When considering distribution ERP, you might ask yourself what exactly one has to do with the other aside from their respective membership in the business terminology club. What do they mean? According to BusinessDictionary.com, distribution in the commercial sense is:
·    “The movement of goods and services from the source through a distribution channel, right up to the final customer, consumer, or user, and the movement of payment in the opposite direction, right up to the original producer or supplier;”

Distribution ERP

Distribution ERP: What does one have to do with the other?

And enterprise resource planning (ERP) defined as:
·    ”Accounting oriented, relational database based, multi-module but integrated, software system for identifying and planning the resource needs of an enterprise. ERP provides one user-interface for the entire organization to manage product planning, materials and parts purchasing, inventory control, distribution and logistics, production scheduling, capacity utilization, order tracking, as well as planning for finance and human resources.”

So how do these two relate to one and other? Clearly it is as a system for the relevant exchange of required order fulfillment data from order entry through distribution and finally billing and payment.  Distribution is a vital spoke in the commercial business wheel and ERP is the data hub to which it is connected.  

Distribution is the final step in the order fulfillment process and initiates the billing and/or the electronic or ACH (automatic clearing house) transfer of funds, after which, the cycle begins again with another order or customer request.   The speed and accuracy with which contributing and finalization transactions occur must be high in order to ensure repeat business and accurate accounting.  

As with most things, business operations are made up of individual components. A system is required to integrate those components into entire operation that is solid and consistent.   

Business occurs in a cyclical way and each step involves a transaction.  The ERP is the tool by which each transaction is done.  In general, a manufacturing order goes through the following steps:

1.    Account Management
2.    Sales/Customer Service
3.    Order Receipt
4.    Order to Scheduling
5.    Procurement
6.    Production
7.    Distribution
8.    Accounts Payable
9.    Accounts Receivable
10.    Cycle begins again

Each of these steps requires a transaction or transfer of data and information and the ERP is the electronic tool used to complete the transactions.  

Steps in the cycle are dependant on the previous step if any one of them is skipped or flawed; the rest of the cycle is affected or interrupted.  Distribution ERP are related in that distribution is a necessary step in the cycle facilitated by mean of an ERP.

Distribution is a physical activity as well as an electronic transaction but the use of an ERP makes it visible to all who have access to the ERP system.  Real time status reports are possible by virtue of ERP systems.  Portals for particular accounts have become commonplace and provide a window through which individual customers can bill their accounts and distribution status among other things.

Distribution ERP is not, therefore an exclusive relationship but rather simply one portion of the complete cycle that is all manufacturing.

Written by :

Amy Cruz