When the pandemic hit half a decade ago, it disrupted the distribution industry and forced businesses to adapt. Even now, downstream effects continue to put pressure on distributors, particularly those that don’t have technology in place to help them be resilient. And now, with the rapid rise of AI and machine learning, there are more solutions — and more noise — than ever before. How can distributors choose the right solutions to modernize their operations and achieve their objectives?
To start, here are a few lessons we’ve learned in recent years:
Siloed technology is detrimental to modern supply chain operations
The pandemic changed the world view of having on-premises infrastructure versus Software-as-a-Service (SaaS). On-premises solutions involve on-site equipment and connectivity. When the pandemic forced people out of the office, this was difficult to maintain, manage and access. With SaaS solutions, your infrastructure is hosted elsewhere and accessible from anywhere. You relieve yourself of the liabilities of maintaining and managing on-premises solutions, and you remove location-based risks and limitations. Those benefits continue to be increasingly relevant to ensure ongoing business continuity.
Labor challenges continue to complicate operations
At the start of the pandemic, many businesses had to let go of employees to reduce expenses. This meant reduced support for their in-house systems, and many found they still had to fill the gaps with consultants and contractors, adding cost. The post-pandemic “Great Resignation” impacted labor numbers. Even now, companies are struggling with the labor shortage, the uncertainty of existing labor, and large numbers of the workforce retiring and are mandating a return to the office. You likely have employees with siloed knowledge who know your systems from end to end. What happens if you already let them go, they leave or they’re unavailable? And how challenging will it be to find a replacement?
The Cloud provides the flexibility and resilience businesses need
On-premises, siloed applications don’t have the flexibility to adapt to the changing supply chain landscape. Businesses must be more adaptable. The Cloud provides agility and resiliency. The Cloud allows you to extend or integrate services, add or reduce capacities as demand and supply changes, and map and integrate new processes, all quicker and more easily than with on-premises systems.
Modernizing the supply chain is as simple or complex as you make it
When it comes to managing the supply chain and its moving parts, sometimes easiest is best. Today, there are many variables and options for tracking data and operating your warehouse. And they’re simpler, more intuitive and more accessible. Where it used to be true that modernizing a warehouse shop floor was daunting because it wasn’t seamless to manage labeling, barcoding, racking locations, stock status, etc., the modern enterprise resource planning (ERP) is more mature and flexible.
Being able to manage barcodes, different standards of labeling and scanning, license plating and more with your ERP, mobile devices and Bluetooth scanners has changed the game. Still, with the variety of options available, your investment can be as minimal or substantial as required (or desired). For instance, inbound and outbound counting activities can be done systematically with inexpensive scanning devices.
Artificial intelligence can’t be ignored
AI isn’t a panacea, nor is it a replacement for the humans in your organization. It’s a powerful tool that can help those humans do a lot more with what they have, and early adopters have already seen it pay dividends. It’s particularly useful in distribution, an industry that generates tremendous amounts of data thanks to large product catalogs. With AI, you can get more use out of that data far more quickly than you ever could by manually poring over spreadsheets. In fact, AI can be valuable across every part of your business — you have to be willing to make the leap and invest in the tech.
Effective Supply Chain Modernization Strategies for Distributors
When you’re ready to start or continue your modernization process, it helps to have insights from experts in supply chain software and trends. Here are seven of the most effective tools and strategies experts recommend for modernizing the supply chain in today’s environment.
1. Mobility
Mobility helps solve common warehousing challenges, such as low inventory visibility and poor traceability. Most modern ERPs have core configurations to help you eliminate these challenges and achieve mobility. They can manage different types of barcode solutions, such as license plates. You can put barcode labels and associated serial numbers on individual items in cases, palletize the cases, shrink wrap them and put a master label (license plate) on the pallet to get traceability against the pallet.
Additionally, you can replace many heavy, expensive and outdated devices you might be using with better, less expensive options today. For instance, for inbound and outbound counting, you can run an extension in your browser that’s tied to your interface. This extension can run on a low-cost tablet (as low as $200) and a Bluetooth scanner (as low as $50).
2. Inventory accuracy and transparency
Inventory accuracy and transparency are trust-defined. Many companies don’t know the value of all the inventory on their floor at any one time. With today’s technology, when you receive any standard item on your floor, you’ll have a product receipt stating the amount you received. In the stock virtual warehouse, you can see the debits and credits against locations in the warehouse for those items. You have complete traceability at the transaction level, device level, and the date and time stamp level. This helps you overcome the trust issue with core inventory.
Compound this with your counting activities. Many supply chain professionals used to count inventory every year. Now, concepts like doing percentage counting along with your picks inputs for the day gives you momentary snapshots of inventory.
In terms of transparency, it’s about how much you have, what its stock status is and also:
- Whether it is lot traced, batch traced or serialized
- When you received or produced these items
- Accounting for who you bought it from and on what PO
- Accounting for where you received it
- How you recorded the lot number and labeled it
This sets you up for complete transparency of how an item moves in and out of your facility to customer sites or stock status change.
3. Virtual warehouse stock status
In the product sense, a site is a physical address with a physical structure. Inside of that warehouse or in that site, you have a stock status. It could be raw materials, stock, quarantine inspection, transit or web. Modern virtual stock status, or virtual warehousing, has really changed our abilities for picking and other operations. For instance, if a pallet gets destroyed with a forklift, you can look at that location, scan the license plate on the pallet and simply change the stock status. This process is much more efficient compared to needing to physically pick it up, take it out back and send a note to someone to adjust it out so it can be registered in the system against the stock.
4. EDI and order optimizations
Many companies receive orders through one of several Electrical Data Interchanges (EDI). With EDI, customers want a response stating that the order was received and when it will be sent. An EDI professional, such as Data Masons or TrueCommerce, can help you define and set up those core reports. That way, if a sales order is sent and the customer wants an acknowledgement, there are two different reports and triggers of how they fire. Those professionals can help you manage against the entry and exit of different types of transactions against the ERP system.
5. Modern identification
Barcodes are on almost all products in the world today, and barcode structure is an important consideration for modernizing your operations. Your barcodes might have a specific combination of key numbers that you need to choose and define. And you’ll need a method to get the labeling stickers on products and boxes. Often, distributors find that vendors haven’t stickered their boxes with barcodes and it’s up to them to do the labeling. The ability to generate those labels from the system when you receive items means you’ll have a product receipt, pick tickets, labels—everything in your hands. A modern ERP supports that today.
For instance, if you want to take several items and sell them as a kit, you can go into the system and define that these discrete items are kit components in the kit master and are now part of a new bundle or kit with a new item number and ID. You can also define the start date, stop date and price.
6. Choosing the right ERP
The most critical component of your modernization efforts is the ERP you choose. The right system for you depends on the size of your company, the time you have and the time it will take, whether you have the resources and tenacity to get through rapid start templates to shorten your implementation time and reduce cost, what your ecosphere needs to look like, etc.
It’s also important to identify what you’re doing right today and what you have to do tomorrow, so you can identify the best solution and map out the most realistic implementation. Every good house build starts with a blueprint and a qualified contractor. To be successful and avoid disappointment, you must know what you’re getting, what the house looks like, what the budget is and what the deliverables are.
7. Leveraging AI for all of the above
These days, there are AI-powered tools that touch every process a distributor performs. For example, Microsoft Copilot enhances Microsoft’s already robust ERP platforms, helping businesses prioritize tasks, simplify sales order processes and organize their finances. And you can use the Microsoft Power Platform to quickly develop productive custom apps (no coding expertise necessary), enhance workflows and build virtual agents to take care of routine tasks. The saying “time is money” is especially true when it comes to supply chain logistics, and AI can save you a lot of time if you leverage it properly.
Right-Sizing Your Modernization Efforts
Distributors hesitate to modernize their supply chain for many reasons. For instance, it may be that you aren’t ready for the technology and:
- You have siloed pockets of innovation across functions that don’t connect
- You don’t have a well-defined process for change management and technology adoption, data quality management or partner collaboration
- You’ve heavily invested in multiple outdated systems
- Your leadership is new and isn’t seasoned enough for these decisions
- Leaders are used to having direct, hands-on control of their systems
- You’re not sure which AI tools are worth investing in
Yet, lack of decision-making costs companies millions of dollars. If you’re hesitant, consider that with most Cloud environments:
- The infrastructure is built to provide fault tolerance
- Recovery is almost always more robust than at a typical corporation
- Regional disaster resilience is almost always greater and more capable
For small-to-midsized distributors, there is a clear choice for solution that fits your business:
Microsoft Dynamics 365 Business Central: Trust the solution Forbes Advisor calls “The Best ERP System” to transform your business operations, improve financial performance, boost sales and service, enhance your inventory management, and optimize your supply chain management. And Microsoft’s industry-leading AI tools can enhance the functionality to help you reach your goals.
With Business Central, you can trust Enavate to deliver your distribution solution and accelerate your results. Our three Xcelerate™ Distribution packages enable you to select the functionality that best fits your distribution operational requirements and get your tailored solution up and running quickly.
Modernize Your Supply Chain with a Trusted Partner
The world is changing and supply chains are being affected. It’s important to be agile and adopt new technology. It’s best to work with a trusted partner to work through the project of modernizing your supply chain so you get an ideal roadmap and avoid issues with change management. A partner can help make sure you have the right data and decision criteria as you go through this process, helping you get the facts and do the right research. A partner can also perform an assessment to understand what it will take to migrate, what solution you need and how to phase that solution in.
This might mean thinking small to start. Rather than spending years building the perfect system, you can implement minimal changes, such as to warehousing and inventory, to create small victories for your teams, see immediate results and breed success.
Implementing such modern foundational systems enables you to perform better now and prepare for what’s next. Lack of decision-making and collaboration could mean wasted time and effort – and even millions in spending. When you work with a strong partner, they can help ensure your project isn’t shelved.
At Enavate, we’ve helped many customers modernize their environments. As you consider modernizing your supply chain infrastructure, you don’t have to do it on your own. Reach out to our expert team today
