Enterprise resource planning (ERP) software is undergoing a significant change as we head into 2024. This change will impact all industries and business sectors, including distribution. Distributors should be aware of these trends and maximize all they can for competitive advantage.
Key Themes for Distributors in 2024: Rapid Adaptability
High inflation, cautious business buyers, and a softer economy all made 2023 a difficult year for distributors. As we look ahead to the upcoming year, the same trends are likely to continue. Although the American economy shows signs of stabilizing, significant global impacts may still shock the markets back into inflationary waters, making buyers reluctant to take risks. How can distributors remain competitive and profitable in such an environment?
The key phrase to keep in mind is rapid adaptability. Gone are the days when distributors could wait for reports on sales trends or economic variables. Today’s distributors need complete visibility into all aspects of their business in real time. An integrated approach, with one source of data and easily accessible analytics, is vital for healthy distribution.
That’s where enterprise resource planning (ERP) systems come into the picture. An ERP system is an integrated platform containing accounting, finance, sales, marketing, and operations data. Instead of using separate, siloed systems, ERPs gather and combine all data sources, making them easily accessible, transparent, and usable throughout a company.
Distributors who are not using ERP systems will lag behind their competitors. There is no doubt that as we move into the new year, distributors who are not using an ERP will be at a significant disadvantage.
Cloud ERPs and Rapid Adaptability
Cloud ERPs enable rapid adaptability by providing real-time insights and information. Because such ERPs are hosted on the cloud, information flows almost immediately from its source to the ERP for access and analysis by all stakeholders. Informed decisions can be made using this data. Stock counts, shipping information, supply chain updates and more can be tracked and analyzed. Customers can be informed about any order changes. These improvements add to a company’s ability to respond quickly and adapt readily to changing environmental conditions.
The 2024 Trends Report: What to Expect in ERP for Distributors
The top buzzword in 2023—and we predict 2024—is AI: artificial intelligence.
When Microsoft unveiled ChatGPT and the Open AI project in November 2022, no one doubted this invention would have ripple effects throughout the business world. What no one could have predicted was that the ripples rapidly turned into a seismic quake as AI spread from a test platform to all aspects of software and technology, including ERPs.
AI has been around for several years in various earlier incarnations, but after the launch of ChatGPT, many software providers ramped up their research and development efforts to include AI, machine learning (ML), and large language models (LLMs) in their software applications. This includes ERP for distributors.
Distributors should follow the AI trend in ERP carefully and take advantage of improvements in their ERP systems utilizing AI. For example, Acumatica’s R2 2023 update (October) included new AI and ML features that may be helpful to distributors:
- The ability to support international operations by leveraging AI/ML to add branches and locations to Acumatica’s document recognition capabilities.
- Support for complex language recognition.
- Intelligent text completion, which makes recommendations based on past entries.
Other AI-based feature enhancements distributors may see in ERPs in the upcoming year include:
- Enhanced predictive analytics, which can be used to better manage supply chains, inventory, and more.
- Automated routing of routine tasks; for example, automated workflows to route invoices and approvals from accounting to relevant managers.
As additional AI features are added to ERPs, each incremental improvement adds to the overall increase in productivity and time savings. Every bit adds to cost savings that can improve the bottom line.
Cloud technology has made ERPs flexible and improved real-time data access. With these advances, new apps for mobile ERP access have made it even easier for everyone with the company to access the ERP.
Accessing a mobile ERP can offer distributors more features to help them stay competitive. For example, distributors with warehouses in multiple states may use mobile technology to update inventory. With mobile apps and added apps for barcode readers, using mobile devices to check stock count and update inventory can be accomplished quickly and efficiently.
Improving the User Experience (UX)
Another ERP trend that benefits distributors is the trend toward enhancing and improving user experience (UX). UX design has made many platforms and apps easier to use, and ERP is no exception.
A UX-based ERP design offers subtle changes and enhancements that make it easier for users to find, search, and access information. It’s often called “intuitive design” because the goal is to make using the software intuitive and easy. Placing buttons in logical spots, ensuring that users can find frequently used information and tasks, and even enabling customized dashboards may all be part of an ERPs enhanced UX experience.
Blockchain Advancements in ERP for Distributors
Another trend distributors should watch for in the coming year is the advances made in blockchain use in ERPs for distributors.
Many people assume that blockchain only affects cryptocurrency holders, but blockchain simply refers to the organized, permanent record of information stored and encrypted on the blockchain. Many industries are exploring blockchain to host files permanently and securely: real estate transactions, for example, are one area where blockchain holds great promise.
For distributors, some ERPs are exploring the use of blockchain to store and monitor supply chain records. This can be useful for highly regulated industries where tracing the source of ingredients or goods is necessary for legal compliance. Additionally, blockchain records of supply chain transactions can be helpful for all trying to trace component defects, sources, and suppliers.
Technology Advances to Support Good Business Practices
It’s always fun to look into the virtual crystal ball at the start of a new year and predict things like where technology is headed. While we’re often right about the macro trends, sometimes, the industry throws us a curveball (like ChatGPT and AI last year!).
However, one thing remains constant: good business practices remain the same.
The ability to provide customers with the goods and services they require, in a timely fashion, will always be at the heart of a strong and heathy distributor business. Supporting these tasks is a communications and service infrastructure that understands how to deal with people and businesses to solve problems and be vibrant partners to their companies.
Software like ERP systems is a complement to this model. It supports best practices in business, finance, customer service, sales, and marketing by its very nature. The integrated data model, which eliminates data silos and systems, ensures that everyone in a distributor’s business has the same access to real-time information. This information, when used properly, can ensure that adequate stock levels are maintained, goods are shipped properly, and supplies can be traced back to their origin—or to the customer’s delivery point.
With the newer technologies added to ERP systems, such as AI, machine learning, blockchain, and cloud applications, distributors have more powerful tools to support best practices in business. When distributors have the right technology supporting good business practices, they are in a great position to succeed in the new year.
Mindover’s consultants can help you assess your ERP and create an action plan to update if necessary. Contact us or call 512-990-3994.