Calculating ROI From Distribution Software

At first glance, it might seem that the return on investment for any distribution software is determined in the same manner it is calculated for any enterprise software, which is by dividing your expected cost savings or margin increases by the software, hardware, annual maintenance, and implementation costs. However, the savings portion of the calculation is where you should be looking if you want to see a really satisfactory ROI and it is the savings that will differ greatly from business to business. As for the implementation cost, there should not be a major difference among distribution businesses of similar sizes.

How Process Change Leads to Cost Savings

One of the best ways to obtain cost savings is through process change. It enables these savings with an improved and flexible replenishment planning, real-time data processing, and enhanced analytics for inactive or slow-moving inventory. An analysis of the costs side of the income statement highlights a few other process changes that can make a significant impact such as better accountability of returned goods, less expenses on premium freight and late fees due to on-time delivery, etc.

How Distribution Software Improves Your Business Operations

For businesses who have been utilizing manual or traditional ways of managing their distribution operation, investing in distribution software can translate to massive improvements and advancements through increase in savings by streamlined purchasing, improving financial accounting, or eliminating automated billings. In addition, you can also look for savings from having mistake-free computations on your billing rates, which can also prevent situations such as missed billings.

Further savings can also be achieved by enhancing the basic functions included in the distribution software such as the use of scanners or bar codes that aid in retrieval reporting and inventory storage. If you implement a distribution solution as part of a whole ERP system rather than a stand-alone distribution software solution, then you may discover labor leaning more towards the “costs” side since very few distribution software modules are as efficient as software created specifically to address distribution.

In conclusion, achieving greater savings and ROI are attained by executing a business in a smarter and more efficient manner. It is uncommon for a distribution business to overlook any aspect that is essential for its growth and to discover it as a result of implementing distribution software. What is more common is that the distribution solution allows the business owner to think about more ways to conduct the business more efficiently. There is an ROI from distribution software out there for most businesses. You just have to find it.

Jordan Scott is the editor of He is a digital marketing consultant and freelance writer.

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