Since 2020, product distribution companies have faced rolling waves of worker shortages and supply chain disruptions, all amid a global economy that can best be described in one word: unpredictable.
It should come as no surprise, then, that product distribution companies would increasingly look to ERP capabilities such as process automation to bridge gaps and fill holes so they can continue meeting the demands of clients and consumers.
How to Decide What to Automate
With dozens upon dozens of options for tasks that could be streamlined through ERP process automation, product distribution enterprises need to be deliberate in choosing what to automate.
“Many implementations disappoint because they try to automate everything they can, rather than everything they should,” say EY’s George Kaczmarskyj and Christopher Harris.
The better approach would be to focus on specific priorities for your business. Do you want to be more consistent in communicating with customers? Do you want to retain staff (and thus reduce expenses associated with recruitment and training)?
Soliciting input from employees and clients, along with more high-tech approaches such as AI and process mining – part of a range of techniques known as “intelligent automation” – can help identify specific pain points or processes that could benefit from automation. Once you determine your focus areas, you can implement ERP process automation that complements your priorities.
That being said, there are certain tasks in the product distribution sphere that are ripe for ERP process automation.
Customer communications
Product distribution enterprises, whether selling to retailers or dealing directly with customers, must contend with consumer expectations that have evolved in the face of the COVID-19 pandemic. More than simply a transactional relationship, product distribution customers want their lives to be made better, easier, and more fulfilling.
Communication is one piece of that puzzle and one area that can benefit from ERP process automation. ERP process automation can be deployed for:
- Notifications: keep clients in the loop every step of the way with order confirmation emails, notifications when items are shipped or scheduled for delivery and to follow up on completed transactions.
- Invoicing: set up ERP process automation to send invoices for completed orders and automatically send billing reminders when payments are a specific number of days past due.
Not every customer interaction in product distribution should be automated. Kaczmarskyj and Harris assert that process automation works best when designed “around the user experience — both customers and employees.”
“Designing for ‘the human in the loop’ enables intelligent automation to be focused on human interactions where you want them, because you want them optimizing the human roles by improving them with tools that improve their efficiency and effectiveness,” they write.
In the product distribution sphere, customer-facing ERP process automation could translate to agents spending less time sending notifications and reminders and having more time to track down a wayward shipment or smooth things over with a client whose order is stuck somewhere along the supply chain.
Financial management
Dealing with finances is by no means unique to the product distribution sphere, but the finance function within a product distribution company can benefit as much as any other from ERP process automation.
Any business involved in product distribution is likely to be buying and selling items across international borders and is therefore likely to be contending with multiple currencies. ERP process automation can be used to update currency exchange rates in real time as well as calculate realized gains and losses resulting from foreign currency transactions.
This vigilance, which would be inordinately time-consuming if performed manually, can help mitigate the risks of doing business in foreign currencies, some of which may be subject to sudden fluctuations that could result in losses for your enterprise.
Other finance-related tasks that can be streamlined via ERP process automation include bank book reconciliation and updating accrued liabilities upon receipt of inventory items. An ERP system can also be set up to automatically recognize recurring revenue in the correct time period, which is increasingly important as more product distribution moves to a subscription model.
Inventory management
Thanks to technological advances such as the Internet of Things (IoT) and Radio Frequency Identification (RFID), product distribution companies have access to more efficient and accurate methods for costing and tracking their inventory along with more opportunities for process automation. This is essential in an era of omni-channel distribution.
“As more sales are influenced by digital and fulfillment options continue to proliferate, retailers need to maintain an accurate view of where their inventory is located at all times – be it in store, in warehouse, in transit, etc.,” retail technology expert Nikki Baird told Forbes.
Alongside the use of IoT and RFID, ERP product distribution capabilities can be used to create automated inventory management processes, including:
- Tracking inventory in real time, updating counts as soon as an item enters or leaves one of your facilities.
- Automatically performing a margin analysis when a sales order is completed.
While it might seem counterintuitive, a recent article from EY Americas on the subject of Robotic Process Automation (RPA) posits that automation technologies could actually be embraced “by the very people whose jobs may seem most at risk from its introduction.”
This is because instead of boring, repetitive “back-office manual tasks,” advances such as ERP process automation could free up capacity for “higher-value work” that will keep employees interested and engaged, EY says, thus reducing staff churn and its associated costs.
Once you decide what functions of the business you need to streamline, the automation powers of the right ERP system can be transformative.
Why Crestwood?
At Crestwood Associates, we are software agnostic. Our experienced consultants have been advising clients in a range of industries for more than 20 years. Through over 5,000 ERP implementations all over the globe, we’ve learned how to help companies like yours avoid pitfalls and achieve success.
- We have a strong and deep team to support the complexity of an ERP implementation.
- We have experts in various avenues who can help solve problems on complex projects.
- We do not outsource any aspect of the project, saving time and money.
We advise key stakeholders on which technology solutions will have the greatest impact on your business goals by reviewing your system and processes. We then quantify the goals and map out a plan for action to achieve them. Contact us today for an ERP Discover and Advise Consultation Request.
