How ERP Can Solve Distribution Supply Chain Issues


Distribution Disruptions

The past two years haven’t been friendly to distributors and distribution supply chains. Quite the opposite, in fact. The pandemic and the subsequent lockdowns, trade tensions, cyberattacks—and the list goes on—have contributed to major supply chain issues, affecting distributors’ ability to serve their customers.

For instance, 38.8% of US small businesses have experienced pandemic-induced supply chain delays in 2022. Shipping costs have also skyrocketed. Freightos, a global freight booking platform, reports that:

[T]he cost of shipping a 40’ container from Asia to the US West Coast in September 2019 was $1,437 according to the Freightos Baltic Index (FBX). In September of last year [2020] that increased to $3,744, and this past September [2021] freight rates shattered records at a hefty $20,586. On top of that, there have been shipping container shortages leading to significant delays, with door-to-door transit times going from an average of 43 days at the end of 2019 to 53 days at the end of 2020, and currently [December 2021] standing at 78 days.

In response, businesses have been forced to raise prices, severely impacting consumers, who are already in the grip of rising inflation. According to some analysts, this grim situation may continue through 2023 and beyond. This leaves distributors wondering how they can excel despite the disruptions surrounding them.


Facing Supply Chain Challenges with Cloud ERP

Getting products into customers’ hands while grappling with supply chain issues requires effective financial, sales, inventory, human resources, and supply chain management. But this can only be accomplished with the right tools and resources, such as those provided by cloud ERP solutions.

The following sections discuss examples of distribution challenges and how cloud ERP solutions can help distributors overcome them.


1 – Inventory Visibility, Reporting, and Management

There are many pieces to the distribution puzzle, but inventory is arguably the most important. If inventory isn’t managed well, distributors may find themselves with too much inventory, too little, or even none at all. Such mismanagement leads to customer dissatisfaction, which negatively affects distributors’ bottom lines. With cloud ERP software and an integrated warehouse management solution, distributors have full visibility of their inventories. They know exactly when items enter and leave their warehouse(s). Through barcode scanning, real-time inventory information is automatically loaded into the ERP software—eliminating manual data entry (which can be plagued by human error and confusion). This means that inventory is automatically optimized, replenished, tracked, and distributed through a single, central system.

If the ERP solution integrates seamlessly with general ledger and other important third-party applications, distributors can also easily manage their financial reporting needs and use personalized dashboards to detect issues and identify trends.


2 – Procurement and Purchasing

Supply chain issues influence every aspect of the distribution process, including procuring and purchasing goods, raw materials, and finished products. Procurement, according to Investopedia, is the “act of obtaining goods or services, typically for business purposes.” It entails researching and selecting suppliers and completing the “final act of purchasing” the products. Procurement has become increasingly difficult due to high demand, and, if or when supplies are available, obtaining them is now expensive and time consuming.

Cloud ERP solutions give distributors vital supply chain information: what they need to order (based on product demand), who their suppliers are, how those suppliers have been performing, when shipments have been arriving, and much more. This critical data helps distributors decide what to purchase from whom based on facts, not suppositions.


3 – Multiple Data Locations

Distributors often rely on multiple data checkpoints. At every stage of the supply chain pipeline, data is created, entered (often manually), and stored. The data is also communicated to relevant actors within the business. However, keeping information in multiple, disconnected locations can reduce visibility and prevent company-wide sharing of accurate knowledge.

A cloud ERP solution stores all data in one central, integrated system. This improves data hygiene and ensures that all information is accurate and up to date.


4 – Maintaining Compliance

Like all businesses, distribution companies must comply with government rules and regulations. Noncompliance can result in fines and damaged reputations. Unfortunately, because governments constantly revise existing regulations and draft new ones, compliance is a complex responsibility—unless a distribution company implements a cloud-based ERP solution.

Cloud ERP solutions offer the features and functions needed for maintaining compliance, including visibility of the entire organization, forward and backward traceability, sophisticated reporting capabilities, and private data security.


Introducing a Culture of Efficiency

Ultimately, cloud-based ERP systems introduce a culture of efficiency that is not attainable with outdated, disconnected systems.

Cloud ERP solutions are central storehouses for business data from every department in an organization. Employees can access this synchronized information whenever, from wherever, which ensures that everyone is using the same intelligence to make decisions and overcome obstacles.


How Acumatica Can Help

The challenges faced by distribution companies, which have been exacerbated by the ongoing supply chain issues, can be defeated with the right cloud ERP solution. At ACC Software Solutions, we believe the answer is Acumatica Cloud ERP.

Acumatica’s wholesale and distribution software, which is integrated with the company’s award-winning ERP solution, is a complete, connected, mobile option for today’s distribution companies. It includes core distribution, financial, and reporting applications and can easily integrate with optional applications, including Inventory Management, Sales Order Management, Purchase Order Management, Customer Relationship Management, Financial Management, and more. As a single source of truth, Acumatica’s cloud ERP software simplifies, automates, and streamlines distribution processes, while ensuring that security and compliance standards are met.

Contact our premier team of consultants to ask questions or set up a demonstration. You’ll be working with experts committed to following ERP best practices, from selection to end-user training.

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