Accelerated digitization, investment in technology, and emerging customer demands are driving the industry toward a more technologically advanced future.
Key trends include the use of IoT, AI, machine learning, data analytics, and automation, all of which are transforming business operations and supply chain management processes within the industry.
That’s where NetSuite ERP is integral in helping distribution companies automate their business processes and offer scalability and flexibility for rapid growth.
Whether you’re an established distributor or a fast-growing newcomer, NetSuite offers a comprehensive solution to help you stay ahead of the curve.
Growth Challenges for Distribution Businesses
The wholesale distribution industry significantly contributes to the global economy, acting as a vital link between manufacturers and retailers. As of 2023, the global wholesale market is valued at approximately $46 billion, indicating a robust industry with potential for further growth.
However, the industry also faces significant challenges. Global disruption impacts on supply chains and increased competition are considerable issues. Overcoming these challenges requires strategic planning and innovation.
From an operational perspective, distribution companies looking to scale amidst industry-wide obstacles include:
Unreliable Inventory Management
Distribution companies must ensure optimal inventory levels to meet customer demand without tying up excessive capital.
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Inefficient Drop Shipments
As a distribution company grows, managing drop shipments can become increasingly complex. Coordinating with multiple suppliers, maintaining accurate records, and ensuring consistent service levels across a growing network of products and customers can become overwhelming. The lack of control and visibility in drop shipping can hinder scalability and potentially impact operational efficiency.
Manual Order Processing and Fulfillment
Wholesale distribution businesses need to run efficient systems and processes to handle a higher number of orders while maintaining accuracy and timeliness.
Manual order processing can become inefficient and error-prone, necessitating the implementation of automated order management systems.
Warehouse Management Inefficiencies
Challenges include improving picking and packing efficiency, reducing fulfillment errors, and managing multiple shipping methods.
Scaling often involves implementing warehouse management systems (WMS) to enhance visibility, automate processes, and optimize resource allocation.
Supply Chain Complexity
As distribution businesses scale, their supply chain becomes more intricate. Managing relationships with multiple suppliers, coordinating inbound and outbound logistics, and ensuring timely deliveries can quickly become unmanageable.
Financial Inaccuracies
Scaling can bring complexities to financial management, including managing cash flow, tracking profitability, and maintaining financial controls. Wholesale distributors must establish robust financial management practices, including accurate accounting, budgeting, financial reporting, and forecasting.
Using NetSuite ERP to Scale Your Distribution Companies
By eliminating manual processes, reducing operational costs, and improving decision-making, NetSuite ERP equips distributors with the agility and flexibility they need to grow and adapt in a rapidly changing market.
1. Centralize Data Into NetSuite’s Cloud-based System
NetSuite integrates all key business processes, such as inventory management, order processing, customer service, financial management, and sales, into one unified platform.
This centralized approach reduces the need for multiple disparate systems, reduces software costs, increases efficiency, and helps distributors make informed decisions.
Plus, NetSuite offers customizable dashboards that provide real-time visibility into key order management metrics, allowing management and teams to monitor performance, track trends, and identify areas for improvement.
2. Enhance Inventory and Warehouse Management with NetSuite ERP
Distributors must track stock levels accurately, manage multiple warehouses, handle returns, and ensure timely replenishment.
NetSuite addresses these challenges effectively with features like multi-location inventory tracking, demand forecasting, and automated reordering. These capabilities ensure optimal inventory levels, and reduce carrying costs.
Add-ons like RF-SMART further enhance NetSuite's inventory and warehouse management capabilities. For instance, warehouse staff can scan barcodes to update inventory records instantly, reducing errors associated with manual data entry. This leads to more accurate inventory data, faster order processing, and improved warehouse efficiency.
RF-SMART also optimizes picking, packing, and shipping processes. Warehouse personnel can leverage advanced features like bin location management, lot and serial tracking, resulting in improved order accuracy, reduced fulfillment errors, and increased productivity.
3. Streamline Order Management and Fulfillment
NetSuite's integration capabilities, automation features, and comprehensive visibility empower distribution companies to effectively manage their orders, optimize inventory, and deliver a seamless customer experience.
- Consolidated Order Management: NetSuite provides a centralized platform to manage all aspects of order processing, including order entry, order tracking, and order fulfillment.
- Seamless Integration: NetSuite integrates with various sales channels, ecommerce platforms, and customer touchpoints, allowing for seamless order flow and real-time data synchronization. This integration ensures accuracy and eliminates the need for duplicate entries or manual transfers of order information.
- Order Automation: Distribution companies can automate order processing workflows, reducing manual intervention and accelerating order fulfillment. Rules and triggers can be set up to automate tasks such as order validation, inventory allocation, pricing calculations, and invoicing, improving efficiency and reducing processing time.
- Approval Processes: NetSuite supports configurable approval workflows for order processing. Companies can define approval rules based on order types, order amounts, or other criteria to ensure appropriate authorization and compliance with internal policies.
- Real-time Inventory Tracking: NetSuite provides real-time visibility into inventory levels across multiple locations and warehouses. Distribution companies can accurately allocate inventory to customer orders, preventing overselling and ensuring accurate promise dates to customers.
- Available-to-Promise (ATP) Calculation: NetSuite's ATP functionality considers inventory levels, incoming shipments, and existing customer commitments to calculate available inventory for new orders. This helps sales teams provide accurate order commitments to customers and avoids overselling or fulfillment delays.
- Shipping Integration: NetSuite, powered by ShipHawk, integrates with shipping carriers to automate shipping processes. Shipping labels, tracking numbers, and carrier rates can be generated directly within NetSuite, reducing manual effort and improving shipping accuracy.
- Customer Self-Service: NetSuite's customer portal allows customers to access order information, track shipments, and submit inquiries or returns. This self-service capability improves customer satisfaction and reduces the burden on customer service teams.
- Automated Notifications: NetSuite can automatically send order confirmations, shipping notifications, and delivery updates to customers, keeping them informed throughout the order fulfillment process. Proactive communication enhances the customer experience and reduces inquiries.
- Order Metrics and KPIs: NetSuite's reporting and analytics capabilities provide insights into order metrics such as order volumes, order status, fulfillment rates, and customer order history. This data helps distribution companies track performance, identify bottlenecks, and make data-driven decisions to optimize order management processes.
4. Manage Financials with Precision
By leveraging NetSuite ERP's financial management capabilities, wholesale distributors can achieve greater financial control, accuracy, and precision.
NetSuite streamlines accounting processes, provides real-time visibility into financial data, automates financial operations, and supports compliance with regulatory requirements.
Let’s explore how these features enable wholesale distributors to make informed financial decisions, improve cash flow management, and drive financial performance.
- General Ledger: NetSuite provides a centralized General Ledger that captures all financial transactions, allowing wholesale distributors to maintain accurate and up-to-date financial records. This eliminates the need for manual data consolidation and provides a single source of truth for financial information.
- Chart of Accounts: NetSuite allows customization of the Chart of Accounts to align with specific industry needs and reporting requirements. Wholesale distributors can define account structures and categories to track and categorize financial transactions accurately.
- Financial Dashboards: NetSuite offers customizable financial dashboards that provide real-time visibility into key financial metrics, including revenue, expenses, cash flow, and profitability. These dashboards enable management and finance teams to monitor financial performance and make data-driven decisions.
- Real-time Reporting: NetSuite's reporting capabilities enable wholesale distributors to generate financial reports, including income statements, balance sheets, cash flow statements, and financial ratios, in real-time for better financial analysis, budgeting, and forecasting.
- Accounts Payable and Receivable: NetSuite automates accounts payable and receivable processes, including invoice generation, payment processing, and collections management. This automation reduces manual effort, improves accuracy, and ensures timely payment processing and cash collection.
- Financial Consolidation: NetSuite's financial consolidation features streamline the consolidation of financial data across multiple subsidiaries or business units. Wholesale distributors can eliminate manual consolidation efforts, reduce errors, and generate consolidated financial statements accurately and efficiently.
- Budgeting and Forecasting: NetSuite's budgeting and forecasting tools enable wholesale distributors to create, manage, and analyze financial budgets and forecasts. This allows for better financial planning, resource allocation, and performance tracking against budgeted targets.
- Audit Trails: NetSuite maintains a comprehensive audit trail of all financial transactions, providing visibility into who made changes, when they were made, and the reasons behind them. This audit trail enhances transparency, supports internal controls, and facilitates compliance with regulatory requirements.
- Compliance and Reporting: NetSuite helps wholesale distributors comply with accounting standards and reporting regulations. It supports automated tax calculations, facilitates tax filings, generates financial statements in compliance with GAAP or other regulatory frameworks, and provides tools for audit preparation.
- Integration with CRM and Sales: NetSuite seamlessly integrates with customer relationship management (CRM) systems and sales modules, enabling accurate recording of sales orders, revenue recognition, and customer invoicing. This integration ensures financial and sales data consistency and eliminates manual reconciliation efforts.
- Integration with Inventory and Warehouse Management: NetSuite's integration with inventory and warehouse management systems provides real-time visibility into inventory costs, valuation, and sales. This integration ensures accurate cost of goods sold (COGS) calculations, inventory valuation, and financial reporting.
5. Strengthen Customer Relationships with NetSuite CRM
NetSuite CRM offers a range of features designed to help you strengthen customer relationships, including contact and sales automation.
Contact and sales automation
NetSuite's CRM is a comprehensive cloud solution designed to manage customer relationships and accelerate sales for distribution businesses. It provides an exceptional platform that delivers a real-time, 360-degree view of your customers.
NetSuite CRM offers a highly personalized approach to customer engagement, starting with customizing each customer interaction.
It enables you to segment your customers based on various criteria like purchase history, demographics, preferences, etc. This way, you can tailor your interactions and engage with each customer in a way that resonates with them the most.
One of the most transformative features of NetSuite CRM is how it nurtures customer data and turns it into actionable insights for wholesale distributors.
These insights can be used to understand customer behavior, identify sales trends, and make data-driven decisions. It aids sales automation by providing predictive analytics that suggest the next best action move leads down the sales funnel.
6. Optimize Supply Chain Management with NetSuite
NetSuite offers a comprehensive solution to help you optimize your supply chain operations, with features for purchase order and supplier management, as well as demand planning and forecasting.
Purchase order and supplier management
NetSuite ERP offers robust Purchase Order (PO) and Supplier Management tools that empower distribution companies to streamline their procurement processes, effectively manage supplier relationships, and optimize purchasing operations.
Let's explore the key features and benefits of NetSuite's PO and Supplier Management tools for distribution companies:
- Efficient Creation and Tracking: NetSuite enables distribution companies to create and manage purchase orders easily. Users can generate POs directly from sales orders, automatically populate vendor information, and track the entire procurement lifecycle.
- Centralized PO Control: NetSuite provides a centralized platform for managing all purchase orders. Users can access a comprehensive view of their purchase orders, monitor status, track delivery dates, and ensure timely fulfillment.
- Approval Workflows: NetSuite supports customizable approval workflows for purchase orders. Users can define approval rules based on predefined criteria, ensuring appropriate authorization and compliance with company policies.
- Document Attachments: Users can attach supporting documents, such as vendor contracts, product specifications, or compliance certifications, to purchase orders. This feature ensures easy access to relevant information throughout the procurement process.
- Vendor Database: Distribution companies can store vendor contact details, payment terms, contract terms, and performance metrics in one location for easy access and reference.
- Vendor Performance Tracking: Users can track and evaluate vendor performance through key metrics such as on-time delivery, quality, and responsiveness. This data helps distribution companies identify top-performing suppliers and make informed decisions when selecting vendors.
- Supplier Scorecards: NetSuite enables the creation of supplier scorecards to evaluate vendor performance against predefined criteria. By assessing delivery accuracy, lead times, and product quality, distribution companies can identify areas for improvement and foster stronger supplier relationships.
- Vendor Collaboration: NetSuite's supplier management tools facilitate effective communication and vendor collaboration. Distribution companies can share purchase orders, receive shipment updates, and exchange messages with suppliers directly within the system, reducing manual communication efforts.
Drop shipment support
Drop shipments are a huge part of modern distribution business models. Thankfully, NetSuite offers native functionality to handle drop shipments within its system.
Distribution companies can create drop shipment purchase orders (PO’s) in NetSuite, specifying the customer details, shipping address, and the products to be drop shipped. This automation streamlines the communication and coordination with suppliers for order fulfillment.
Demand planning and forecasting
NetSuite's demand planning and forecasting tools empower distribution companies to accurately predict customer demand, optimize inventory, and streamline supply chain operations.
By improving forecast accuracy, organizations can enhance inventory management, reduce costs, and improve customer satisfaction levels.
These tools provide the necessary insights for data-driven decision-making, enabling distribution companies to adapt to market dynamics, optimize resources, and gain a competitive edge.
- Historical Data Analysis: Analyze historical sales data, customer trends, and seasonal patterns to understand demand patterns accurately. This analysis forms the basis for creating demand plans and forecasting future demand.
- Demand Segmentation: NetSuite enables distribution companies to segment their customer base and analyze demand patterns for different customer groups, regions, or product categories. This segmentation helps tailor demand planning strategies, optimize inventory, and improve customer service.
- Statistical Forecasting: NetSuite's tools leverage statistical algorithms to generate accurate demand forecasts. The system automatically generates forecasts at various levels, such as SKU, product line, or customer segment, by analyzing historical sales data, seasonality, trends, and other factors.
- Forecast Adjustments: Users can manually adjust forecasts based on business knowledge, market intelligence, or external factors that statistical algorithms might not capture. These adjustments can be made at various levels, allowing for granular control over the forecast accuracy.
- Forecast Collaboration: NetSuite enables collaboration between sales teams, demand planners, and other stakeholders to refine forecasts based on market insights, customer feedback, and real-time information. This collaborative approach enhances forecast accuracy and aligns expectations across the organization.
7. Omnichannel Ecommerce Experience
With SuiteCommerce, you can fulfill your customer’s needs at every touchpoint, including:
- Physical stores
- Phone sales
- Ecommerce websites
- Online marketplaces (e.g., Amazon, eBay)
- Partner resellers
- Mobile apps
- Mobile messaging platforms
- Social media
- Catalogs and other mail-order options
Being truly omnichannel means inventory, customer, and sales data are readily available to your team and updated in real-time. Your customers can buy from any channel and you’ll have the confidence to know your products are in stock — never losing a sale again.
NetSuite for Wholesale Distribution Growth
NetSuite ERP is built for distribution companies. With the proper implementation of NetSuite ERP, wholesale distribution businesses can predictably scale and overcome any economic challenges.
Book a call with the StratusGreen team to learn how to make the most of NetSuite ERP for your wholesale distribution company.
