warehouse where it was assembled) to Point B (your local store), the process requires proper coordination of many moving parts, including the buyer, seller and third-party companies. And for distributors, streamlining those various components — while simultaneously handling high volumes of stock — is crucial to the entire operation’s infrastructure.
In addition to up-to-the-minute communications with the contractors, suppliers, shippers and other businesses involved, this type of operation also demands the meticulous orchestration of all activities relevant to fulfilling client orders. Such an accomplishment is no easy to feat to achieve, which is why software platforms are proving so valuable to companies in the distribution industry.
A system to oversee the chain of actions that constitutes distribution will prove beneficial not only in its ability to better unite the disparate tasks and parties, but also because it offers the power to zoom out beyond the daily tasks and observe end-to-end competency. Distribution software provides a business with a strong, centralized framework through which to regulate the flow of activities and gain more control over operating costs.
What to Look for in Your Distribution Software
Distributors need a unique set of tools and modules to be able to effectively oversee their business, which can make selecting a software platform all the more difficult. While many ERP and manufacturing software vendors offer solutions that will address some of a distribution company’s needs, stick with those that provide platforms tailored to distributors. And when shopping for a solution, ask yourself which criteria are most important to your business:
- Is price a top concern?
- How scalable must the distribution system be?
- Do you consider advanced customization a priority?>
- What other systems does the distribution software need to integrate with?
- Does your ERP or manufacturing vendor offer a distribution solution?
Likewise, you should also evaluate potential software platforms for their core components. A system without the following core components will be far less effective at addressing the unique challenges your company faces. Let’s take a closer look at those six key features of distribution software.
1. Order Management
A distributor’s bread and butter are its customer orders — yet improper management of orders can cause a major headache for managers. Today’s order management modules collect all order data, including orders submitted via ecommerce sites, and input it into a single catalogue for easy reviewing. The software should also offer the ability to log all customer data relevant to the order, creating detailed customer profiles for future reference.
The best order management tool will not only process and monitor order statuses, but also enable distributors to more easily create and track bids and quotes. A well-organized order management system ensures the entire order lifecycle operates more smoothly, from the registration of a new client order to the notification of order completion.
2. Inventory Control
If your company frequently experiences over- or under-stocked shelves or a lag in inbound or outbound shipments, it’s likely that your current methods for overseeing inventory aren’t working. Proper inventory control should extend beyond the limits of tracking stock and shipments to record returns, log transfers and replenishments and input stock adjustments or reservations.
Many distribution systems’ inventory control modules work in conjunction with warehouse management to supervise all activity relating to existing inventory. Coupled with warehouse management, inventory control provides a comprehensive view of all asset movement — ensuring managers have access to exact inventory numbers and data.
3. Financial Oversight
A distributor must maintain total control of company expenses and customer order payments in order to ensure that overall operating spend and income can be calculated accurately. Purchasing and procurement tools provide increased control over inventory operational costs, enabling administrators to concurrently monitor stock levels and review budgets for acquiring new assets.
Invoicing and billing capabilities are another vital component of the fiscal management tools available to distributors, synchronizing changes to client orders with automated notifications and invoice generation. The availability of standard accounting features should also be considered for distributors without pre-existing financial software, as these will streamline all account activities within one system.
4. Supplier Management
Only with the assistance of all parties involved can every packaged item be inventoried, ordered and then transported to the correct location in a timely manner. If any piece of that chain fails to perform its job, distributors can no longer effectively fulfill orders. Supplier management will enable your business to interact in real time with all pertinent parties — even external partners and third-party shipping companies.
Large distributors handling high-volume orders and/or operating multiple facilities will find a supplier management function of the greatest value to improve communication between locations and companies.
A distribution management system should do more than organize various ongoing activities — it should also record and interpret data from those activities, presented to system users as actionable insight. Advanced analysis and reporting will prove essential to your distribution business, transforming unorganized data into useful statistics on overall performance, profitability and productivity.
Look for demand planning and forecasting tools when evaluating analytical capabilities, as these will allow you to best monitor and predict the supply-demand balance. Beyond using historical data to predict optimal inventory levels, planning and forecasting functions help you implement smarter business practices that ensure long-term revenue gains and identify superfluous overhead costs.
Seamless integration is critical to distributors, enabling you to easily connect your ERP, sales and accounting tools with minimal disruption to business processes. Assess potential distribution solutions based on their ability to easily connect with any existing platforms your business is running on, as it can be far more difficult to successfully implement a new system if it lacks the capacity to fully link with software already in use.
Some vendors also provide API support, which you can use to customize your integrations with third-party applications. Consider looking for this function while shopping if you anticipate needing to custom-configure your various software platforms.
Ready to start shopping for your new distribution system? Begin your search with our handy guide to the Top 10 Distribution Software Vendors — available for free in an easy-to-read chart format.
[Photo courtesy of Flickr user Direct Relief.]