Is Outdated Distribution Management Software Hurting Your Profits?

Distributors and manufacturers that use outdated distribution management software are losing out on their bottom line. According to a white paper released by NetSuite, half of all distributors are using ERP software that is two versions older than the current release, which can sometimes be several years old.

The cost of not staying up to date with your distribution management software can be significant. Organizations with an outdated system are unable to stay properly connected with customers, partners and vendors.

“The impact is multifaceted,” the paper explains. “Your customers are frustrated if they can’t easily view pricing and inventory information on your website, or check the status of orders or returns. You’re frustrated if you can’t switch suppliers on demand, because the effort requires yet more expensive integrations.”

When manufacturers and distributors don’t track profitability and cost-to-serve within their ERP systems, they are losing money by awarding sales reps commissions on unprofitable business and providing the same programs to unprofitable customers.

Modern, streamlined distribution management software can track metrics like current pricing, costs, margins and commission schedules on an ongoing basis with fairly little effort. Many modern ERP systems allow distributors and manufacturers to automate these business processes for a more streamlined and efficient workflow.

Distributors using on-premises ERP systems often do not upgrade their software due to fears about cost and also the implications of making changes to code in several locations. “Faced with outsized risk, cost and resource requirements for what may seem like an incremental upgrade, your company can be effectively forced into ‘version-lock,’” according to the paper.

These are legitimate concerns shared by many, if not all, companies. Upgrading ERP and CRM software, especially for on-premises systems, can be highly expensive and a drain on time and resources.

One possible solution to this problem is moving to the cloud. Cloud distribution management software vendors like NetSuite host the application and upgrade the program themselves on a regular basis. This means you don’t have to worry about updating code or losing vital access to your data. You’ll also avoid a pricey and time-consuming upgrade process. It’s all securely managed for you.

Most of the time users won’t even know an upgrade occurred and there is virtually no interruption to business operation. However, the benefits of these upgrades are very noticeable and, as mentioned above, can mean the difference between making a profit and losing money.

Source: NetSuite, 2011