Picking up from Part 2, we continue our exploration of how ERP system functionality can help wholesale distributors pursue an ERP system strategy of optimizing the Supply Chain.
Four ERP Strategies To Improve Distribution Processes (Part 3)
Value-added services are pursued by a great number of distributors, with 38% of warehouses involved in light manufacturing and 36% offering kitting and assembly, packaging and re-labeling are increasingly more common activities, as well. Distributors can tap into advanced planning algorithms in their ERP systems to optimize packaging and assembly processes, leading to a reduction in operating costs.
Supply chain network design is a fundamental capability of Supply Chain Management programs, and essential for distributors witnessing their supply chains proliferate across the seas and around the world. Network design enables a distributor to model and optimize expanding supply chains. It supports facility and inventory location decision-making, and aids in selecting the best transportation options and design of multimodal strategies. Network design solutions provide
interactive map-based graphics that show the impact of multiple scenarios on profitability and service levels.
Streamlining Operational Efficiency. The last of the four strategies for extending the impact of ERP systems on distributor performance touches the other three: Demand, Inventory and Supply. Distributors need to constantly streamline operating efficiency and look for ways to reduce costs and improve performance.
Enterprise Asset Management (EAM), as part of the suite of ERP applications, provides automated control and analytics for monitoring and managing the deployment, performance and maintenance of corporate assets. With EAM, distributors save time and money by optimizing maintenance resources, improving equipment and staff productivity, strengthening their ability to collect on warranty-related claims, and monitoring energy consumption.
Document Management Systems (DMS) as part of an ERP system can streamline operations. It seems, paradoxically, the more processes are automated and computerized, the more paperwork gets generated. Dealing with all those documents is labor intensive. Converting that paperwork to electronic documents, with version control and robust filing systems are the solution. Distributors who have taken advantage of document management functionality have reported savings of $50,000 per year or more. Advanced document management makes it easier and faster to find the document you are looking for, boosting employee efficiency, improving response time, compliance and customer satisfaction.
ERP systems have built in performance analytics that can be bolstered with Business Intelligence (BI) functionality to link operational plans to corporate strategy and improve alignment of day-to-day activity with long-term goals. Analytics and BI increase visibility into metrics that draw data from multiple enterprise applications and even disparate databases, enabling distributors to increased productivity, control costs, and fine-tune processes.
Which of these four ERP extension strategies makes most sense for your wholesale distribution organization, or which one is the most valuable and should be implemented first? Distributors must assess ROI of the various approaches and consider the overall impact on overall operational and financial performance.
Different distributors will have different strengths and weaknesses, and in evaluating the broad construct of demand, inventory, supply and execution, a distributor needs to rank their relative strength in each area to prioritize improvement initiatives. Also, you need to consider how changes in one area will impact other areas. One final note: reassess once a year.