In just a few short years, the wholesale industry has witnessed the start of a shift from the classic, ‘siloed’ ERP solutions of the past to modern, ‘integrated’ ERP solutions. These next-generation ERP tools are adaptable solutions that invite greater coordination among departments, reduce staffing challenges, create new ways for companies to deliver products directly to the consumer and enable ongoing cost savings. This is a remarkable shift from years past, when wholesalers coveted physical access to their data storage hardware and made a point of handling IT needs internally.
Thanks to new functionalities and delivery models, ERP has shifted from a solely on-premise solution to a system that can be deployed through a ‘hybrid approach’ across multiple environments, spanning internal (on-premise) and external (cloud-based) locations. As these integrated solutions are adopted, wholesale leaders are enjoying the ability to focus on business activities without worrying about their IT systems. Put simply, as one forward-thinking CIO told me recently, “I’m running a food distribution center, not a data center.” While this new breed of solutions may seem like a major step to some, they offer immense value for wholesalers and distributors alike in today’s business environment.
The New Middle Man
Integrated ERP solutions are driving valuable changes in the sales and distribution landscape, making it easier for wholesalers to provide round-the-clock customer service and create new direct sales channels. This is especially true with regard to retail, as companies look for new ways to cut out the middle man and decrease costs. In fact, with the help of new technology, many are cutting costs for both themselves and the consumer by adopting business-to-consumer models over the traditional business-to-business sales model.
With integrated ERP solutions in place, new sales channels are simpler to navigate and the distribution process can be streamlined. Customer service centers, manufacturers, warehouses and distribution centers are now able to work together in real-time to process an order, locate a product and ship it directly to the customer without the product ever reaching a store shelf. This is a remarkable shift from previous models, when a business could track how many orders it had received, but could not access inventory or shipping data in tandem to coordinate the process end-to-end.
Supply chain integration also improves greatly with integrated ERP systems, as they provide more capabilities to connect with manufacturers. Before making a purchase order, companies can now review manufacturers’ inventories through web services to identify the cheapest, fastest way to get a product into the hands of their customer, rather than defaulting to a single source.
Stepping Into The Future Of Staffing
Wholesale businesses have begun to realize that it’s not where your ERP system lives that’s important. Instead, having the dedicated resources to do proper backups, maintenance and upgrades is what really makes a difference when looking to maximize your IT investment. The infrastructure needed to run an in-house ERP system is expensive, complex and requires far more than the average company’s internal IT resources to operate. Hybrid cloud options that blend on-site and off-site resources are helping alleviate the human capital expenses associated with on-premise solutions while ensuring systems are up to date and properly maintained.
As we usher in a new generation of technology, companies still running legacy IT systems are challenged to keep up their workforces. With older IT staffers retiring, companies must consider whether they will recruit teams fluent in their current systems or seek out replacements with the skillsets needed to run today’s modern ERP solutions. Adopting off-premise solutions can help make that decision an easier one as cloud and hybrid ERP solutions free up resources to focus on other areas such as innovation and customer service.
Relying on in-house staff to operate an in-house IT system can also cause technology headaches. Depending on limited internal resources can leave businesses vulnerable to challenges as IT staffers call in sick, take vacation or simply get tied up with other internal responsibilities. Taking the ERP system off-premise helps to reduce these concerns, ensuring a staffing issue or emergency does not interrupt business processes.
Enabling Greater Cost Responsibility
When compared to traditional ERP functionality, today’s integrated ERP solutions bring added value and reduced costs over earlier systems. Integrating cloud-based solutions allows business units like warehouses and distribution centers to be spread out across the country (or even the world) without compromising access to actionable, real-time data. These information-sharing capabilities empower employees in all business functions to make educated decisions that eliminate errors, duplications and overlooked cost-saving opportunities and offer every team member a greater role in cost responsibility.
Integrated ERP solutions that are delivered via cloud models are helping transition ERP from a single fixed capital expense to an operating expense divided across time, reducing overhead and making it more affordable and accessible for businesses of all sizes. The transition offers wholesalers and other organizations more financial flexibility, allowing them to take advantage of the latest technology solutions without incurring significant upfront costs. Shifting to a distributed operating expense also frees up cash for other projects and investments, helping to drive added revenue and growth.
These new platform delivery options also have ripple effects on associated IT expenses. Along with spreading out the cost of an ERP solution, related service costs such as hardware maintenance are also dispersed over time. As well, leveraging private cloud environments and sharing infrastructure further reduces costs, as other cloud tenants share in the coverage of these expenses. Businesses that opt for cloud-based ERP options can also take the costs of upgrades and data center hardware repair off their plates, allowing their hosting partners to take the lead and keep servers and other key components running smoothly.
With industry demands and competitive pressures continuing to rise, companies will need the functionality and speed afforded by integrated ERP solutions to confidently make decisions and keep up with change. Modern, integrated ERP solutions help companies drive down their technology costs and enable greater visibility, making processes more cost responsible and streamlining the flow of information. To stay ahead in today’s business environment, companies need tools that empower organizational interconnectivity, streamline workloads and support greater financial flexibility. Integrated ERP solutions help distributors and wholesalers achieve this, and will only drive more benefits as technology advances and adoption increases.
Stefan Hoffmann is industry solution principal and global director of trade industries at itelligence, an SAP solutions provider.
This article originally appeared in Industrial Distribution's July/August print edition. Click here to view the full digital edition.