Wholesale Distribution Plus Cloud ERP Equals a Powerhouse Combination

WHITE PAPER

A unified cloud ERP complete with ecommerce can help wholesale distributors run a profitable, streamlined, customer-focused enterprise and unleash the power of their business.

Whether they specialize in fine jewelry, home furnishings, sporting goods, industrial lighting or another product category, wholesale distributors serve as a valuable link between product manufacturers and end users. Some of these companies are involved with retail sales and manufacturing processes, both of which have been impacted by the rapid uptick in ecommerce and omnichannel sales.

With ecommerce centered on online sales and omnichannel commerce providing an integrated customer experience across all sales channels (in-store, online, mobile, etc.), wholesale distributors are operating in an environment that looks nothing like it did just five to ten years ago. In a world where both B2C and B2B customers want accurate, complete orders delivered within a day or two, for example, there’s literally no room for error on the distributor’s part. As the middlemen who are expected to make this magic happen with limited

resources, wholesale distributors need technology platforms that help them tackle the rigors of today’s ecommerce and omnichannel selling environment.

This white paper will explore the key challenges that hold distributors back from realizing their full potential in the online and offline selling environment and show how a unified cloud enterprise resource planning (ERP) solution plus industry-specific integration/implementation methodology is helping companies overcome these issues in the competitive wholesale distribution environment.

Key Distribution Challenges Wholesale distribution is a growing industry that reached a record-high $6.01 trillion in annual sales for 2018 (up 7.5% from 2017). It currently represents 29% of U.S. gross domestic product (GDP), according to the National Association of Wholesaler-Distributors (NAW). Employment in the wholesale distribution industry is also increasing, having reached a record high of 5.9 million people (up 51,000 over 2017) and currently employing 4.6% of the U.S.’ total private workforce.

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Wholesale Distribution Plus Cloud ERP Equals a Powerhouse Combination

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Specializing in a diverse range of products, wholesale distributors all share some operational commonalities. Changing customer demands, increased competition from the suppliers that they work with, the impact of the “Amazon Effect”, and global issues like the ongoing trade wars and Brexit are just a few of those common challenges. Most operate on fairly thin margins and rely on volume sales and repeat customers to help maintain profitability.

The Technology Gap To compete effectively in the digital selling environment, distributors need robust, user-friendly ecommerce storefronts and omnichannel platforms that can meet the needs of B2C and B2B customers that want their orders fulfilled accurately within one or two days. Meeting these demands is difficult using antiquated, disparate systems that weren’t designed to tackle the rigors of today’s ecommerce and omnichannel selling environment.

Here are the key challenges that these technology systems are creating for distributors:

• Company systems are disconnected. Working with a web of disconnected, disparate systems that don’t communicate with one another, distributors are forced to piece together information across various departments, software platforms and information repositories. This eats up time, money and human resources while also impairing operational ability. A customer relationship management (CRM) system that’s not connected to inventory management or financials, for example, probably isn’t talking to the company’s ecommerce platform either. This lack of communication leads to poor data visibility, limited connectivity and organizational silos.

• Information is never up to date. When staff members have to manually enter every single order that comes in, match invoices against those orders, pull those orders to manage customer service requests and take myriad other steps as

“The disconnected technology systems drive the need for all of these manual steps, as a result, information is never up to date or accessible.”Drew Macbeth, NetSuite Practice Director, Net at Work

the orders are fulfilled, keeping the data up to date and accessible is nearly impossible.

• Most integrations are manual. In a world where application programming interfaces (APIs) have streamlined the process of integrating both internal and external systems, manual labor-intensive integrations have become a thing of the past. Still, most wholesale distributors are grappling with these manual integrations as they try to connect with their vendors and customers. “Most of this is still handled manually,” Macbeth explained, “versus using a middleware program that integrates seamlessly and kept up to date automatically.”

• Poor customer visibility. Today’s customers have high expectations. Without a comprehensive view of those buyers and their activities—made possible by data and information collected at various points along the customer’s journey—distributors can’t effectively interact with and serve them. Mandatory for both B2C and B2B distributors, the 360-degree customer view is impossible when systems are disconnected, thus creating significant information gaps and subsequently, poor customer visibility. “When CRM isn’t connected to ERP, there’s no way to get real-time visibility into order status and no good answer to the question, ‘where’s my order?’” Macbeth said. The same visibility gaps impact inventory management, where knowing whether an item is in stock and ready to ship requires manual intervention. “These issues stand in the

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way of a good customer experience,” he added, “and create major challenges for wholesale distributors who can’t effectively manage buyer expectations.”

• Staff members that aren’t empowered to make decisions. Under pressure to compete more effectively with the Amazons and Walmarts of the world, wholesale distributors have to be agile, flexible and responsive. They rely on their employees to help them reach these goals, but when those staff members don’t have accurate, up-to-date data at their fingertips—and when the departments they work in are siloed and disjointed—making quick decisions is difficult at best. “All companies are trying to figure out how to grow revenue and manage shrinking delivery windows,” said Macbeth, “both of which can only be attained when employees are empowered with good, accurate data.”

A Blended Solution That Works Working with distributors of all sizes, implementations typically take about four to six months, with the resultant solution connecting the distributors’ sales channels (i.e., Amazon, eBay, Wayfair, etc.) plus their ecommerce platform (SuiteCommerce, Shopify, Magento, WordPress).

These integrations are essentially connecting any and all of the distributor’s existing networks into the unified ERP. This helps distributors unleash the power of their businesses and complete the omnichannel/multi-channel loop that all retailers, manufacturers and distributors are striving for.

For example, when a customer orders an outdoor furniture set from Wayfair, it’s up to Wayfair to know whether those products are in stock at the distributor’s or manufacturer’s warehouse. It also needs to know when the products can ship and has to be able to track that order across the supply chain—all in the name of keeping that Wayfair customer informed throughout the process.

“For many distributors, this process is handled by someone sitting at a desk, using email, phone calls and a spreadsheet. This is not only inefficient, but it also doesn’t operate 24/7.”Ed Catarsi, NetSuite Consulting Manager, Net at Work

By implementing a unified cloud ERP that incorporates financials, CRM, inventory management and other functionalities, distributors can vastly improve their customer service component without having to add headcount. Going a step further, the integration of that ERP with ecommerce creates a fully-integrated omnichannel ecosystem in a world that demands it.

Engineered to Solve Unique Challenges Using the Propel SuiteSuccess methodology, Net at Work has developed numerous “Suitelets” for customers that need customized portals and other specialized functionalities. The company also has a business unit (Pixafy) which can develop and build out all of a distributor’s ecommerce functionality based on its specific business requirements.

Leveraging the experience of thousands of ERP implementations in the wholesale distribution industry, NetSuite has developed the SuiteSuccess for Distributors—a methodology the Net at Work NetSuite team follows. SuiteSuccess is engineered to solve unique industry challenges for distributors that historically have limited a company’s ability to grow, scale and adapt to change.

When distributors work with Net at Work to implement NetSuite, the benefits begin to surface pretty quickly. Nearly all of them can immediately

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“Distributors aren’t always equipped to efficiently handle all of that returned merchandise and the authorizations. Those capabilities are built right into NetSuite and require no manual intervention. That’s a huge plus for an industry that’s dealing with a fairly high volume of returns, thanks to ecommerce and omnichannel.”Drew Macbeth, NetSuite Practice Director, Net at Work

redeploy employees to more important tasks than data entry, for example, with some increasing their sales by up to 30%. Companies also benefit from having a more streamlined, automated approach to core business processes.

“Once a distributor ties financials, CRM and mobile sales together in a single system, they can start generating and managing more sales almost immediately,” said Catarsi. By adding inventory management and ecommerce to the equation, the same companies can begin to see even more impressive results of their technology implementations.

Take the small omnichannel distributor that had about $7.5 million in revenues and was able to grow its annual revenues by $1 million within three years of implementing NetSuite. This is just one example of how Net at Work helps companies achieve bigger sales goals without the need for more internal resources, Macbeth explained, and it doesn’t even factor in the amount of money the distributor now saves on expenses.

“Getting finance, sales and customer service all operating within one system is a big plus for these companies, most of which are very disconnected,” he said. As an unexpected bonus, the same companies also benefit from better returns management. This is a critical win in a business environment where return delivery costs were estimated to be $381 billion in 2018 and on track to reach $550 billion in 2020.1

By integrating ERP and ecommerce for a fully-integrated omnichannel experience, and by leaning on Net at Work’s decades of working in their industry, wholesale distributors can effectively knock out the challenges outlined in this white paper. They can also get some added “wins” that they weren’t even expecting, all of which are focused on streamlining processes, growing sales and effectively serving customers in the ecommerce/omnichannel marketplace.

To know more about Net at Work: www.netatwork.com 800-719-3307 info@netatwork.com

1 Costs of return deliveries in the United States from 2016 to 2020

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