Many sellers – whether they’re wholesalers or retailers – have warehouses and distribution operations, and much variety exists within the distribution function itself. Some distributors do little more than drop-ship standard items from warehoused inventories when orders arrive, while others are actively engaged in the design, manufacture, customisation and/or sale of the products they distribute.
Whatever the variations within this industry sector, wholesale distributors face challenges ranging from tight margins to supply chain and delivery-carrier dependencies. Succeeding in this demanding and fast-paced sector requires that companies operate with high efficiency and low error rates.
Wholesale distributors that don’t closely track and optimise their core operations can put critical business relationships at risk, seriously undermining their profitability and growth potential.
Critical wholesale distribution metrics
Wholesale distributors form the critical link connecting manufacturers and other suppliers with retailers and end customers. They must therefore balance variable product availability on one side with fluctuating customer demand on the other.
As a result, they need 360-degree business visibility, smart inventory management, efficient order and shipment processing, and quick problem resolution.
Among the operational challenges wholesale distributors face:
Supplier partners: Wholesale distributors must track product availability, costs and quality from manufacturers and other suppliers.
Retailer partners: Wholesale distributors may have to manage different forms of relationships with retailers, ranging from simple drop-ship order fulfilment to providing customisation and other value-added services.
Carrier partners: Wholesale distributors must depend on third-party carriers to deliver the correct products on schedule and undamaged.
Inventory: Ensuring that inventories are stocked to meet current and future demands, while limiting overstocking and item obsolescence, are critical requirements.
Reporting: Workers ranging from the finance team to warehouse-floor supervisors and workers need accurate, real-time reports spanning the full range of relevant operations.
Orders and Shipping: Orders for goods must be rapidly processed and goods from inventories must be correctly packaged and shipped from the distribution centres closest to the customers’ addresses.
Customisation: ERP, CRM and other functions must be easily customised to match individual company business processes and requirements.
Improve the KPIs that matter
Like many industry sectors, wholesale distributors have been investing in cloud applications because of their low upfront costs and faster time to deployment, their highly efficient and flexible functionality, and their low IT demands.
Given the range and interdependencies of operations, a multifaceted suite that integrates many functions on top of a shared-data foundation is especially valuable. That’s why many wholesale distributors have been able to measure and improve their KPIs after adopting an integrated cloud-based ERP such as NetSuite.
By interviewing and surveying representative NetSuite customers in the wholesale distribution sector, market research company SL Associates identified which KPIs these companies track as well as the improvements they’ve experienced by basing their core operations on NetSuite’s integrated business suite.
Deploying NetSuite as the foundation for their core business processes generated a range of impressive KPI improvements. Some of which are listed below:
- Inventory costs reduced by 20-30%
- Obsolete inventory carrying costs lowered by 20-40%
- Fulfilment rates and back orders improved by 75-85%
- Delivery time reduced by 75-90%
- 360 degree visibility increased 50-80%
Source: SL Associates survey 2014
Finding a business solution suite sold as a cloud-based service has become a highly desired, and increasingly required, purchasing consideration. After all, cloud vendors take responsibility for managing, updating and securing the solutions that run in the cloud.
Having a reputable cloud provider handle these and other critical business processes frees companies from performing these tasks, which are often outside of their areas of core competency.
And, as shown above, having a comprehensive and fully integrated business solution foundation on which to conduct a wide range of business operations can greatly improve the efficiency and effectiveness of many KPIs that are critical to wholesale distributors.
NoBlue provides NetSuite’s all-in-one cloud-based ERP solution to companies across the UK and Europe. If you are a wholesale distributor looking to improve your KPIs, then please get in touch to discuss your potential requirement.
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This article has been adapted from the SL Associates research study titled: ‘Research Study: Cloud-Based Business Solutions Suite Delivers Key Performance Improvements to Wholesale Distribution Companies.’