2018 ERP Guide for Small- and

Mid-Sized Distributors
 Content

3 The Need for ERP

5 ERP Functionalities for Distributors
8 ERP Market Forecast
9 Top US ERPs for SMB Distributors
13 Get Started with ERP

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 The Need for ERP
When it comes to wholesale distribution, having the right
tools to manage your business is the difference between
failure and success – no matter what industry you’re in.

Distributors have a myriad of moving pieces to constantly keep

track of (and not just SKUs). Every link in the supply chain from
supplier through the warehouse through delivery to the
customer must flow cohesively in the shortest possible
amount of time with the lowest possible investment.

The end goal for every distributor: boosting profits with

seamless delivery to satisfied customers. So what’s the best
way to ensure this? By having a company-wide information
system to facilitate and coordinate all resources and activities
throughout the company. In short, Enterprise Resource
Planning (ERP) software.

ERP was first created for enterprise-level companies. However,

these large businesses are no longer the only ones who need a
comprehensive management solution; it’s time for small- and
mid-sized businesses to gain the competitive advantage that a
successful ERP can bring.

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 The Need for ERP

ERP is more than just a supply chain solution; an effective

ERP unites all functions of a business into one single point
of reference.

This includes procurement, sales, and distribution as well as

accounting, customer service, project management, and even
HR all under one umbrella. By keeping these functionalities in
one solution, companies are better able to track movement
throughout the entire business and facilitate business
intelligence to aid the decision-making process.

In addition to improving efficiency and decision-making, ERP

solutions have the most direct impact on reducing costs for an
organization. By streamlining internal processes, businesses
not only minimize costs but also increase their revenues –
translating into higher profits overall.

SMBs are particularly susceptible to this type of growth with

the implementation of a successful ERP. However, SMBs
without a solution to manage the entire organization that fail to
effectively unite their operations run the risk of falling behind
their competitors.

The SMB sector typically has high growth rates and, thus, more
competitors. Failing to update organizational management as
the industry evolves results in stunted growth and reduced
profits.

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 ERP Functionalities for Distributors
ERP is a great tool for wholesale distributors, but it was not
created exclusively for distributors. ERP solutions exist for a
variety of industries including manufacturing and retail and
address the different requirements of business management for
each. So what does a wholesale distributor need to look for in
their ERP?

1) Financial Management
Financial Management oversees the finances of an organization
including accounting and financial reporting, budgeting, collection of
accounts receivables, and risk management.

Overall, financial management in an ERP is a no-brainer; the financial

module in an ERP will oversee not only internal finances (such as
employee salaries) but will also manage accounts with suppliers and
customers.

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 ERP Functionalities for Distributors
2) Supply Chain and Distribution Management
Supply Chain and Distribution Management involves managing
business operations among all parties in the supply chain (suppliers,
manufacturers, wholesalers, distributors, retailers, and customers). This
tends to be the bulk of the functionalities for wholesale distributors.

Supply Chain and Distribution Management includes the day-to-day

operations in the warehouse with a Warehouse Management System
(WMS), Customer Relationship Management (CRM) and Supplier
Relationship Management (SRM).

Supply Chain and Distribution Management starts with acquiring goods

from the suppliers. A good system will help generate purchase orders
after analyzing demand for each SKU and will coordinate with the
suppliers for orders.

Once the items reach the warehouse, the WMS will take over in tracking
stock levels and incorporating new items into inventory. WMS will also
process replenishment functions and help process orders from
customers.

CRM helps distributors keep track of campaign and leads management

and customer service and support. CRM works with WMS to help
process orders and incorporate returns back into the warehouse.

Logistics management is also key; once the orders are processed,

picked, and packed, they need to get to the customer. For many SMB
distributors, this involves hiring a 3PL for distribution so coordination is
key.

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 ERP Functionalities for Distributors
3) Organization Operations
While your ERP manages external interaction, it also takes care of
internal organization operations as well including human resources
(HR) and project management.

Making sure that your employees are working efficiently and have all
the resources they need is an integral part of a successful distribution
operation.

4) eCommerce
While eCommerce functionalities are not strictly necessary, they are a
definite advantage when it comes to ERP. eCommerce is the latest
distinguisher for success for SMBs; customers expect to have access
to ordering online and eCommerce capabilities allow distributors to
fulfill that expectation.

When it comes to deciding ERP functionalities, make sure you

take stock of all your needs as a distributor from start to finish.
Do you have an overview of every step of your supply chain? Do
your employees have everything they need for success? Are you
keeping communication open? Can you track and measure every
item as it moves through your warehouse?

While the ERP functionalities for wholesale distributors are fairly

universal, not all ERPs group their functionalities as we do so
make sure that your business has what it needs to succeed. This
also is not an exhaustive list of every functionality that a
distributor could use for success; different ERPs offer different
functionalities.

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 ERP Market Forecast
The US ERP market has great potential for growth; the domestic
industry for enterprise software and related products is worth
$50 bn and has grown by 6.8% over the last 5 years. (Source)

The market shows a high level of concentration; the ten largest firms
control 69.5% of market share in the US industry and nearly 30%
globally (the global numbers are represented in the chart below).

While research and development is the major cost associated with

enterprise software, once the software exists, it is cheap and simple
to replicate. This leads to established brands taking over smaller
developers‘ products and using existing brand awareness to sell the
software.

New technological developments in business analytics are

continuing to drive demand. The global market has the potential to
reach $84.7 bn by 2021 – a CAGR of 0.6% from 2016. (Source)

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 Top US ERPs for SMB Distributors
The following is a list of the top 6 ERPs in the US for small- to
mid-sized distributors. The criteria for each ERP includes the
functionalities for distributors mentioned earlier, pricing
comparison, and deployment.

This is not an exhaustive list of all ERPs available to SMB

distributors in the US, but it is a good starting point for those
distributors looking to find the best value in ERP software for
their businesses. This list is not in any particular order.

Sage X3 Microsoft Dynamics 365

NetSuite ERP SYSPRO 7

Acumatica Cloud ERP SAP ERP System

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 Top US ERPs for SMB Distributors
Sage X3
Sage X3 offers elevated finance, supply chain, and production
management. The functionalities for distributors are covered
with procurement, warehousing, sales, and financials all
managed within the ERP. It‘s also available on any connected
device so you can take it with you and manage your SMB
wherever you go.

Deployment: SaaS or On-premise

Pricing: $$

Microsoft Dynamics 365

Microsoft Dynamics 365 is Microsoft‘s response to serving
any size business; this particular ERP can be scaled down for
SMBs or up for enterprise-level companies. This is a great
ERP for syncing multiple departments including sales,
customer service, and operations.

Deployment: SaaS

Pricing: $$

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 Top US ERPs for SMB Distributors

NetSuite ERP
NetSuite ERP is the result of the combined forces of Oracle and
NetSuite since NetSuite was acquired by Oracle in 2016. This
cloud ERP is designed to grow with the businesses that use it.
It includes financial, supply chain, warehouse and fulfillment,
procurement, production and human capital management
among its functionalities along with eCommerce tools.

Deployment: SaaS

Pricing: $$

SYSPRO 7
This latest version of SYSPRO ERP was built with
considerations from existing customers in mind. SYSPRO
prides itself on customizing the solution according to the
company‘s needs. Modules can include warehouse, supply
chain, order, production, CRM & sales management and
business intelligence.

Deployment: SaaS

Pricing: $$$$

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 Top US ERPs for SMB Distributors

Acumatica Cloud ERP

Acumatica Cloud ERP offers different products for different
industries, but the distribution management modules include
inventory, requisition, and sales and purchase order
management that integrate directly with Acumatica‘s CRM,
financials, manufacturing, and project management for
businesses improving visibility across the whole organization.

Deployment: SaaS or On-premise

Pricing: $$$

SAP ERP System

SAP ERP System offers a wide range of ERPs for different
sized businesses with ERP functionalities based on industry.
The most popular for SMBs is SAP Business One which offers
financial, sales and customer management, purchasing and
inventory control, analytics and reporting, and business
intelligence.

Deployment: SaaS or On-premise

Pricing: $$$$

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 Get Started with ERP
Embarking upon the process of ERP selection and
implementation will involve a number of critical choices; the
sheer range of enterprise software available can make
choosing the right ERP package difficult.

A well-implemented system will show an ROI with increased

efficiency, and the long life cycle of a well-designed ERP
package will enable it to grow and adapt along with your
business.
Keeping in mind the important functionalities for your
distribution operation will help you narrow down the selection
considerably. However, an ERP isn’t the only solution to
streamlining your business; there are plenty of ways to add on
capabilities to your ERP with third party solutions. If you find
that you need additional capabilities once you implement an
ERP or your business grows beyond the capacity of your ERP,
adding on solutions is an economical way to boost your
system.

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