If ever there was an industry where digital transformation was necessary, wholesale distribution is it.
Having made such a bold statement, defining ‘digital transformation’ is probably a good idea, as it can and does mean different things to different people. Effectively, digital transformation means moving away from disparate, manual, time-consuming and error-prone systems towards fully-integrated ones featuring automation and which provide a single, easily accessible view of everything going on in your organisation.
For us at Verde, that means modern Enterprise Resource Planning solutions; these solutions turbocharge your business, providing unrivalled visibility and control, and bring efficiency to businesses choking on their own growth (all businesses, obviously, benefit from efficiency…but small ones can achieve this with manual systems; scale is often when things get out of hand).
Coming back to wholesale distribution. Characterised by high volumes and slim volumes, the secret to success is accuracy and efficiency. Knowing where goods are, how long they take to arrive, and logistics that never miss a beat are some of the factors at play. Any mistake or miscalculation means margins can evaporate: the right goods must get to the right customers at the right time. Every penny must be accounted for, because failure to do so imperils your ability to turn a profit.
Now, New Zealand is a bit of an oddity in the distribution world. There are far more distributors across multiple industries than you might imagine for a nation with fewer people in total than some large cities. This means many distributors – perhaps your business too? – have grown from small specialists into more substantial entities. This organic growth also often means that while the company has grown, the business systems probably haven’t and that means you don’t have the pin-point accuracy required for success and expanded operations.
Instead, you might be relying on common tools which are highly unsuitable for a complex business: Excel spreadsheets, manual data input, and calculations on the back of a notepad….these methods work for distributors handling one or two vendors, and 5 or 10 SKUs. But in the volumes game, it’s all about shifting more and shifting it fast.
As you grow towards 5 vendors and 30 SKUs, as that starts moving up into the hundreds or even thousands, the stakes go up, and fast. Manual systems might be able to cope, but not without enormous pressure on people, including your own good self. That’s because while people are clever and capable, we aren’t good at detail and repetition (the very things that make or break warehousing and distribution!) Even the smartest of us struggle with scale in ways digital systems simply don’t.
Of course, in today’s crazy times, there’s another factor heavily impacting distributors and in fact the broader supply chain. Predictability.
It’s no secret that supply chains are buckling or even broken. The pandemic response of lockdowns and infusing money into the economy has wreaked havoc on demand; for some, it shot through the roof only to immediately recede. For others, it’s up and down then up again and who knows what tomorrow brings. For yet others, demand has seen a steady decline which means efficiency gains are the best opportunity for improving margins on every shipment.
Whatever your specific case, the commonality is the value of flexibility in your business systems. You need technological capabilities which enable profitability despite the vagaries of an increasingly perplexing market.
We’re not going to go ahead and say an ERP system is a panacea ready to solve all your problems. But as ERP experts, we are going to say a good ERP like MYOB will improve operations a great deal, and even provide new avenues and opportunities for your warehousing and distribution business.
That’s because among the things you can expect are real-time data and a clear view across your entire operation. By tracking, recording, calculating and showing where every product is, by bringing clarity to orders and payments, inventory, compliance and reporting, and automating many common tasks, a sound ERP system helps predict demand, and price accurately, manage stock, and consistently meet or exceed customer expectations.
In short, it’s a smarter way of doing business because it takes away a ton of the ‘busy work’ which takes the focus away from the things people are better at. Like finding and signing on new vendors, growing the channel by adding new resellers, or empowering the channel through better support or value-added services.
Basically, a great ERP system underpins efficient distribution. If you don’t have one yet, it could be time to consider MYOB Advanced.
Do get in touch. I’d love to discuss how it could take your operations to the next level.
