Distribution companies that face challenges in managing their inventories, supply chains, and logistics activities are often told to turn to distribution ERP software. Distribution ERP software is a tool that manages logistics operations as well as front- and back-office activities of wholesale and distribution companies.
By automating the replenishment of goods, tracking orders, measuring stock levels, and managing incoming and outgoing inventory, distribution ERP helps users reduce order times, improve customer satisfaction, and enhance sales and warehouse management. Wholesalers, distributors, third-party logistics (3PL) providers, and food distributors can all benefit from a distribution ERP system.
Challenges in Implementing a Distribution ERP
While there are immense benefits to implementing a distribution ERP, it is not always a seamless process. So, what are the challenges one may encounter when implementing a distribution ERP, and how can you minimize them?
1. Data Transition
One of the key benefits of implementing a distribution ERP is that it provides a single, accurate source of data for an entire organization. Most manufacturers and distributors already have an existing and disparate system for managing procurement, collections, finance, order management, and delivery fulfillment. In most cases, these systems are manual, and depending on the size of the company, transitioning the data from a manual system into an automated ERP system can be a major challenge.
Enterprises with large distribution channels not only manage more data but also more inventory, sales transactions, and employees. In some cases, they’re also required to manage more than one business entity and multiple levels of management. Transferring data from multiple, often disjointed, systems into one interlinked ERP system can be a cumbersome task. It’s important to understand the steps to implementing a distribution ERP before beginning the process.
2. Cost and Implementation Time
More often than not, large enterprises spend more time than initially allocated for the implementation of a distribution ERP. This is one key reason why implementing a distribution ERP system is infamous for sailing past the expected budget. Before launching the ERP implementation project, companies should consider these challenges to avoid overshooting budgets and timelines.
3. Employee Training
Transitioning from a manual system of management to an automated ERP for distribution can be an uphill task. Employees who are not handy with changing technology can slow down the organization’s growth, despite the larger benefits of implementing an ERP system.
In addition to the cost involved in training employees, enterprises need employees to be willing to move out of their comfort zone to adapt to the new software and its features. A strategy that minimizes the impact of this challenge is the parallel deployment method, but it requires more employees and can be more expensive during the transition period.
4. Coordination With Suppliers and Customers
Speed is one of the key determinants of success in the distribution industry. While a distribution ERP will ultimately help a company work more quickly, managing the coordination with suppliers and their customers during the implementation period might pose a challenge. It is not uncommon to find distribution delays and some order errors during the integration and transition period.
5. Selecting the Right ERP System
This is one of the most underrated challenges that every company will face as part of the transition to a new or first ERP. However, with more than 520 ERP systems available, some companies find comparing ERP systems difficult when it comes to finding the software that best meets their requirements–this challenge can be solved by factoring in the functionality, price, and size of the organization.
In a Nutshell
Implementing a distribution ERP system is not without its challenges. However, appropriate steps can be taken to reduce the impact of these challenges, and choosing the distribution ERP from a reputable provider, such as NBS, can reduce the challenges faced during the implementation process.