In today’s global village, the demand for distribution services is escalating rapidly due to the increasing complexity of supply chain operations, the expanding e-commerce, and retail sectors, and a pressing need to deliver swiftly and enhance the customer experience. The customer remains king for now.
Emerging trends such as technological innovation and automation of processes are requiring new business and delivery models, setting the stage for exceptional growth in the fast-moving market space for distribution services. What worked yesterday may not work today…watch out for disruptors on the fringes.
There are a few emerging trends in Distribution Services that we need to be aware of if we are to keep ahead of the game:
Technology to automate distribution processes
A significant trend is that distribution and logistics service providers are using technology at a previously unseen scale, to automate their processes and get ahead. In addition to enhancing warehousing and transportation capabilities, this approach is helping to increase both profitability and operational efficiency. The adoption of process automation in place of manual processing provides real-time visibility, streamlines process, and material flow, and drives customer satisfaction while preparing the industry for robotics.
Building mega-distribution centers to achieve economies of scale, optimize delivery schedules and ensure optimum allocation of human resources is on the rise. Previously these mega-distribution centers failed, but the advent of newer technologies is providing the necessary abilities for the concept to succeed.
Implementing green practices
Integrating advanced technologies, such as green practices to reduce paper use and minimize the use of corrugated packaging, offer environmentally sustainable services to customers which have become a critical decision-maker in the newer generations.
Adopting an omnichannel model
The sudden surge in online retail and multi-channel fulfillment to include last-mile delivery and same-day delivery options to cater for the diverse demands of retailers and e-commerce players has driven a demand for omnichannel business models. This is new territory for distribution businesses as these models are not in any textbooks. Instead, we see these innovative models and integration strategies becoming carefully protected I.P. for businesses.
The next generation of e-commerce companies are finding demands for flexible, low-cost options that drive cost savings and ensure efficient supply chain management if they are to survive.
6 Ways Distributors can use ERP to Realize the Benefits from Innovation
We have identified 6 key steps that the distribution companies need to factor into their business strategies going forward.
To ensure a seamless flow of information and prompt delivery of goods and services across the value chain, distribution companies must understand and incorporate the emerging trends. ERP systems using a proven technology as a platform, with proprietary business processes including the Internet of Things (IoT) and a simplified user interface, will help businesses create unique business models to change the industry to their benefit. Along with this will be the need to automate traditional processes while securing critical information. This will become game-changer across the distribution network.
In some industries, there is a tendency to rather leverage the specialist distribution and logistics services offered by third-party providers, to reduce costs. In response to these demands, distribution service providers are finding themselves investing in high-end IT infrastructure to reduce costs, fulfill buyers’ requirements and improve operational efficiency. Over time, these benefits will contribute significantly towards efficient supply chain management and eradicating process roadblocks. The first organizations’ to understand these roadblocks and navigate around them will become the market leaders.
The key trends to be considered are:
1 – Visibility
To squeeze costs from your distribution channel, you need a holistic view of your operations right from quoting, through order processing to procurement, inventory tracking, shipping, logistics, and financial management. With visibility, you have a 360-degree view of all areas of your business and improve control – critical if you want to manage costs.
2 – Automate processes and develop Key Analytics
By automating business processes, your workforce can spend less time manually compiling and analyzing data since the time-consuming repetitive tasks are now taken care of. This means your workforce is freed up from mundane tasks to generate insightful business analytics or focus on areas of the business needing improvement. Automation also improves data accuracy by reducing the risk of human error.
3 – Insightful data
Leveraging available data insights can lead to commercial growth and increase your bottom line. Data-driven decisions enable your company to use its resources more effectively and efficiently. This will also cut costs as resources are used effectively.
An ERP solution which includes distribution management software allows your workforce to track and interrogate real-time data, resulting in meaningful insights. These insights allow you to identify new ways to further optimize business performance. Plus, with the correct tools, businesses can reduce waste and develop cost-effective practices.
4 – Inventory Management
Keeping control of stock is a common challenge experienced by distribution companies, especially when the stock is constantly on the move. ERP systems help remove these barriers.
An ERP system is a cost-effective solution as it enables you to track goods in real time on multiple devices. And since it makes use of the cloud, anyone in your company can access the information regardless of their location. One centralized Inventory Control System avoids miscommunication and the confusion that stems from having several databases.
For example, the automotive industry can accurately track deliveries using ERP, as well as all the history of deliveries. If a customer’s engine fails due to a faulty part, they immediately know how many engines have used the same part and where they are located. Since ERP systems provide information in real-time, action can be taken immediately. All parts are accounted for and tracked for easy retrieval within the inventory control module.
5 – Full traceability
The traceability of products from their origins through to their final destination is a key system requirement for distributors, especially when things go wrong.
This is particularly critical for food and beverage distributors as they need to be able to recall food found to be unsafe or purchased by the consumer after its expiry date. They also must comply with regulatory requirements, as there needs to be accountability if food is found to be contaminated.
Adopting an ERP solution with full traceability features helps maintain precise data records of processes so areas of uncertainty exist. With automated systems, barcode readers and sensors, companies can improve inventory management, enhancing their ability to monitor warehouses, logistics, and retail points.
6 – Improved Forecasting
No company wants to be left with a surplus of stock – or a shortage. Balancing supply and demand is a fine art. Using an industry-built ERP system, you can predict demand and avoid over- or under-stocking.
All-in-all, utilizing ERP for distribution tightens controls and helps streamline inventory management with tools which improve forecasting and planning by matching supply with customer demand.
Whether you are an organization with locations spread across the globe or a niche standalone operation, combining functionality and efficiency with the latest technological solution will transform distribution channels and create limitless opportunities.