How to Build An Effective ERP for Wholesale Industry

Ah, the world of wholesale inventory – a realm where the words ‘out of stock’ can send shivers down the spine of even the most seasoned wholesaler. Wholesale inventory management is often akin to piecing together a complex puzzle, where each piece represents a crucial part of your business. On top of that, wholesalers sell to multiple marketplaces nowadays, which adds to the complexity of managing inventory.

Moreover, today’s customers whether B2B or B2C expect convenience, instant response to queries, and consistent experience across all channels. To meet these expectations, wholesalers need access to real-time inventory updates, balancing supply & demand, and avoiding overstocking & stockouts.

Say goodbye to the days of drowning in a sea of spreadsheets or playing hide and seek with your stock levels.

The right ERP solution can address your inventory woes. Companies that integrate their enterprise resource planning (ERP) systems with inventory management functionality have a competitive advantage.

But you need more than just adopting an ERP to solve your problem. You need to set it up so that it can share information within different parts of its business in real-time to help you generate meaningful insights.

In this blog, we will understand what an ERP for Wholesale Industry is capable of, what benefits it brings to your business, and how you can set it up for success.

Before we dive deep into ERP and how it solves your inventory problems, it’s crucial to understand the problems wholesalers face with inventory.

The Complexities of Wholesale Inventory Management

Wholesalers using outdated inventory management software or manual methods are prone to errors and may find it difficult to meet the evolving demands of the market. Often, they find it challenging to :

1. Accurately forecast supply and demand: Wholesalers who depend on fragmented systems or manual record-keeping often make predictions based on stale, imprecise data, or mere intuition. Such unreliable forecasts can result in excessive spending or insufficient inventory levels
2. Order Fulfillment: Businesses need to consolidate order details, inventory data, and customer information in one location so that managing the processing, fulfillment, and dispatch of orders can be manageable. Mistakes such as dispatching incorrect items, miscalculating inventory, and inaccuracies in customer address details can occur, leading to shipments going astray or being returned. Additionally, overlooking regulatory labeling standards can cause avoidable hold-ups and penalties.
3. Managing supply chain uncertainties: Managing risk and formulating backup strategies is vital to inventory management. Strategies include spreading out supplier risk, keeping a close watch on forecasts, and basing predictions on market movements. Without accurate data to assess their supply chain status and execute their backup strategies knowledgeably — sometimes needing to make quick decisions as situations shift — distributors may face new rounds of preventable upheaval.
4. Company-wide availability of accurate information: A wide array of staff from sales reps and order handlers to warehouse supervisors and financial experts, interact with inventory management data. Since these diverse roles and departments rely on this shared data for making decisions, swift and clear communication between them is essential to maintain the company’s seamless operations.
   Now that we have identified the problems, lets dive deep into ERP and how it can solve these problems.

What is an ERP?

Enterprise Resource Planning (ERP) is a system that allows businesses to manage all aspects of their business on a single platform, including inventory, finance, planning, logistics, and operations.

An ERP inventory management system offers real-time inventory insights to the entire organization. This is crucial for companies looking to grow, manage intricate workflows or supply chains, seek sophisticated automation, operate with a “just in time” approach, deal with a wide range of products, or aim to optimize their inventory investments.

But before we dive more into how an ERP can help with your inventory issues, let’s find out if you need an inventory management system.

Do You Need a Wholesale Inventory Management System? Key Questions to Ask

1. Is My System Proactive in Planning? Does your inventory management system effectively forecast needs by providing crucial data such as restocking lead times, current stock status, replenishment schedules, inventory turnover rates, and sales trends, including customer preferences and purchase timings?
2. Does My System Offer Crucial Business Insights? In today’s complex supply chain dynamics, it’s essential to have a system that not only aids in growth planning but also alerts you to upcoming shifts in market demand, helping avoid situations where stock shortages push customers toward competitors.
3. Are My Teams Empowered with Necessary Inventory Data? Consider if your sales and customer service teams have immediate access to comprehensive inventory information, including current stock levels, location details, incoming stock, and the speed at which items can be delivered to customers, to ensure an exceptional customer experience.
4. How Well Does My System Integrate With Other Business Processes? Assess whether your inventory management system seamlessly integrates with other key business operations, such as accounting, order processing, and logistics, to ensure a smooth flow of information and efficient business functioning.
5. Can My System Adapt to Changing Business Needs? Evaluate if your inventory management system is flexible and scalable enough to adapt to your business’s evolving needs, including expanding product lines, entering new markets, or adjusting to business size and scope changes.

What benefits does an ERP Inventory system bring to your business?

ERP systems integrate with multiple data sources, enabling companies to gain a deeper understanding of different SKU performance trends, among other critical insights. This wealth of data aids businesses in making well-informed purchasing choices and developing more precise demand forecasts, helping to avoid stockouts and overstocking.

Furthermore, ERP’s enhanced inventory management contributes to greater efficiency across the supply chain. Centralizing operations reduces the repetitive handling of goods and streamlines processes like daily restocking.

Additional advantages of integrating ERP into inventory management are:

• Enhanced Reporting Capabilities: ERPs provide accurate inventory data, which is crucial for data-driven decisions. This includes insights into top-performing SKUs, COGS, and sales across various locations and channels, enabling the creation of custom, time-efficient reports.
• Precise Inventory Tracking: ERP systems offer detailed tracking of excess stock, shortages, and replenishment plans, along with metrics like turnover rates and COGS. They also monitor product movements in warehouses during shipping and receiving.
• Comprehensive Inventory Analysis: ERPs analyze every stage of inventory flow, including COGS, turnover rates, and shrinkage, aiding in optimizing inventory efficiency.
• Automated Quality Assurance: ERP systems include features for setting inventory quality checks, ensuring compliance with environmental or safety standards, and alerting staff to potential non-compliance issues.
• Efficient Inventory Planning: ERPs list each product’s inventory status, allowing staff, partners, and customers to easily access information on availability and quantities, aiding in planning and enhancing customer satisfaction.
• Improved Cycle Counting: ERPs facilitate a systematic cycle count process, integrating these counts into warehouse operations to ensure better inventory accuracy and checks and balances.

How to find the right ERP for Wholesale Industry?

To guide you in this process, here are steps to follow, along with additional considerations:

Step 1: Define Your Goals and Outcomes. Start by understanding the objectives of your stakeholders and crafting a business case. Analyze trends, external opportunities, and internal resources to align the ERP purchase with your long-term business strategies. Consider the insights and advantages the new system will provide in shaping your inventory strategy.

Step 2: Determine Project Scope. Identify the necessary data sources and partners, like suppliers, that need to integrate with the ERP. Compile a detailed list of required features and capabilities essential for achieving your desired outcomes.

When wholesalers are looking for ERP options, they should opt for a system that at least provides the following functionalities.

• Features for Planning Procurement.
• Tracking of Lots and Serial Numbers.
• Support for Barcode Scanning and Electronic Data Interchange (EDI).
• Dashboards Tailored to Different User Roles.
• Integrated Shipping Solutions with Seamless Functionality.
• Adaptable Pricing and Discounting Capabilities.
• Identification of Dead-Stock, Inventory Categorization, and Analysis of Turnover Rates.
• Inventory control and availability
• Inventory costs
• Demand forecasting
• Inventory tracking & replenishment
• Requirement planning
• Multiple warehousing

Step 3: Ensure Open API Integration.

Select an ERP system that is hosted on the cloud and has open APIs to facilitate seamless integration with other systems in your technology stack. This step is critical for ensuring flexibility and adaptability to future technological changes and evolving business needs.

At WizCommerce, we integrate ERPs with APIs so that whenever an order is created, your inventory and order details are updated in real time.

Step 4: Conduct ROI Analysis. Look beyond mere cost-cutting. Focus on how the ERP will enhance profitability, efficiency, and customer satisfaction. Check if the system will enable profitable growth through better inventory management.

Step 5: Create a Shortlist of Vendors. Assess which ERP systems align with your requirements. Review case studies from similar businesses and ask critical questions about flexibility, integration, scalability, industry endorsements, training support, trial availability, costs (both initial and ongoing), and implementation timeline.

Below, we present an overview of leading ERP solutions for small and medium-sized wholesalers, that you can explore. Make sure you do thorough research on which ERP can best tackle your business use cases and make informed decisions.

Step 6: Future-Proof Your Decision. Examine the long-term plans of your potential ERP vendors. Ensure their product development roadmap is in sync with your future business needs. This step is crucial for a sustainable, long-term partnership.

Additional Considerations:

• User Experience: Ensure the system is user-friendly and can be adopted easily by your team.
• Customization and Support: Look for a solution tailored to your specific business processes and offers robust customer support.
• Data Security: Prioritize systems with strong security measures to protect sensitive inventory and business data.
• Integration with Existing Systems: The ERP should seamlessly integrate with your current technology stack to prevent disruption and maximize efficiency.

Get your ERP system up and running.

• Establish
  For a business to thrive, it’s essential to set up a strong, unified system that integrates financials, inventory, order management, and CRM, ideally on one platform or with easily integrable software.

Real-time, flexible, and transparent integration between inventory and back-office systems is key. This ensures up-to-the-minute visibility for customers and partners and keeps financial reports accurate. ERP systems with inventory management features simplify this integration, offering comprehensive data visibility.

• Elevate
  Upon establishing a solid system of record, take it a notch higher by incorporating e-commerce, procurement, rebate management, and warehouse operations, along with advanced HR and payroll functionalities. Integrating e-commerce and other omnichannel features significantly enhances the company’s ability to offer a superior customer experience.

After streamlining core processes, aim to excel operationally further. Explore advanced inventory management tools, embracing mobile technologies, quality control, integrated financial and operational planning, efficient supply chain execution, as well as comprehensive project and asset management strategies.

• Accelerate
  Once you have the core foundational capabilities in place, strive to integrate more advanced capabilities like IOT, and AI so that you can dominate your industry and significantly increase efficiency for various business processes.

Conclusion

Businesses using disjointed systems often lose out on crucial inventory insights, hindering their operational efficiency. However, a solid ERP system equipped with advanced inventory management features can elevate inventory handling from a basic operation to a key competitive advantage.

It’s important to choose an ERP with integrated business intelligence that merges data and visual analytics, aiding managers in making more informed decisions. Opt for a system with a flexible design that can evolve alongside your business, allowing for the addition of resources and features as required.