OUR THOUGHTS ON:

Distribution Industry: Are You Missing Hidden Value in Your Technology Investments?

Technology

By Robert Morgan

For most distributors, growth and profitability depend on their ability to effectively and efficiently manage operations, such as inventory, warehouses, fleets and order fulfillment. Inventory and warehouse management are key focuses of operations, and distributors are always looking for opportunities to reduce supplier costs and increase their inventory turns, among other things. Furthermore, many distributors own or lease a fleet of trucks, and controlling related operation and maintenance costs are important to improve profitability. Order fulfillment is also important to distributors (as well as their customers), focusing on the time it takes to fill orders and the frequency an item is out of stock.

To keep track of all the data that results from these and other operations, companies have made large investments in their IT infrastructure, including the implementation of ERP systems. Data is gathered from these systems and provided to management to analyze and make decisions meant to improve the company’s growth and profitability. The difficulty many distributors face with the systems in place today is usually not the lack of data they provide. More often, the difficulty lies in the disparate nature of the systems and lack of integration between them. Collecting and reporting on key financial and operational data from disparate non-integrated systems is extremely difficult, time-consuming and prone to human error. This hinders management’s ability to receive the key metrics necessary to drive business decisions in a timely, accurate and meaningful way.

In these difficult economic times, companies are looking for ways to maximize their current investments. Many are taking a closer look at their IT investments and recognizing a hidden value in their ERP systems through integration. Those that have taken this approach have immediately realized the benefits, such as access to timely and accurate financial and operational information, and the elimination of spreadsheets, duplicate system entries and multiple reports for data comparison.

Recent advances in financial and operational reporting tools have led to easier reporting of integrated data from multiple systems, even across multiple database platforms. The result is improved access to accurate, timely and relevant information needed to drive business decisions. By combining the key elements of your data, a more representative view of your business can be created, which is vital to the growth and profitability of your company. With improved visibility comes the ability to better manage exceptions and adjust quickly to your customers’ needs.

As noted, a company’s growth and profitability highly depend on its ability to manage its operations and the resulting key metrics necessary to drive business decisions. This requires leveraging your people, processes and technology to report the necessary data in a timely accurate manner to management. Considering the nature of the systems in place at your organization today, your current key operational and financial reporting requirements, and the recent advances in technology discussed, is your organization missing any hidden value in its technology investments?

For further information, please contact Bob Morgan, Technology Advisory Services, at (412) 697-5211 or rmorgan@schneiderdowns.com.

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Schneider Downs provides accountingtax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH. 

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