Winter is here, which for some means snow. Break out the snowplows, shovels, and snow blowers; snow happens, and you can’t just wait for it to melt—at least if you hope to go anywhere.
For distribution firms, snow is bad enough, creating logistical nightmares in its wake. Luckily, snow melts. Unmanaged data, on the other hand, just keeps building up.
Left unchecked, this ever-expanding pool of data can become unwieldly, slowing your business down and hurting your ability to serve customers. As the data stacks up at your business, the competition is heating up outside of it, making it more important than ever to clear up the blind spots, connect the supply chain, and work smarter than ever.
That said, when distribution data is managed and understood, it can benefit your company, improve your relationships, and facilitate growth. But what goes into making your data work for you?
You can’t measure what you can’t see. Common challenges holding distributors back.
For many distribution firms, the first challenge in overcoming their data challenges is to know just how tall the ‘snow pile’ is. Businesses lose sight of inventory and processes for a variety of reasons, but the most likely culprits are manual processes and disconnected systems.
Paper, spreadsheets, and email
Overreliance on paper, spreadsheets, and email isn’t only slow, it creates a blind spot for distribution businesses. For those looking to improve their ability to track data, the first place to look is the file folder. Why? Because you shouldn’t be relying on one.
A surprising amount of businesses still rely on paper-based processes, printing out paperwork for orders and projects, faxing invoices and checks, scanning data into the system, and hoping they can keep track of it all. This presents a variety of problems.
- First, it’s expensive and time consuming. Those businesses still relying on outdated processes are paying their staff to waste hours every single week completing tasks they shouldn’t be worrying about.
- Second, it’s inaccurate. Spreadsheets are breeding grounds for errors, and it’s incredibly easy to make a mistake when hand-keying information into a document. One mistake can set off the entire formula.
- Third, it’s hard to track. Scanning a document into a computer, routing an email to a warehouse, and hoping the right person saw it is just that—a strategy based on hope.
By eliminating paper and spreadsheets and reducing reliance on email for important processes, you can begin to track how data stacks up at your organization and take steps to control it.
The application hairball
Another challenge that businesses face when trying to make sense of the data they have is something that can best be described as an ‘application hairball,’ a mess of separate products that are tangled together—but still disconnected.
For those in the distribution industry, this is often one of the most pressing issues; data from inventory management exists, data from CRM exists, and data from ERP exists—in three separate places. So where do they turn? Back to spreadsheets and emails.
However, those on the leading edge are able to untangle this mess of applications that can’t talk to each other, connect the processes, and facilitate the management. A distribution-focused ERP can make this happen. To manage their supply chain and logistical activities successfully, distributors should consider implementing a true cloud distribution ERP solution, one that is able to handle their warehouse, inventory, and order management processes while simultaneously connecting these activities with their financials and sales.
Getting from disparate to data-driven: How to start using your distribution data.
Once you get rid of the first challenges, the next step is to start making your data work for you. How? It all starts with knowing what to measure and being able to track what’s happening.
Know what to measure
The ability to make sense of the data you’re generating is one thing—knowing the what, why, and how of this information is another. There’s more to your business than revenue, profit and loss, and cash flow, you should be able to understand how this information came to be.
Key performance indicators, or KPIs, exist to answer this, representing a variety of measurements important to a specific industry designed to unlock the true health of a business and uncover previously unknown opportunities or challenges that traditional reporting measures fail to address.
However, not all KPIs are created equal—some metrics matter more than others, some are easier to track, and others are great for predicting where you will stand a year from now. Learn more about tracking KPIs for business growth here.
Improve your understanding
If you’re in the finance department, charts are your friend. What about the people who didn’t spend their college days learning about GAAP? Even if it makes sense to you, present most people with something unstructured and their eyes will glaze over.
However, by structuring data (including the aforementioned KPIs) and presenting it in a way that’s useful for anyone who needs it, your business can work faster and your people can make smarter decisions.
Distributors that turn to dashboards, analytics, and business intelligence (BI) software integrated with an ERP system and other key internal systems are able to unlock the secret value hidden in their data and make wise choices based on what they learn. Reports that used to take hours are now automatically calculated in real time, helping distributors to improve planning, increase profit margins, and enhance customer relationships.
The right ERP solution for your distribution business.
The right ERP solution for distribution is essential. When you pair this with other necessary applications you will have a solution that can put you on a path that allows you to not just survive, but thrive. NexTec Group consultants have been helping distribution companies select and implement ERP, BI and CRM for a quarter century. If you believe 2020 is the year that you truly take control of your supply chain, let’s talk. We’re here to help.