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4 Ways Cloud ERP Optimizes Operations For Distribution Centers

Posted by Steve Anderson

May 5, 2014

optimize operations distribution centersOwners of small distribution centers and light manufacturing companies have their hands full. They need to get the right products to the right people at the right time.

Technology is the key to pulling this effort together. For distributors that are growing, QuickBooks and a few spreadsheets just won't cut it. You need something more powerful.

The acronym ERP stands for “enterprise resource management.” This describes a software solution that distributors need after they reach a certain size. ERP software encompasses several functional areas within the same application framework. Some of the core business operations that are included, automated and integrated in most ERP platforms are: financial management, human resources, payroll, project management, supply chain management, services, sales and marketing automation.

ERP distributed over the Internet in a subscription model is called cloud ERP. Here are four reasons that a cloud ERP system is a must-have for light manufacturing and distribution centers.

1) Improve supply chain management (SCM)

This is a rather broad concept, spanning many functional areas including purchasing, receiving, inventory, customer service and negotiations with partner companies. Cloud ERP supports SCM quite well because it, by definition, encompasses the proper management of several different functional areas. Business flow starts at raw materials, goes from finished goods to consumption of those goods, and includes everything in between these steps. Only ERP solutions by definition have the ability to manage SCM within a single platform.

2) Create efficiencies

Automate just about everything by leveraging the ability to create workflows and processes within the cloud ERP platform. Some examples of automation for distribution centers include pick-and-pack processes, the creation of customer quotes and the replenishment of inventory.  Other efficiencies ERPs create include:

  • Eliminate double entry between separate inventory, shipping and financial systems. Empower your team with access to key sales and financial data needed to answer customer questions quickly. Track inventory across multiple warehouses from a single screen so you know what you have in stock, where it is and when it’s going to get to your customer.
  • Keep labor costs low and improve efficiency. Do this with efficient categorizing and routing of shipping paths. Streamline picking methods and analyze inventory movement to ensure the most efficient product flow throughout your facilities.
  • Provide real-time information for quick business decisions. Delivering software with built-in business intelligence tools allows you to be quick and decisive. Through graphical dashboards and key performance indicators, quickly analyze quantities sold, inventory movement, gross margin contribution, customer buying patterns and seasonal patterns.
  • Improve accuracy and efficiency with automatic data collection. Accurately track inventory movement in your warehouse with bar-coding. Warehouse management features, such as lot and serial control, cycle counts, support for bin locations and inventory tracking in multiple warehouses, ensure on-hand quantity displayed in the system is accurate and reliable.

3) Allow for future growth

Cloud ERP enables scalability. By not having to manage manual processes, multiple Excel spreadsheets and several different systems for each area of the business, distributors are free to grow without errors and manual processes. Solid cloud ERP platforms allow for general business process improvement for future and sustained growth because they integrate with your other business systems.

4) Improve the returns process

From a returns management standpoint, most cloud ERP systems allow users to:

  • Process several different types of return material authorizations (RMAs).
  • Create customer credits, replacement orders and re-stocking charges all from within the RMA processing functions.
  • Handle scrapping inventory, returning inventory to stock and processing returned items to a depot (repair) center.
  • Process returns to the vendor for credit, replacement or repair.
  • Link return to vendors (RTVs) to RMAs to ensure a documented flow that remains with the equipment from the time it enters your warehouse on through to the vendor and then back again.
  • Perform reporting for scheduling of inbound returns and overdue items.
  • Perform analysis regarding product turnaround.

Distributors and light manufacturing companies need strong inventory records, optimized picking and shipping efforts, and quality systems to sustain growth. If QuickBooks and spreadsheets aren’t enough, it’s probably time to invest in a cloud ERP system.


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Topics: cloud ERP, distribution