What Kind of Distributor Are You?

Blog Written By | ERPFocus

Distribution ERP – What Kind of Distributor Are You?

Evaluating advice and information relating to ERP and distribution requires first that you understand exactly what portion of the distribution spectrum you are interested in, and then, what portion of the information – vendor claims, ERP implementation consulting experience. etc. – your evaluation is referring to.

Distribution can refer to channel – retail or web or wholesalers, for example. It can be shorthand for the primary function of administering transportation routes and freight management. If the distribution is used in the context of manufacturing, then it may be limited to getting finished inventory off the loading dock and on to a truck. In all of these cases, the functionality requirements of distribution ERP software are significantly different, and the vendor selection process can and should be different.

Channel Distribution

Managing channel distribution is largely a matter of marketing strategy. How you choose to sell your products, and to whom, must be a well thought out approach, or you can end up alienating your customers. For instance, if your primary channel strategy is to get your product to market via regional distributors, then later decide to also offer your product directly to consumers via a website, that could put you in direct competition with your distributors. The types of ERP solutions that help manage this sort of distribution have more elements in common with customer relationship management (CRM) than traditional supply chain management.

Logistics Based Distribution

Companies which make their money primarily from the transportation of goods from one point to another are dead center in the distribution spectrum. These companies deal with a very unique set of business problems and need a very unique set of ERP utilities as a result. Distribution companies are extremely sensitive to fuel costs and fuel consumption, and the effect changes in either can have an effect on costs and productivity. Transportation companies operate in a highly regulated arena, in which the hours drivers can work is rigidly specific, and can sometimes complicate the planning for long hauls. Truck and trailer (asset) management requires its own unique math formulas and logic. And all of this occurs in an environment that is chronically short of qualified drivers. Distribution ERP software for this segment needs to integrate smoothly with these business problems.

Manufacturing Distribution

Manufacturing operations often have a distribution function that is almost entirely a warehouse function, whether the warehouse exists as a part of the factory, or as a separate distribution center facility. Warehousing issues typically involve picking strategies, inventory movement, financial control, cycle counting, bin location, safety management, and document creation for bills of lading, shipping labels, and packing lists. Again, the ERP packages that handle these things effectively probably aren’t effective at handling the previous two categories of distribution.

The conclusion is to be well versed in what distribution requirements you have as you do your research for the right ERP vendor. No distribution ERP system on the market is all things to all organizations, and finding out the right fit for you will take self-knowledge and patience.

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You need an ERP system for process manufacturing

processing manufacturing

Blog Written By | ERPFocus

ERP in Process Manufacturing: Business Benefits

You may call it an accidental benefit, but one thing that an ERP implementation forces on an organization is a thorough examination of its business models and practices, and process manufacturing benefits disproportionately from this examination. By its very nature, process manufacturing tends to be more flexible and dynamic over time. As a result, many business practices are the result of evolution, instead of a thoughtful and well-executed strategy. In a process manufacturing, you can almost always accommodate one more special customer need, until, after a while, your business model hardly resembles what your manufacturing, service, or systems were designed for. The misalignment between how the business was designed to run and how it actually does run will be highlighted in a number of ERP design issues.

Turning Over the Rock

A typical example might be defining a business model as either make-to-order (a specific manufacturing plan for each customer order) or make-to-stock (sell orders from inventory). ERP generally rewards a clear-cut choice between these two with rich functionality, but process manufacturers often have difficulty committing to only one strategy. They want to describe a hybrid strategy and decide, order by order which strategy applies. While this sounds very customer-focused, it is an administrative nightmare. As you begin asking who has the authority to decide, and what the decision criteria are, you grasp that there is no overarching logic to the choices being made, and therefore it is not a business model that is easily programmable within an ERP environment. The conversation which emerges as a result of this ERP question is a vitally important one to the leaders of the business. If the leadership team is collaborative and synergistic, it is possible that ERP will serve as the framework for re-establishing a set of logical business rules. If the leadership team is dysfunctional and does not work together well, at least everyone explicitly understands that the business model does behave according to any predictable rules. This is not an observation in sarcasm; it is an important reference point for helping people understand why things do not go as expected.

Other examples might include how planning and manufacturing scheduling occurs, how a product that does not strictly meet quality specifications is handled, or how much lot traceability is truly required. The benefit in all of these, just like the one in the preceding paragraph, is to hold up the evolutionary decisions that a single functional area has turned into business policy, and examine them in the clear light of the total business process. The results can vary from exhilarating to frightening, depending on your organization.

If your workgroup can agree to operate your process manufacturing business logically, ERP will be a stair-step improvement. allonline365 can help guide you during your implementation of Dynamics 365 Business Central ERP, offering advice on the best modules and customizations need for your business. Call us on +27 (21) 205 3650 or email us on  info@allonline365.com. 

A multi-channel inventory module in Retail ERP

retail erp

Blog Written By | ERPFocus

Why your retail ERP needs a good multi-channel inventory module

Merchandise management is what sets retail ERP systems apart from ERP designed for any other environment. Merchandise is the inventory a business has right now for sale to customers desiring those items. To have exactly the color and size a customer wants immediately available is the goal for any retail business. Further, it just arrived in minutes ahead of that customer and can be priced at an amount that begs that customer to buy immediately and yield a profit at the same time. Is this possible? Yes, most of the time, the right retail ERP system can help make it a reality.

Retail today goes beyond the physical storefront. ECommerce is a major part of retail now. Merchandise management is largely the same, you need the right item on hand and available for sale when the customer is online or present in the store. If your retail business trades online then it is essential that your centralized inventory module is fully integrated with your ECommerce system.

Cost and price management

COst of an SKU is closely related to the supply chain component of retail ERP. A successful retailer works closely with current suppliers to stock merchandise that a customer wants at the lowest possible total cost. Supply chain systems also connect to new suppliers who might have products even more desirable at even lower prices. The low initial cost is the first target. Total cost includes the ability to easily and quickly make returns to the supplier at little or no penalty. The cost can also include financial terms such as payment due after the sale. If the supplier can monitor sales and inventory levels using an inventory module, they can replenish fast-selling items without the need for a purchase order.

In addition, price management might mean a supplier can provide special, lower prices for seasonal or promotional merchandise. These cost and price management tools should be sought after in any retail ERP.

Retail stock ledger

An accurate count of each SKU on hand with separation by every size, color, and other distinctions is an important part of retail ERP. As customers pay for their purchases and leave the store, that stock ledger should be automatically updated. Return merchandise that cab still sold should be added to the ledger right away. Shrinkage or other unexplained loss of inventory is an unfortunate reality in retail and each SKU should have a reasonable rate used to adjust the ledger.

An accurate ledger helps determine when to replace replenishment orders. An accurate ledger also is a tool to monitor those items that do not sell so that they can be returned or moved to a store where a sale is more likely. An accurate ledger is a critical component in determining expenses and profit or loss over time.

Forecasting and planning

Retail has a strong seasonal element to it, so accurate forecasting activities are essential. ERP is a valuable tool to ensure an optimal profit in any season. How many soccer balls were sold last year in the weeks before the start of the season? What was the weather like last year and what is the weather forecast for this year? ERP doesn’t maintain all this data, but in retail, an ERP can match data it has with external data to predict how much to order and when to accept delivery. A supplier might make those soccer balls over months and make several deliveries to a warehouse to match your requirements against their ability to produce. Those early delivered soccer balls are a part of the stock ledger but also a liability as payment will not be made until the season begins.

These are key features of any good centralized inventory module. Know which ones are important in your particular business and be sure the ERP you select has the ones you need. LS Retail is a top-performing solution that can manage all inventory merchandise, forecasting, and omnichannel aspects of your business.

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