Distribution and retail: a fine line.

The differences between distribution and retail are becoming less clear every day and the Internet is the main reason for this transformation. Today distributors are faced with importers who sell directly to retailers or, in some cases, directly to customers.

These changes in the way products are distributed have already reached several sectors and force wholesalers to rethink their marketing strategy and adapt to a complete digital transformation.

CASE: the unicorn Mercado Libre, which began connecting people with people, today connects companies with people. We might be surprised if in the future it connects companies with companies!

Know the features of the software you need for your distribution business

We know that digitalization modifies task execution times and distribution does not escape this transformation. Your customers may demand shorter delivery times, simpler returns procedures, self-service access to place online orders or view requests.

How to adapt to this new reality? Below we explain the importance of an ERP for a distributor.

Why is an ERP important?

An ERP system allows you to manage the different areas of the distributor in detail but also shows a 360-degree overview that makes it easy to know its exact situation, allowing you to make the best decisions.

A single data source

It unifies all views of the operation and finances in real time, providing reference information at a glance so that everyone works with the same data.

Clear information in the right hands for decision making

Correct information is vital for making the right decisions for your company. But this alone is not enough, it is also very important that it arrives at the right time to make each decision, being accessible quickly by each of the users who need it.

Varied reports to analyze from different approaches

Being a single source of data, an ERP provides a large number of reports giving rise to different analyzes that can make a difference for the success of the business, allowing you to see relationships that, when analyzed independently, become more difficult to visualize.

Your entire company on a single platform.

ERPs reuse data already entered, eliminate double entry of information and avoid typing errors.

Standardization

With ERP software, your company can define a single correct way to perform tasks, limiting the possibility of each team member performing them in their own way.

Audit in all actions

Every action taken is saved: who and when a record was created, as well as anyone who modified it. This provides peace of mind for both users and supervisors, as it lets them know that each change will always have its exact audit.

Why do you really need good software to manage your wholesale distributor?

To have total visibility of your business ! Without visibility you cannot make the right decisions, and we will tell you a secret: companies that succeed have a common characteristic… They know perfectly where they make money and where they don’t!

With software you will have tools that will allow you to know:

• What margin does each client leave?
• What is the cost of each imported product?
• What margin do I have in each product/category?
• What margin does our purchases from each supplier provide us?
• What margin do I have from each Client, and from each sales channel?
• Although this may seem trivial, most distributors do not obtain it automatically , and those that generate it do so partially, inaccurately, and at great human cost .
• The software will help you and your team manage the operation more fluidly, with processes that comply with good operational and administrative practices.
• The different areas of the company need visibility to be better managed.

If, for example, you need to know what a client is, your system should instantly show you on a single screen:

Customer information:

• Credit granted and credit used
• Open debt and documented debt
• Actual days of average collection in the last semester
• Ranking of best-selling products
• Product family composition
• Monthly client percentage margin, for the last 6 months
• Seller Name
• Current quarter sales goal
• Percentage of orders delivered
• Quarterly average days (order/delivery)
• Percentage of sale in value vs target value

RECOMMENDATION: each area of ​​the company needs to access its information quickly and completely to be able to carry out its work efficiently. The management software you select will be vital to facilitate work in all departments of the distributor.

What functionalities should the software have for a distribution company?

General distributor and importer

General distributors are intermediaries between the manufacturer and retailers or companies, and may be exclusive to one manufacturer or several. Your suppliers may be in the country or abroad.

Requires the following functionalities:

• Purchasing and Supply Management
  • Sales forecasts and needs calculation
  • Foreign trade, import costing
• Commercial management
  • Sales orders
  • Mobility for order taking
  • Seller Commissions
  • Web store connected to the ERP
• Logistics management (WMS)
  • Assistance in assembling orders and deliveries
  • Distribution orders
  • Dispatch orders
  • Traceability
• Performance Analysis
  • Exact Product Costs
  • Results reports by:
    • product and product family
    • customer and channel
    • supplier

Necessary functionalities of a distributor

Purchasing and Supply Management:

When you have many products to replenish, supplying your distributor can be a slow and inefficient task, especially when it must be done manually by combining calls, emails, WhatsApp, forms and paper forms. Sounds tedious, right?

To make this process more efficient, we suggest automating everything you can to buy at the best cost, in the shortest time and in the most controlled manner possible. So you can:

• Automate all possible tasks to save as much time as possible
• Reduce costs by making purchases in the necessary quantities
• Reduce errors by purchasing from updated price lists
• Control supplier reception and billing
  Improve the visibility of the company by showing the supplier’s performance in meeting deadlines and products delivered

Requisitions management (merchandise needs)

The requisition is the determination of what products I need, both resale products, inputs or expense products. The objective of using this type of documents can be several:

In the case of purchasing supplies for the company, the idea is that each department enters what it needs (for example, pens) so that later the purchasing department can make a joint purchase and look for a better price.

In the case of resale products you can:

• Automatically generated considering the planning in case this functionality is used
• Enter manually by any user who needs it
• Advanced replenishment based on minimum stock , considering delivery times, reorder points, economic order quantities or minimum/maximum stock definitions.

RECOMMENDATION:

In the case of products for own consumption, a supply manager can group the purchasing needs and make quotes or directly make the acquisition.

When purchase orders are generated, receipt in the system can be done in the following ways:

• Manually: From the purchase order, the lines are searched and those products that are being delivered with their corresponding quantity are selected. Minimum speed level

• Hybrid : There are other, more economical options for making quick and accurate receipts from purchase orders. Using a tablet or computer, you could use wireless barcode readers so that reading allows quick identification of the product and its requested quantity so that it can be quickly selected . Medium speed level.

  Automatic: using a PDA collector , which, through a scanner, verifies that what is received is actually what was requested. High speed level

• Shortcuts: From reception it is ideal to allow the direct creation of the Supplier Invoice, taking the quantities received along with the Prices defined in the purchase order. This will save typing work for the administration. Logically, the invoice will be waiting to be confirmed with the administration before approving it and entering it into the accounting.

Shortcuts: From reception it is ideal to allow the direct creation of the Supplier Invoice, taking the quantities received along with the Prices defined in the purchase order. This will save typing work for the administration. Logically, the invoice will be waiting to be confirmed with the administration before approving it and entering it into the accounting.

Supplier invoice

Continuing with the search for agility and accuracy in document entry, we always try to enter as few fields as possible, taking as much as possible from the defined data (Ex: Payment term from the Supplier, or from the order of buys). That is why systems define flows to link documents in such a way that they are created from each other, taking all the data previously entered into the system.

Document flow

In this way, the invoice payable from the supplier could be entered from the purchase order without having to enter anything

RECOMMENDATION:

Ask the supplier to always generate invoices with clear reference to which purchase order it corresponds to, this serves to facilitate control and helps the personnel who enter it.

Controls at the time of receipt and entry of the invoice into the system

You must always confirm that both the quantities and the prices on the invoice are the same as those defined in the purchase order you placed.

By always having a purchase order, verification of what is being received as well as what the supplier is billing will be much simpler, and the system will notify you if there are discrepancies, which can lead to an approval flow or directly a rejection.

The best systems also allow you to define a tolerance percentage in quantity or price, over which they will allow receipt of invoices. If prices exceed this tolerance, then the documents payable will automatically be pending verification so that a user with permissions can confirm and accept said difference.

Possibilities due to differences detected at the time of receiving purchases:

• reception, generating the automatic

• request for a Credit Note to the supplier, the invoice remains in negotiation making payment impossible

• reception on hold, with approval flow due to detected differences

• reception, with approval permits

• refusal of reception

Recommendation

If there are discrepancies between the documents, a complete system could already request the creation of a credit note for price difference directly from the document, clarifying the amount that is being exceeded than what was agreed and marking the invoice in negotiation so that it is not be paid.

Capture your supplier invoices from your received electronic invoice

Technology for efficiency

High speed level

Thanks to current technology, there is also the possibility of generating the documents to be paid in the system directly from the electronic tax receipt (CFE) generated by the supplier.

In this case, at no time should the operator enter articles, quantities or prices, since the system will have this information from the supplier’s CFE document and will suggest it so that the administration only accepts the suggestion, so that the document remains firm and without being typed.

Return to supplier

Eventually there may be a need to return received products to the supplier. This must be controlled, because once the product has been delivered to the supplier, indicating the reasons that originated it, the corresponding Credit Note from the supplier must be entered RMA return merchandise authorization

If you want to delve deeper into the supply functionality, go here.

Import costing – Landed cost

Purchases of foreign products generate several expenses that must be incorporated into the cost of the product. The costs that correspond to the nationalization of foreign products are called “landed cost”.

What is the landed cost?

The landed cost or destination cost is the sum of the expenses associated with shipping a product. That is, it takes into account the cost of a product at origin, shipping and the expenses incurred until the buyer’s deposit. The landed cost calculation includes all specific costs associated with shipping each item, such as:

• Original price of the product
• Shipping or transportation costs
• Sea freight
• Taxes
• Duty
• Customs clearance
• Packaging Fees
• Management and payments
• Currency exchanges (if applicable)
• Supply needs planning
• The basis of good supply is a correct estimate of what is going to be sold. And this is more important the further away or complex the supply is.

Supply needs planning

The basis of good supply is a correct estimate of what is going to be sold. And this is more important the further away or complex the supply is.

Good supply planning avoids stock outages and obtains better costs from purchases made. To achieve this successfully and in the most efficient way, this process must be systematized as much as possible, so that all those involved can contribute their knowledge and work. To systematize it, it can be done in two ways:

• Shared manual spreadsheets : the estimated sales they plan to have in the following year must be manually defined product by product. This process can be very costly both in time and in the accuracy of the information, which is why it normally causes the company to give up on its definition.
• Software that facilitates its preparation : If you have a system that can help by providing the correct classification to be able to see the data in different approaches, it can make the creation of this planning much simpler. If you add intelligence to this by adding information from similar periods prior to the process, you can reduce the margin of error substantially. Keep in mind that each year is different and special situations must always be considered, so the manager’s criteria will always be vital to be able to consider how the need will vary based on the past. Consider that it is of great help if you can have adjustments in percentages from past numbers to define according to Product Category. Commercial Agent, Group of Clients or even by clients.

RECOMMENDATION:

The automation and simplification of sales forecasts (forecasting) allow the sales team to enter their forecasts by client (facilitating the measurements of deviations to the sales team objectively).

Carrying out this planning will allow you:

• Define your goals more easily
• Correct actions according to the performance obtained
• Create hypothetical scenarios in real time to define plans or budgets, adapted to the context of the organization and the market.
• Boost your sales force with the definition of clear goals
• With the definition of a detailed planning, if it is carried out by a commercial agent (seller), a month-by-month monitoring of how sales are going according to the planning can then be applied . This allows corrective actions to be taken in order to meet the proposed objective.Additionally, thanks to this planning, specific goals can be defined per seller. At all times it will be possible to know the state in which we are in relation to the previously set objectives, both monthly and annual.

Boost your sales force with the definition of clear goals

With the definition of a detailed planning, if it is carried out by a commercial agent (seller), a month-by-month monitoring of how sales are going according to the planning can then be applied . This allows corrective actions to be taken in order to meet the proposed objective.

Additionally, thanks to this planning, specific goals can be defined per seller. At all times it will be possible to know the state in which we are in relation to the previously set objectives, both monthly and annual.

Sales management

Visiting the buyer’s premises

For an agile commercial process, it is necessary to automate the sales order capture, system entry and approval processes as much as possible. To do this, we must quickly manage price lists, discounts and promotions, order taking, approval of commercial conditions and management of customer returns, seeking to ensure that they require the least amount of human time for their entry and control.

Through centralized purchasing

When buyers carry out their replacements centrally, the usual thing is:

• Spreadsheets
• EDI (Electronic Data Interchange)

For what was previously explained, you will need the following functionalities:

1.Taking orders: 

They will be able to enter:

• Offline (paper)
• Direct to the system (telephone salesperson enters order)
• Vendor automation (mobile)
• Own website
• Worksheets
• EDI (Electronic Data Interchange)
• Third party website (Mercado Libre)

2. Order approval flows

After creating sales orders, their approval is a mandatory step of the sales order procedure. If the credit and sales conditions are respected, the Sales Order will be automatically approved. In cases where it does not comply, approval from a user with powers will be required.

3.Order status visibility

Visibility at all times of the status of each order and the main commercial indicators will drive sales and facilitate compliance with your sales forecasts.

4.Management of pending orders (backorders)​

Also known as a “short order,” a backorder indicates that demand for a product exceeded what the distributor had in its inventory, these are sales that if not delivered could be “Lost.” Its correct management can mean a significant increase in your sales.

The shortages could be due to:

• poor planning
• supply chain issues
• overly strict safety stock policies
• unforeseen increase in demand for an item

A complete system will always be able to maintain the pending balance of each order placed, knowing exactly in which document and moment each of the deliveries and invoices were generated, product by product. This allows, in the event that a part of what has been ordered has not been delivered, to later monitor and correctly manage those pending items.

The correct management of these pending is vital to be able to get the most out of these sales, so it must be allowed when you want to enable or remove enabling.

Recommendation:

Although it is preferable that they did not exist, good management of pending orders is essential to avoid aggravating this situation.

Price lists

Good management of price lists, both sales and purchases, is extremely important for automating the commercial process.

Necessary features:

• Management of price list versions to never lose historical data
• Generate sales price list from supplier price lists defining profit percentage
• Importer of price lists from excel spreadsheets
• Validity of price lists
• Price lists with taxes included
• Massive updater of sales price lists by category
• Price lists according to product packaging
• Automatic updating of price lists when approving supplier invoices with new prices

Offers and discounts

A complete maintenance of clients and suppliers should allow the exact definition of the pricing conditions agreed with each one. For this reason, it is vitally important to have detailed and clear definitions of discounts that allow flexibility in the definition that your business needs.

Among the different discount options we can find:

• Discounts by volume of purchase
• Cascade Discounts
• Discounts classified by product category

Returns for purchases or rappels

Many times additional discounts are requested or offered, either from the clients or suppliers respectively. These are conditioned or not to compliance with purchase volumes. This is called return or rappelling.

Discounts for rebates can be made as a discount on the invoice or off the invoice through a supplier invoice.

Managing retail returns is a headache if you don’t have the right software.

Customer product returns with approval flows

Customer returns can mean a significant loss on sales made, which makes it critical to have a correct flow for managing them so that you can have control of them while not generating unnecessary inconvenience to the customer.

In order to quickly manage these returns processes, the following characteristics must be met:

Customer return request generated quickly from documents. It allows easy control and monitoring of how the delivery was made, the order put together and confirming what prices were invoiced.

• Definition of reasons for returns: facilitates subsequent control to know which are the reasons why the greatest number of returns were generated.
• Approval flow: depending on amounts or reasons for returns, define a different approval flow so that it is approved by the correct person.
• Credit note generation: defining a system will allow credit notes to always be generated with the corresponding quantities and prices, avoiding their manual creation.

Commissions to sellers

Staff motivation is crucial to achieving the success of a company. Particularly in the commercial department, a widely used method is the definition of sales commissions, where different criteria can be defined to try to incentivize in a different way those sectors that are most interested in sales growth.

Having a system that accompanies you in the exact and automatic definition of sales commissions will allow you to make the most of this tool without the need to dedicate hours to its calculation, which can be done automatically. Furthermore, having a report where each of the calculations can be easily validated by the commercial agent who will win it will provide confidence and security that the work carried out will always be valued as it should be.

This is an important functionality for distributors and should allow detailed reports on the composition of commissions.

• Sales Forecast Reach Award (Goals) by Category
• Management of external sellers
• Sales commission settlement
• Commission calculated for collection of sales and not only for billing.
• Sending report by email
• Reassignment of commissions
• Mobility for the sales force
• Automate your sales team with mobile tools. It can be using your own mobile phone or a tablet.

Mobility for the sales force

Automate your sales team with mobile tools. It can be using your own mobile phone or a tablet.

To do this, you can use third-party software or, in the case of professional ERP systems, your own sales mobility system.

• ERP system with special web access for mobile phones.
• Mobile application for order taking and collection
• Request for return of merchandise due to breakage or expiration

Logistics

In a distribution company, logistics management has a predominant importance. This area is often the one with the most human resources, so to improve our management it is what we will focus on to achieve effective resource management.

The idea is to briefly describe what the most important activities are and how we can automate them using software.

Inventory

Inventory is the lifeblood of a distribution company and its correct control is essential to ensure that it is always where and when it is needed. Achieving the systematization of a correct inventory in times where it is affected from different sectors will determine its reliability and will allow you to use it for decision making.

The objective: minimize manual processes and ensure that all operations have total traceability.

What is inventory management?

They are the processes that conserve and move products or materials within the warehouse until their consumption. It is about controlling and physically protecting the items.

Warehouse management

Warehouses of merchandise, materials or raw materials are a very important value of the company’s total assets and that is why special care must be paid to their management. Operating a warehouse efficiently provides real value, no matter how large or varied.

Multiple warehouses

It is common for companies to manage several warehouses to manage their inventory. These can be real or logical inventories, used for the internal movement of inventory within the same warehouse.

Some examples of warehouse types in an ERP:

• Different names for locations
• Merchandise for resale
• Merchandise for assembling packs
• Materials and packaging
• Materials and raw materials
• QA
• Returns

Warehouse transfers

As there are several warehouses, there must be various documents that serve to transfer products from one warehouse to another. Performing these actions quickly and accurately becomes vital due to the large number that can be performed daily.

Assembly and disassembly of packs or kits

You may need this functionality to carry out marketing actions by combining products and marketing them as one.

Pack assembly

On many occasions you may need to create sets of items to sell them as a single product. To do this, the software must facilitate the configuration of a bill of materials where you will identify which products and materials you need to join to create a new entity that you will define as a product and provide it with a SKU code.

Whether you carry out these builds in:

• your installation with your own personnel
• your installation with outside personnel
• in a third party installation with outsourced personnel

You can use a warehouse created for this purpose that will serve as a control.

Disassembly of packs

There you will disassemble a pack into several products, entering it into your warehouse.

Taking inventory

Inventory counting (or physical counting) is one of the procedures carried out in order to observe the existence of merchandise on a certain date.

This method allows management to obtain certain benefits, among which we find:

• Identify obsolete, damaged or expired merchandise
• Identify shortages, whether due to theft or errors when entering purchases into the warehouse.
• Manage inventory better: knowing the actual stock in the entity allows for better planning of resources and purchases.

There are many benefits that result from carrying out inventory counts, and for this the software must help you do it in the most efficient way.

For this, we recommend you follow the following steps:

• Pre inventory: the previous work to guarantee order in the warehouse.
• Documentary cut: it is important at the time of the count to make a cut in the operations so that the comparison between the physical and the logical is simple.
• Third count: to validate the differences found
• Difference adjustments: these must be analyzed and adjusted by a third party, to maintain transparency.
• Product Attribute Management (expiration dates, batches, serial number)
• Products with attributes such as an expiration date or a batch serial number require the software to have this functionality for management.

Product Attribute Management (expiration dates, batches, serial number)

Products with attributes such as an expiration date or a batch serial number require the software to have this functionality for management.

Serial numbers are used for complete product traceability and are used, for example, for products requiring warranty service. These numbers make it easy to track an item historically from receipt to delivery and post-delivery.

The batch corresponds to a certain number of products that you received and stored together in a single package or when manufactured together. This identification allows traceability for any production defect.

Automation of data capture

The main source of errors in a warehouse is manual data entry, and therefore it is the first thing you should replace.

Inventory tracking in all retail and distribution solutions is performed using barcodes and PDA collectors (portable data collectors) with built-in barcode scanner. These PDA collectors replace manual data entry in areas such as:

• Reception
• Collection for assembling orders (picking)
• Shipment
• Deposit transfers
• Stock count
• Barcode
• Barcode management is essential to automate warehouse tasks. The definition of EAN (international article number) can be done in different ways and this is an important point to define the scope of the system to be implemented:

Barcode

Barcode management is essential to automate warehouse tasks. The definition of EAN (international article number) can be done in different ways and this is an important point to define the scope of the system to be implemented:

• Several barcodes per product: a product normally has a unique EAN by which it is identified. In any case, and due to the changes that an importer or the same supplier may possibly make with different promotions, there are times that the same product comes with different EAN codes. If the system does not have the possibility of defining more than one EAN for each product, a new product must be created, which will cause the correct traceability of purchases and sales of the same product to be lost.
• Creating EANs and printing labels: A good system will allow you to create new products or packs as well as defining EANs to apply and printing labels for them. This will allow you to unify in a single system all the operations related to the creation of EAN and Packs.
• Creation of internal barcodes and label printing : Sometimes companies require internal coding and labeling of products. In these cases the system must generate the internal codes and print its self-adhesive labels.

The incorporation of PDA (Personal Digital Assistant) collectors has the following advantages for the company:

• Avoid the costs of a person by entering data into the system from spreadsheets or papers.
• Avoid potential product code errors caused by manual entries
  Data is entered on site by operations staff and information is always up to date

For those who choose to manage their warehouse with inventory locations, existing locations in the warehouse will need to be labeled. In this way, the task is made easier for the staff and allows the inventory to always be kept organized and in its location.

Cycle stock counting

The key is not to wait until the end of the year to keep track. A continuous monitoring policy through cyclical inventories will help you reduce margins of error in operational processes and the accuracy of the information.

Cycle counting can replace traditional physical inventory counting methods when using an inventory and warehouse system.

Benefits of cycle counting:

• Simple and Real-Time: It’s easy to cycle count and track your valuable inventory as often as needed, as data is entered via mobile devices in the warehouse or yard and updated into the system in real-time.
• There is no need to suspend activities to perform the count: with frequent cycle counting, you can be sure that your stock levels will always be accurate.

Mobility for taking inventories and picking

Mobile tools or PDA collectors can support all warehouse processes and that is why the systems normally have the capacity to perform the following operations using data collectors:

• product receipt
• taking inventory
• product separation tasks, picking
• transfer between warehouses
• delivery of products, dispatch

Warehouse locations

An important decision that we must make when selecting how we will manage our product warehouse is whether to use an ordering with locations.

There are several warehouse location systems, used depending on the resources we have, warehouse size and number of products. We can simplify these into:

preferred location: small warehouse

• fixed location : middle warehouse
• random location: large warehouse

Why is utilizing locations an important decision?

This decision implies modifying the way the warehouse is managed in the future, so we have to verify that we meet the conditions to be able to do so; We must also be aware of the changes that using a location system in our warehouse implies in daily management.

We must verify that :

• We have an organized warehouse
• We have enough space to give fixed locations to all our products.

And assume these commitments:

• Identify locations using labels . (fixed location)
• Maintain order in new product entries.

Summary:

We must analyze the capacity, the occupation of the storage space, the characteristics of the products and merchandise that we are going to store (volume, weight, fragility, durability, conditions on the handling and storage of the product, etc.).

Two more elements that you will have to consider to choose the most appropriate method are the movements of goods and the movements of operators to handle loads in the warehouse.

Location systems

Product Storage by Preferred Location Method

This system is an introduction to the warehouse location method, and assigns each product a select area to assist operators in entry or collection.

• This is not an exact system, but it is useful for businesses looking to get started with their warehouse locations.
• We recommend this method for warehouses with a small variety of products.

Storage of products by the fixed location method

• This is not an exact system, but it is useful for businesses looking to get started with their warehouse locations.
• We recommend this method for warehouses with a small variety of products.

Storage of products by the fixed location method

Also known as a chaotic or free storage system, it consists of storing merchandise in any free area within the warehouse.

• It represents a better use of space than the previous one, but requires the use of a location code for the area or shelf that allows quick location of the goods for subsequent handling.
• It is suitable for warehouses that have automated warehouse and ordering systems, where the main restriction lies in the space available for storage.

Order Fulfillment

Delivery traceability

Following deliveries from e-commerce stores, customers are accustomed to obtaining detailed information on the evolution of product deliveries almost naturally.

With B2B (business to business) deliveries, it is also possible to report the progress of the order and provide delivery traceability.

The states can be:

• Approved sales order
• Picked sales order
• Invoiced sales order
• Embarked on transport
• Delivered to the client

Sending the traceability of the invoice statuses can be entrusted to the client contact by WhatsApp automatically.

Fleet management

The impact of delivery costs is key, so the system must address this operation and affect the corresponding costs as accurately as possible.

Whether the distributor has its own or outsourced transportation fleet, it is essential that:

• All company vehicles, both owned and outsourced, are identified.
• There is correct corrective and preventive maintenance management.
• There is management of drivers that controls their authorizations and settlements of money advances.
• There is fuel consumption management.

Do you have your logistics completely outsourced?

It is very common for growing companies to outsource part or all of their logistics. That shouldn’t be a problem for your software.

Outsourced deliveries

In this option, the transport mobile phones must be identified as third-party, in order to be able to list, verify and settle payments according to the agreements you have with the transport and logistics companies.

Outsourced warehouse – 3PL
When the distributor outsources all or part of its storage, what should be sought is the way to manage and control the operation.

You will be able to integrate your outsourced warehouse by connecting your supplier to your management system: this will facilitate the transfer of orders and perfect control of execution.

There are several ways to route the orders you receive to an external 3PL logistics company:

• By downloading sales order file
• Through API communication with logistics software that also synchronizes your inventory.

eCommerce

When we say e-commerce , retail comes to mind , but this is now changing. The web store became the norm for most distributors, sometimes not for the sale itself, but to display the product and provide in-depth and detailed information on the available items, completely replacing the catalogs and brochures of before.

The interface with the management system provides security of data uniqueness and makes work easier. The integration should be two-way between the eCommerce software and the ERP system, allowing you to synchronize item information, inventory availability, and orders between the systems.

Interface with e-commerce platforms

The main electronic stores are:

• Magento, for large stores
• Vtex, for large stores
• Prestashop, for medium-sized stores
• Woocommerce, for small stores

There are also some advanced ERP systems that offer embedded electronic stores, which is always better as it guarantees perfect data integration.

Advantages of an electronic store embedded in your system:

When we say “embedded” ecommerce in the management software, it means that there are no interfaces between different systems since the store is in the same system. This is the best way to manage your online business as it facilitates and optimizes all processes.

Own store, marketplace or both?

When it comes to selling products on the Internet, the first idea that comes to mind is to open an online store. But there are also many brands and sellers that use marketplaces , those large websites that bring together thousands of products. What is the difference between selling in an ecommerce and a marketplace? Let’s look at some points:

Own web store

The seller is in charge of the entire process: setting up the website, tracking inventory and logistics, shipping orders, and offering customer service.

Marketplace

Marketplaces are a more accessible entry point to electronic commerce. Sellers or brands publish their products and can forget about the rest, since many of them offer (in exchange for a price) warehouse, logistics, shipping and customer service services.

What does today’s consumer prefer: ecommerce or marketplace?

The current trend is that more consumers make their queries and product comparisons directly in a marketplace than in brand stores, we are dealing with consumers eager for information!

The number of online buyers who do their searches through Google is also very high and they are more likely to visit an e-commerce directly through an ad, a snippet or a featured link.

Without a doubt, in Latin America, the favorite consultation and purchasing system of the majority of online buyers is Mercado Libre . This is the main reason why so many brands have dedicated more efforts to online marketplaces than to their websit

Advantages and disadvantages of selling in an ecommerce

Advantages of an ecommerce

• Greater control over your store.
• More customization, both in the style of the website and in the UX (the type of shopping experience you offer to the user: you can decide what the payment process is like, product notifications, etc.).
• Better visual representation of your brand.
• Control over discounts and sales periods.
• Own customer list and availability of their data for marketing actions.
• Behavior analysis (visits, clicks, shopping cart abandonments).
• More loyalty in buyers.

Disadvantages of an ecommerce

• More investment of money and time.
• More software costs.
• Need for a team trained in maintenance and launch of ecommerce platforms and integrations with other systems such as payment and logistics gateways.
• Control and synchronization of stock, distribution network and shipments.
• Greater effort to attract traffic to the website.

Advantages and disadvantages of selling on online marketplaces

Advantages of a marketplace

• Easy start-up.
• Platforms with greater trust among buyers.
• Possibility of standing out in categories among your direct competitors.
• Increased inbound traffic.
• Savings in administrative processes (the marketplace does the transactions and income for you).
• Dropshipping option (the marketplace can manage stock, shipments and returns on your behalf).

Disadvantages of a marketplace

• More competition (even with the marketplace’s own products, which will always be given priority).
• Less customization.
• Commissions for transactions (in listings, product categories and for each sale, variables depending on the marketplace).
• Limited promotions for each seller or periods set by the marketplace.
• Need to set lower prices due to competition.
• Customer service in the hands of the marketplace.

So, is an ecommerce or a marketplace better?

Most marketplaces like Mercado Libre bring together brands and medium and small businesses, so they are excellent platforms to earn income if you have just started your sales and want to save resources. However, online marketplaces are not good tools to make a brand known. This is due to the purchasing habits of users, who use marketplaces to compare products quickly and cheaply.

Do you want to have ecommerce and marketplace at the same time ? It is one of the most common decisions: a multichannel or omnichannel strategy that combines as many own sales channels as third-party platforms.

How to get it? Centralizing product information. So that you can take advantage of the best of both worlds efficiently, you will have to automate the management of your products as much as possible and you can do this by centralizing the information through PIM (Product centralized management).

How can I unify and centralize my product information?

• Instant product catalogs from the system
• Share product data on various channels, marketplace, ecommerce, social networks
• Teamwork workflows, roles for editing, data, correction and approval.

How to determine if your distributor needs an ERP?

Tú deberás analizar qué tipo de ERP necesitas estudiando tus necesidades. Será importante analizar los procesos que usas actualmente en tu distribuidora para identificar las áreas en las que el software puede ayudarte.

Usa los siguientes consejos para identificar tus debilidades y requerimientos actuales:

1. Define los problemas que quieres que el software te ayude a resolver.
2. Enumera tus necesidades actuales y futuras, analizando qué prioridad tiene cada una.
3. Luego define cuales son esenciales y cuáles son deseables.

Este procedimiento te permitirá identificar los principales problemas y alinearlos con los requerimientos del sistema que vayas definiendo.

Some questions that indicate that you need an ERP:

• Do you feel that your distributor handles inaccurate or unreliable data?
• Are your systems unable to generate the reports you need to make decisions and do you have to generate them in auxiliary spreadsheets?
• Do you have difficulties expanding into digital channels?
• Do you have frequent stock outs?
• Do you have spreadsheets shared with your team that become insecure and uncontrollable?
• Do you rely too much on email to communicate with your team and your clients?
• Do you enter the same data more than once into your software systems?
• Do you feel like you manually perform many processes that could be automated?

If after reading this far you felt identified with many of these problems, it is because you need an ERP to manage your distribution company.

What does today’s consumer prefer: ecommerce or marketplace?

To address these common issues, what you need is a solution that quickly allows you to incorporate industry best practices and solve current problems.

We recommend that you do it in 3 stages:

Set the foundation

• Financial
• Inventory
• Sales and purchase orders
• Web portal

Solidify

• Supplying
• Logistics
• Mobility
• Human Resources

Professionalize

• Budgeting
• Sales forecasts
• Centralized eCommerce
• Customer, supplier, employee portal
• Quality
• Asset Management

Why are roles important?

Just as the organization needs direction and strategy to achieve its objectives, your work team will need to know what role they must play within to promote the proper development of their work and, consequently, the mutual “growth” of the company – employee.

Incorporates best practices in the wholesale distribution industry

You will have to analyze what type of ERP you need by studying your needs. It will be important to analyze the processes you currently use in your dealership to identify the areas where the software can help you.

Use the following tips to identify your current weaknesses and requirements:

1. Define the problems you want the software to help you solve.
2. List your current and future needs, analyzing what priority each one has.
3. Then define which are essential and which are desirable.

This procedure will allow you to identify the main problems and align them with the system requirements you define.

Translated with DeepL.com (free version)

Some questions that indicate that you need an ERP:

• Do you feel that your distributor handles inaccurate or unreliable data?
• Are your systems unable to generate the reports you need to make decisions and do you have to generate them in auxiliary spreadsheets?
• Do you have difficulties expanding into digital channels?
• Do you have frequent stock outs?
• Do you have spreadsheets shared with your team that become insecure and uncontrollable?
• Do you rely too much on email to communicate with your team and your clients?
• Do you enter the same data more than once into your software systems?
• Do you feel like you manually perform many processes that could be automated?

If after reading this far you felt identified with many of these problems, it is because you need an ERP to manage your distribution company.

A role-based ERP

Why are roles important in your distribution company?

Preconfigured roles help with distribution management and ensure rapid adoption of best practices in each area.

There are usually 20 roles that you can use as you need, and that will help you organize the responsibilities in your company.

Management

• Manager/CEO
• Controller 
• External auditor

Administration

• Administration manager
• Accounting
• Accounting assistant
• Accounts payable
• Accounts receivable
• Treasury
• Human Resources
• Technology

Supplying

• Planner
• Buyer

Sales

• Sales Manager
• Sales assistants
• Sales administration
• eCommerce

Logístics

• Logistics manager
• Store
• Receptions
• Picking
• Shipment

Role-based dashboards and indicators

Each person on your team has an assigned role, and therefore will have tasks and responsibilities to perform. Role-based dashboards show each role the panels, indicators and reports it needs for its function and responsibility. When you enter your screen, you will have all the updated information you need to follow up and make decisions on the spot.

With these built-in analytics, companies can obtain relevant operational and financial information about company performance across multiple departments and teams. The information will be supported by accurate and online information.

Conclusion

We present this guide with the aim of explaining why ERP systems are a fundamental ingredient in building success in the management of your distributor and why today it is highly necessary to have this type of systems.

In a competitive environment like the one that surrounds us, you must always stay updated and efficient. You will achieve this competitiveness by automating processes and applying good operational and administrative management practices.

Your system must facilitate correct management in areas that involve greater costs or complexity such as the picking and dispatch process.

Finally, and although it is not part of your first step, your next system must be open and must facilitate integration with mobile sales and warehouse devices.

How to do it? Having professional ERP software that allows you to be competitive and guarantees sustained growth for your distributor.