Why Cloud Distribution ERP Has Become So Important

In a Global Economy, Distribution Cloud ERP Can Become an Imperative for Many Manufacturing Enterprise Systems

Do you believe that order fulfillment ends outside the warehouse? Distributors, whether a direct branch of a manufacturing organization or a third-party logistics provider (3PL), are a critical component of the supply chain. When a distributor makes a mistake, the customer typically calls the manufacturer. That's who the customer bought from.

A cloud distribution ERP deployed by a manufacturer or by a manufacturer's distributor and interfaced into the manufacturer's cloud manufacturing ERP can provide untold benefits for the customer, the distributor and the manufacturer -

  • Supports multiple ship-to and bill-to addresses for any given customer,
  • Customer agreements can be used to manage special pricing arrangements and discounting schemes,
  • Supports the allocation of finished goods inventory to Sales Order lines when needed,
  • Provides straight-forward yet sophisticated product pricing and discount options for numerous pricing schemes as needed,
  • Offers the ability to create purchase orders from sales orders and lets you drop ship these purchase orders directly to the customer or to bring the goods directly into the company’s main warehouse or distribution center,
  • Provides item usage history for every material movement which can be utilized to set policy, and
  • Easily manages credit checks by providing various selections as well as user options where credit checks are performed.

Exploring the Relevance of These Benefits

No longer is manufacturing a series of individual companies that produce and distribute their own products. For most, manufacturing has evolved to a network of suppliers, manufacturers and distributors that get wood from the forests to a dining room table in your house. At every stage, efficiency, price and quality are being analyzed. To make things even more complicated, the wood is grown in Brazil, manufactured in Taiwan and sold to you at a retail store in Maine.

As a result, complex manufacturing schemes face some rather difficult problems. When products are developed and components of the products are shipped by multiple companies in various corners of the globe, how do you track both manufacturing and supply chain costs with a traditional ERP? Bottom line - you can't.

Many global trading manufacturers have replaced their manufacturing systems to more of a distribution and logistics scenario with manufacturing being one element of the overall picture. Thus, the retailer from whom you ordered your dining table can go to her computer and find out that your furniture will be available in 28 days. In doing so, she has no idea that the table is being sawed today and packed into a kit tomorrow in Taiwan. She is not informed that the ship from Malaysia is on course to be in Taiwan in six days, thus being on schedule to get your table kit and make the six day cruise to San Francisco where it will enter a warehouse to be picked up by a semi three days later to transport it to the company warehouse in Boston where it will be assembled and from which it will be shipped to your furniture store and arrive really close to 28 days from now. However, each of these pieces of information will be important to someone. No longer are shipping, distribution and rental cost difficult to track and manage. What’s more, quality control can’t be compromised in a production environment that is not local.

Today, supply chain management (SCM) has become as important as manufacturing management. What does this mean? Manufacturing has become more of a service-based industry than a pure manufacturing industry. Even though the physical process of manufacturing hasn't changed, the actual locations of where the goods are being produced have. This fact is now compelling industry to engage in more assembly driven activities, a service-based model. The manufacturing process has transformed into obtaining parts and reassembling them into the final product. The final product is then redistributed throughout the appropriate channel or to the consumer. SCM methods are now reacting to this change as well. They are taking into account final assembly needs and they are distributing particular products to consumers or manufacturers.

SCM and ERP Convergence Is Becoming the Norm

The leading ERP vendors have begun integrating SCM functionality into their ERP offerings, creating ERP-distribution software that can span the entire production process across many continents and that is able to track final goods, components, and materials. We need to add a caveat here. Yes, many traditional ERP solutions included some SCM functionality, which was needed to distribute the companies' produced goods. These systems also allowed components and parts to be imported in order to assemble these goods.

However, the global nature of business today, with offshore manufacturing and expansion into new markets, has required SCM functionality in ERP software to be extended. Today, ERP/distribution software vendors such as Rootstock have integrated SCM functionality into its existing functionality to navigate through the complex global manufacturing environment.

With the ability to gain accurate inventory visibility and SCM production, ERP-distribution software is able to see the whole chain of manufacturing and distribution events, from supplier to manufacturer, all the way to the final consumer.

Looking at the Specifics of Distribution Cloud ERP Software

Rootstock’s Cloud ERP software for Wholesale Distributors enables companies to efficiently manage all aspects of the Supply Chain from first customer contact through final shipping and returns. Fully integrated with the Salesforce CRM solution, Rootstock provides a comprehensive set of capabilities that include Purchasing, Warehousing, Sales, Shipping and Customer Service. Inventorycan be identified by Location ID, Location Number and optionally by Lot and Serial Number. In addition, Inventory can also be segregated by Site and Plant/Division. Inventory can be easily transferred between locations. Full cycle count reporting promotes inventory accuracy. Complete audit trails are created for all Inventory transactions and all financial information is integrated with accounting. Rootstock also retains historical data by Product, by Customer, along with other attributes, providing data for business analytics and forecasting.

Distribution companies can also use the Rootstock Bill of Materials feature to describe and manage kits and products that are assembled-to-order. Rootstock’s Sales Order Entry capabilities include a robust Available-to-Promise feature which includes Allocations and time-phased requirements. Shipments can be made directly from suppliers to customers with Purchase Orders tied to Sales Orders. Sales tax and address verification integrations can also be included.

Rootstock supports Centralized Sales Order entry with fulfillment from multiple Distribution Centers. Sales operations can be centralized to control sales order fulfillment from multiple distribution centers (DC). Rootstock will handle all of the operational transactions for Pick, Pack, Ship and Invoice with complete visibility on all Orders, Shipments and Returns. A complete DRP (Distribution Requirements Planning) function is part of the standard Rootstock Planning Engine. The system will automatically plan replenishments of products based upon supply, demand, forecast, and re-order point. These Requisitions can then be converted to Purchase Orders which can be consolidated across multiple distribution centers.

As a Result of Cloud Manufacturing/Distribution ERP, You...

  • Get Better Inventory Tracking - Wherever you are in the supply chain, you develop better transparency across your warehouses. With cloud ERP, you enhance the value chain.
  • Manage Suppliers More Effectively - You obtain better coordination with your suppliers, helping you stay competitive in your market by curtailing costs.
  • Get Your Customers Excited - Understanding customers' buying patterns and pricing better lets you better position your products
  • Develop Customer Loyalty - By understanding customer requirements, you can improve the required quality and services your customers want. New competitors get locked out.
  • Improve Freight Management - You can better streamline order-to-cash and procure-to-order processes, procurement budgeting and advanced pricing and discounting capabilities.
  • Get a New Visibility into Your Business - You will make swifter decisions with cloud ERP's powerful integrated system, inventory analysis reports and dashboards.
  • Operate from Multiple Countries - Cloud ERP supports multiple languages and currencies.
  • Have Multiple Trading Offices - Get market adaptability with multi-company and multi-location support.