The Top ERP Systems for the Distribution Industry

This guide is a roadmap for navigating the selection of Enterprise Resource Planning (ERP) systems specifically for the distribution industry.

We understand the distribution world is not just about moving goods from point A to point B.

It’s managing inventory, predicting demand, navigating regulations, and keeping everything running on time and budget.

It’s about late nights, early mornings, and the constant pressure to keep the wheels turning.

And through it all, a successful distribution business still needs to keep customers happy and the bottom line healthy. Over the last 15 years, we’ve put many distribution businesses on the path to finding their perfect ERP system and know firsthand how the right one can make your business much more efficient.

How ERP can address the top challenges facing Distribution

The distribution industry ensures the seamless flow of goods from manufacturers to end-users and is the backbone of successful business transactions. The industry encompasses a variety of operations, including, but not limited to, inventory management, order processing, and delivery management. With the continued demand for real-time data and the quest for optimized operations, specialized ERP software has become indispensable in this sector.

The majority of distribution businesses fall under these categories:

• Wholesale distribution: Wholesale distributors purchase products in bulk from manufacturers and distribute them to retailers and other businesses, playing a crucial role in the supply chain.
• Industrial distribution: Industrial distributors sell various products, including machinery, equipment, tools, and supplies, to businesses and organizations in the industrial sector.
• Consumer goods distribution: Consumer goods distributors sell various products, including food and beverage, apparel, and electronics, to retailers and other businesses that sell directly to consumers.
• Third-party logistics (3PL): Businesses can benefit from 3PL providers who offer logistics services such as warehousing, transportation, and order fulfillment. These services can help improve efficiency and reduce costs.

Regardless of which distribution category your business falls under, many common challenges face all distribution companies. Let’s outline these issues below and discuss how ERP can solve these challenges.

Key Pain Points in Distribution Processes

1. Demand Volatility: The unpredictable shifts in demand pose a significant challenge, affecting inventory levels and operational planning.
2. Complex Supply Chain Networks: Managing a multi-faceted supply chain with numerous stakeholders while ensuring timeliness and quality is daunting.
3. Regulatory Compliance: Navigating through a maze of local and international regulations and ensuring compliance requires a robust monitoring system.
4. Operational Efficiencies: Streamlining operations to reduce costs, improve delivery times, and enhance customer satisfaction is a constant challenge.
5. Real-Time Data Accessibility: The necessity for real-time data for better decision-making and forecasting is paramount.
6. Inventory Management: Efficiently managing inventory levels to prevent overstocking or stockouts is critical.

This is just a short list of woes that distributors face. Because distribution is a complex business process with many moving parts, it just makes sense that a powerful ERP system can keep things running smoothly and successfully.

How ERP addresses these issues and more

Implementing a suitable distribution ERP system is critical as it offers real-time data management and enhances supply chain coordination, which are features that are fundamental in improving efficiency and adapting swiftly to market shifts. But that’s just the start. There are many more benefits to these systems.

• Demand Forecasting: Using historical data to predict demand accurately enables better inventory management and resource allocation.
• Supply Chain Optimization: Providing tools for better coordination among suppliers, logistics, and customers, thus enhancing the overall supply chain efficiency.
• Compliance Management: Offering modules that keep track of regulatory changes and ensure compliance, reducing the risk of legal repercussions.
• Operational Analytics: Delivering real-time analytics to identify operational bottlenecks and areas of improvement.
• Real-Time Data Integration: Integrating data across the organization in real-time, providing a unified view for better decision-making.
• Inventory Control: Automating inventory control features to maintain optimal inventory levels, reduce carrying costs, and improve order fulfillment.

There are many more benefits, but overall, Distribution ERP solutions enhance operations, manage compliance, and facilitate data-driven decisions.

The Top ERP Systems for the Distribution Industry

The following ERP systems have been handpicked for suitability in the distribution industry. These leading contenders have demonstrated their ability to perform at the top level for distribution businesses.

ERP Features & Requirements for Distribution
 

Discussing distribution ERP features and requirements is essentially delving into the day-to-day operations of a distribution business. It’s about the essential tools that ensure smooth functioning and the capacity to adapt and expand along with your business.

These aren’t just technical details. They’re the things that will make everyone’s job easier, inform better business decisions, and help the overall business be more successful.

Distribution Specific Software Requirements:

1. Demand Forecasting: Ability to analyze historical data to predict future demand, helping optimize inventory management and resource allocation.
2. Warehouse Management: Optimizing warehouse operations by efficiently handling inventory receiving, storage, picking, and shipping processes, ensuring accuracy and timeliness in order fulfillment.
3. Real-Time Inventory Management: As part of warehouse management, a real-time snapshot of inventory levels helps avoid overstocking or stockouts.
4. Order Processing Efficiency: Streamlining order processing from entry to delivery, ensuring timely and accurate order fulfillment.
5. Supply Chain Visibility: Offering complete visibility across the supply chain facilitates better stakeholder coordination.
6. Regulatory Compliance Management: Ensures adherence to industry regulations and standards, mitigating non-compliance risk.
7. Real-Time Analytics and Reporting: Delivers actionable insights through real-time analytics, aiding in informed decision-making.
8. Customer Relationship Management (CRM): Enhancing customer satisfaction by streamlining interactions and providing better service.

Distribution Specific Modules

• Order Processing Module: Automates order entry, processing, and delivery management.
• Supply Chain Management Module: Provides tools for supplier management, logistics coordination, and demand forecasting.
• Compliance Management Module: Ensures adherence to regulatory standards and facilitates compliance reporting.
• Analytics and Reporting Module: Offers real-time analytics, custom reporting, and dashboards for better decision-making.
• Customer Relationship Management Module: Effectively manages customer interactions, complaints, and feedback.

Integration Capabilities

Integration with other software systems is critical for extending the functionality and streamlining operations in the distribution industry. Sometimes, these features may be part of the distribution ERP software, while others may require integration with separate platforms. Avoid ERP implementation failures by considering these before selecting your distribution ERP software.

• Financial Software: Integrates with financial software for accurate financial reporting, budgeting, and forecasting.
• E‑commerce Platforms: Connects with e‑commerce platforms to synchronize orders, inventory levels, and customer data.
• Warehouse Management System (WMS): Integrates with WMS for advanced warehouse optimization, inventory control, and order fulfillment.
• Logistics and Shipping Software: Facilitates seamless coordination with logistics and shipping software for efficient delivery management.
• Human Resource Management Systems (HRMS): Streamlines human resource functions, including payroll, scheduling, and performance tracking.
• Customer Support Platforms: Ensures synchronized customer communication regarding orders, deliveries, and support queries.

Ensure the must-have features of the distribution ERP system you choose are met by selecting from systems that have proven successful in the distribution sector.

Cloud ERP for Distribution

The distribution industry thrives on immediate data access, flexibility, and smooth communication throughout the supply chain. This is where cloud distribution ERP software is beneficial, offering a single unified platform that enables instant data sharing and decision-making, regardless of geographical or operational barriers.

Cloud ERP Benefits for Distribution Companies

1. Real-Time Inventory Management: Cloud ERP systems offer real-time tracking of inventory levels, order statuses, and deliveries, vital for maintaining accuracy and meeting customer expectations in the distribution sector.
2. Scalability: As distribution companies grow, the cloud can be scaled up to meet increased data and processing demands without a significant upfront investment.
3. Cost-Effectiveness: With Cloud ERP, companies only pay for the resources they use, making it a cost-effective solution, especially for small to medium-sized distribution enterprises.
4. Remote Access: Given the global distribution network span, remote access to the ERP system ensures that decisions can be made promptly, irrespective of location.
5. Enhanced Collaboration: A cloud-based ERP solution facilitates better communication and collaboration between departments, suppliers, and customers by providing a unified information-sharing platform.
6. Improved Compliance and Reporting: Meeting compliance standards and generating accurate reports is streamlined with cloud ERP’s automated data collection and reporting features.
7. Data Security: Although the data is hosted off-site, reputable cloud ERP providers offer robust security protocols to protect sensitive business data.

Leading Cloud ERP Systems for Distribution

We recommend a few top cloud systems based on our knowledge of ERP and distribution companies’ needs. These systems are known for fully taking advantage of the benefits of Cloud ERP.
 

Also, look at our Cloud ERP guide for a full picture of Cloud ERP topics.

Distribution ERP Software by Business Size

It’s crucial to align the system capabilities with the size and requirements of your business. Let’s look at the top systems tailored for various business scales within the distribution industry.

Distribution ERP Software for Small Businesses and Startups

Small businesses and startups in the distribution sector encounter unique challenges, including resource constraints and the need for efficient operations from the get-go and simplified implementation.

Revenue Range: Startup to $10 million.

Our Top ERP Recommendations for Small Distribution Businesses

Let’s look at some ERP software designed to address the sector’s peculiar challenges, offering a springboard for growth and sustainability. These systems are well suited to address the needs of a small but growing business.

Specific ERP Requirements And Benefits For Small Distribution Businesses

1. Cost Efficiency: Effective budget management with low upfront costs.
2. User-Friendly Interface: Minimal learning curve to ensure quick adaptation.
3. Inventory Management: Real-time tracking of inventory levels to prevent overstocking or stockouts.
4. Order Processing: Streamlined order-to-cash process, ensuring accuracy and timeliness.
5. Customer Relationship Management (CRM): Enhancing customer satisfaction through better service and interaction management.

Distribution ERP Systems for Medium-Sized Enterprises (SME)

As medium-sized distribution businesses gravitate towards broader market exposure, the complexity in operations follows suit.

Revenue Range: $10 million to $50 million.

Our Top ERP Recommendations for Medium-Sized Distribution Businesses

These distribution ERP system options emphasize scalability and advanced functionality to meet the growing demands of your operations for the next 5 to 10 years.

ERP Requirements And Benefits For Medium-Sized Distribution Businesses

1. Scalability: Ability to grow with the business without substantial additional investments.
2. Advanced Analytics: Providing deeper insights for better decision-making.
3. Integrated Financial Management: Consolidated financial data for accurate reporting and analysis.
4. Supply Chain Management: Advanced tools for better coordination among the supply chain stakeholders.
5. Regulatory Compliance: Ensuring adherence to industry standards and regulations.

Distribution ERP Systems for Large Corporations or Multinational Enterprises

Large distribution corporations or multinational enterprises operate in a more complex and demanding environment, necessitating robust and comprehensive ERP solutions.

Revenue Range: $50 million to over $1 billion.

Our Top ERP Recommendations for Large Distribution Businesses

The following systems cater to large distribution enterprises’ intricate global-scale operational demands.

ERP Requirements And Benefits For Large Distribution Businesses

1. Global Operations Management: Tools for managing multinational operations, including currencies, languages, and legal compliance.
2. Advanced Supply Chain Management: Real-time visibility and control over a complex, global supply chain.
3. Business Intelligence: In-depth analytics and reporting for strategic decision-making.
4. Enterprise Asset Management: Efficient management of physical assets and infrastructure.
5. Customizability and Extensibility: Ability to tailor the system according to the specific needs and to integrate with other enterprise systems.

Cost of ERP for the Distribution Industry

Investing in an ERP system is a significant financial decision impacting various distribution business facets. Understanding the cost components and the value proposition they bring is crucial for making a good investment.

Here are some primary factors affecting distribution ERP software pricing:

1. Software Licenses or Subscriptions: The core cost of the distribution ERP system is either a one-time purchase license or a recurring subscription fee.
2. Customization: Tailoring the ERP system to meet the unique needs of your distribution business.
3. Implementation Services: Costs associated with the selected ERP solution’s setup, configuration, and deployment.
4. Data Migration: Transferring data from existing systems to the new ERP system.
5. Training: Ensuring your team is proficient in ERP software, including onsite training or online courses.
6. Support and Maintenance: Ongoing costs for support, updates, and maintenance of the ERP system.
7. Integration: Linking the distribution ERP software with other software solutions in your organization, such as e‑commerce or logistics applications.
8. Infrastructure: If opting for an on-premises solution, costs related to servers, storage, and network infrastructure would apply.
9. Warehouse Optimization Modules: The distribution industry heavily relies on warehouse operations. ERP software with advanced warehouse management (such as wireless warehouse management) and optimization modules may incur additional costs.
10. Transportation and Logistics Management: Specialized modules for managing transportation, logistics, and route planning are crucial for distribution businesses and may incur additional costs.
11. Additional Modules: The cost of other modules or features not part of the core ERP system but essential for your distribution operations.

As we conclude this section, it’s important to remember that investing in a distribution enterprise resource planning system should be seen as a strategic investment that will yield substantial returns regarding increased profits and operational enhancements. It may take a few years to see a return on investment, but the rewards should be significant.

For a deeper dive into ERP costs and to better plan your investment, we encourage you to read our in-depth guide to ERP pricing. This will equip you with a comprehensive understanding of where costs come from and your options for optimizing them based on needs.

ERP Vendor Evaluation for the Distribution Industry

Selecting the right ERP vendor is a pivotal decision for distribution businesses.

Fortunately, you’ve come to the right place, as we feature only the best vendors and help you easily compare them.

Here are some crucial factors to consider while evaluating ERP vendors, specifically distribution:

• Reputation: Investigate the vendor’s track record in the distribution industry. Look for testimonials, case studies, or references from other distribution companies they have worked with. A good reputation in the distribution sector is a positive indicator of their understanding and experience.
• Customer Support: The complexity of distribution operations necessitates robust customer support. Check the vendor’s support team’s availability, responsiveness, and expertise in solving distribution-specific issues.
• Vendor Viability: Evaluate the vendor’s financial stability and longevity in the market. It’s essential to have a vendor likely to remain in business for the long term, providing continuous support and updates.
• Industry Expertise: Verify the vendor’s knowledge and experience in the distribution industry. They should understand the industry’s challenges, workflows, and compliance requirements. Be sure the system has helped other distribution businesses specifically.
• Technological Advancements: Look for innovative vendors and keep up with the latest technologies like real-time analytics, AI, cloud computing, and mobile access, wireless management, which are becoming increasingly important in the distribution industry.
• Vendor’s Compliance and Security Measures: Ensure that the vendor’s ERP system can assist your business in complying with industry regulations and that they have robust security measures to protect sensitive data.

Considering these points, you’ll be better positioned to pick an ERP vendor that meets your distribution business’s current needs and supports its success.

Distribution Industry ERP Implementation

Implementing an ERP system in the distribution sector requires understanding and a strategic approach. Here are some essential points to consider:

• Data Migration: Ensuring accurate and seamless data migration is crucial to avoid discrepancies that could adversely impact inventory management, order processing, and financial reconciliation.
• Customization: The ERP system should be customizable to accommodate varying distribution models, be it direct store delivery, cross-docking, or third-party logistics, aligning with the unique operational workflows of the business.
• Integration: Achieving seamless integration with existing systems like Warehouse Management Systems (WMS), Transportation Management Systems (TMS), and Customer Relationship Management (CRM) is essential for real-time data exchange and enhanced operational efficiency.
• User Training: Equipping the workforce with the necessary skills and knowledge to effectively utilize the ERP system is critical for leveraging its full potential in managing distribution operations.
• Change Management: Addressing the human aspect of the ERP implementation, ensuring a smooth transition and acceptance of the new system, is critical to overcoming resistance and achieving project success.
• Vendor Support: Having robust support from the ERP vendor to resolve industry-specific challenges, like managing returns or handling backorders, is invaluable for a smooth implementation and ongoing system optimization.
• Process Re-engineering: Streamlining existing business processes to align with the capabilities and workflow of the ERP system can result in improved efficiency and more streamlined business operations.
• Testing and Validation: Conducting thorough testing to validate the system’s readiness to handle high order volumes, seasonal demand variations, and other distribution-centric scenarios is imperative before going live.
• Scalability: Ensuring the ERP system is scalable to accommodate business growth, expanding inventory, and increasing order volumes is crucial for long-term operational sustainability.
• Performance Measurement: Establishing Key Performance Indicators (KPIs) like order accuracy, on-time delivery rates, and warehouse efficiency to measure the impact and return on investment of the ERP implementation.

During the ERP selection stage, it’s important to know what’s to come in the implementation stage. We have also written an ERP implementation guide that may be handy for you to refer back to at some point. 

Future Trends in ERP for Distribution

To keep pace with omnichannel demands and customer expectations, ERP systems for distribution must rapidly adopt new technologies and capabilities.

Emerging innovations shaping the future of ERP for distribution include:

• Real-Time Analytics: With real-time analytics, distribution businesses can now make informed decisions on the fly. ERP systems increasingly offer real-time analytics features, enabling immediate insight into sales, inventory, and customer behavior trends.
• Advanced Demand Forecasting: Modern ERP systems offer more sophisticated demand forecasting tools by leveraging historical data and real-time insights. This is crucial for distributors to track inventory levels efficiently, meet customer demands, and minimize carrying costs.
• Artificial Intelligence (AI) and Machine Learning (ML): AI and ML are integrated into ERP systems to improve forecasting, automate routine tasks, and enhance customer service through intelligent responses and actions.
• Internet of Things (IoT): IoT technology is becoming a game-changer in inventory management and asset tracking. Connecting IoT devices to ERP systems allows for real-time data collection and analysis, aiding in efficient inventory management.
• Dynamic Route Planning: For wholesale distributors, logistics is a core operation. ERP systems increasingly incorporate dynamic route planning tools that optimize delivery routes in real-time, considering traffic conditions, weather, and other variables, ensuring timely deliveries and reducing transportation costs.
• Robotic Process Automation (RPA): RPA in ERP improves efficiency by automating repetitive tasks such as data entry, freeing human resources for more strategic, value-added tasks.
• Vendor Managed Inventory (VMI) Capabilities: VMI is a collaborative strategy where vendors monitor and replenish the buyer’s inventory levels. Advanced ERP systems enhance VMI capabilities, facilitate better collaboration between distributors and suppliers, and ensure optimal inventory levels.
• Sustainability Features: With a growing focus on sustainability, ERP systems are introducing features to track and manage carbon emissions, waste, and other sustainability metrics in distribution operations.

These emerging technologies and innovations set the stage for a more connected, efficient, and data-driven distribution industry, making integrating a modern ERP system a prudent investment for forward-thinking distribution enterprises.

ERP Case Studies in the Distribution Sector

Case studies show how ERP software can change business operations. We look at examples from the distribution sector to show how ERP systems have helped these businesses succeed.

• Quality Material Handling, Inc. ERP Case Study: Quality Material Handling Inc. (QMH) upgraded to Acumatica Cloud ERP from Sage 100, leading to streamlined operations, improved inventory management, and real-time business insights. The transition facilitated remote work, reduced financial closing times, and supported QMH’s expansion goals by providing a scalable, user-friendly platform for better decision-making and customer service.
• Endries International ERP Case Study: Endries International adopted Infor Distribution SX.e ERP to support growth, improve pick rates and inventory accuracy, and achieve their revenue goal of $100 million within five years. The system’s Total Warehouse Logistics and SCM Demand Planning modules further streamlined operations eliminated yearly inventory counts, and saved $500,000 in safety stock in one warehouse within a year.
• Warshauer Electric Supply ERP Case Study: A family-owned business, Warshauer implemented Epicor Eclipse to address several pain points, such as reducing repetitive tasks. By automating repetitive job responsibilities, the system freed up employee time for brainstorming and problem-solving. Improving ticket tracking and digitalizing the warehouse have moved this business forward quickly, with improved sales growth and cost efficiencies.

FAQ Section for Distribution Industry ERP Buyers

This FAQ provides invaluable insights on ERP systems tailored for distribution industry leaders.vWhile each distributor will have unique priorities, these questions aim to illuminate how modern ERP can address common pain points and opportunities.

What is the significance of ERP in the Distribution Industry?

It’s clear now that Enterprise Resource Planning is crucial for distribution businesses. It unifies operational areas like order management, inventory control, supply chain management, delivery scheduling, and customer relationship management into one system. This integration allows for streamlined distribution processes, informed decision-making, improved efficiency, and cost reduction.

How can ERP support multi-warehouse operations?

An ERP system streamlines workflows, enhances inventory tracking, and provides comprehensive reporting across multiple warehouse locations. More sophisticated ERP systems also offer integration with Warehouse Management Systems (WMS) for superior automation and control capabilities.

How does an ERP system assist in regulatory compliance within the distribution industry?

ERP systems play a crucial role in aiding distribution businesses to adhere to industry regulations. They automate the tracking and reporting of compliance-related data, ensure precise record-keeping, facilitate product traceability, and uphold shipping and transportation regulations. By centralizing compliance information, they simplify the audit process, helping businesses stay updated with the fluctuating regulatory landscape, mitigating risks, and fostering a culture of compliance.

How does an ERP system improve inventory management in distribution?

An ERP system is critical for efficient inventory management in the distribution sector. ERP endows real-time monitoring of inventory levels, order statuses, and deliveries – an essential for maintaining optimal stock levels. Besides, advanced analytics and forecasting tools embedded within the ERP systems enable distributors to anticipate demand accurately, manage stock replenishment proficiently, and avert overstocking or stockout scenarios. This holistic approach significantly augments overall inventory efficiency and customer satisfaction.