Having seen the manufacturing and trading industry smartly implementing and reaping the benefits of ERP (Enterprise Resource Planning) solutions, the near future will see the distribution sector using these sophisticated applications.
Until recently, distributors were reluctant to spend on the latest technology. However, the industry is all set to go through a seismic shift and ERP vendors are likely to unveil better products and well-packaged applications to help distributors service their customers better.
New offerings for the distribution sector, built on open systems and industry-standard technologies, are touted to offer broader, deeper and well-integrated functionalities.
A whitepaper by Ramco Systems states that these new offerings, apart from providing web-based capabilities, will also offer deeper functionality in purchasing, inventory, warehouse and order management. A few vendors will also be extending their offerings into customer relationship management.
Until now, distributors used low margins as an excuse for low IT spending. However, with ERP applications helping distributors reduce their inventory, control costs, increase revenue and improve customer service, they have enough reasons to use these applications and up-scale.
The slow but constant erosion of BHS (Build Hold and Sell), wherein distributors acted like middlemen, has put the onus on distributors to rethink their business model and shift to a Sell, Source and Ship model. This model requires distributors to hold less stock and ship in the inventory after an order has been made by the customer.
Business model shifts are inevitable; however, being well-prepared helps. Ramco Systems, in a White Paper, shares its thought on this process transformation. ‘Managing inventory that you do not own or handle is better than taking title and including
cost and risk’.
Addressed efficiently by the consignment purchase order and sales order business processes.
__ ‘Having a strong infrastructure, comprising work flow based information system, is more
important than being good at sales.’
Supported by the powerful workflow management system, which is capable of providing timely alerts and reminders, thereby resulting in effective decision-making
__ ‘Focusing on business model innovation, an element you can control, rather than relying
on product innovation, an element you are unable to control.’
Given the flexibility in deployment of components and collaborations with other applications, the distributor has the choice of opting for any optimum business model deployment deployment.
Reference: White Paper on Wholesale Distribution