Packaging distributors play a valuable role in the global supply chain, with industries such as food and beverage, consumer goods and healthcare relying on packaging to ensure the safe and efficient distribution of product. Demand continues to rise; the U.S. industrial packaging market is expected to grow to $73 billion by 2025, based on a compound annual growth rate of 3.5%.
Packaging distributors are expected to deliver a wide array of products efficiently, quickly and cost effectively. As demand grows rapidly, many distributors rely on disparate technology systems and manual processes that are draining resources and decreasing productivity. For example, many businesses use spreadsheets to manage processes, or invest in a variety of task-oriented “solutions” that do not integrate. These systems become increasingly difficult to manage, and hinder the ability to address larger business challenges, including rising material costs and global supply chain disruptions. In an industry with tight margins and high-volume production pressures, distributors can find that these systems restrict their ability to adapt and thrive.
Having been relied on for decades, these disparate systems limit business visibility and create inefficiency. Real-time inventory visibility is critical for distributors that have a high volume of constantly moving stock, and must process and fulfill orders quickly.
Following are three ways in which an automated and integrated business system can help address pricing, customer management and purchase order challenges.
Simplifying complex pricing structures to close deals faster. Packaging distributors typically use a cost-plus pricing structure, which evaluates the cost of materials and production with an added percentage to determine the final selling price. Additionally, pricing may vary based on order quantities, existing customer agreements, shipping location and added discounts. These complex pricing models can make invoicing tedious when distributors rely on manual calculations and homegrown spreadsheets. With inflation and rising material costs, it’s also important that distributors continue to analyze and update pricing models in real-time.
An integrated enterprise resource planning (ERP) system with features for workflow management, order approvals, fulfillment and purchase-order consolidation can help streamline financial processes and ensure that all data is accurately captured. Additionally, configure, price and quote (CPQ) features can help sellers automate pricing quotes for prospective customers based on inventory catalogues and pricing rules. This also allows formulas to be updated regularly to reflect current market and labor costs.
With these automated sales and billing efficiencies, distributors can close deals and complete order payments faster. A tailored financial system can also help inform and calculate employee commissions, which may have its own set of rules based on products sold and final costs.
Strengthening and maintaining customer relationships to build brand loyalty. Many packaging distributors lack customer relationship management (CRM) systems, limiting their visibility into existing sales prospects, potential products of interest and forecasts. When third-party sales forces are used in the field, this further disrupts the business’s ability to track open opportunities and financial resources.
By using a system that integrates both ERP and CRM resources, distributors can improve opportunity and sales pipelines with informed insights. For example, if a distributor has extra inventory, it can run a timely promotion to existing customers. Distributors rely on sales volume to drive profit, and a CRM can help automate customer communications, offer personalized deals, improve customer support and drive loyalty.
Managing high volumes with efficiency and visibility to improve business performance. Distributors operate in high-volume environments with low profit margins, where fulfillment speed and accuracy are critical. The reliance on outdated systems and manual processes leaves opportunity for financial errors, delayed fulfillment and missed business opportunities.
Today, more than ever, warehouses are under pressure to increase output without additional resources. To do this, distributors require a high level of real-time business visibility to understand inventory, minimize costs and accelerate customer deliveries. A warehouse management system that integrates mobile capabilities can eliminate manual processes, ensure timely inventory updates from the warehouse floor and increase employee productivity. An integrated business system with complete visibility into inventory and sales can also optimize fulfillment processes including picking, packing and shipping. For example, distributors can consolidate shipments and modify shipping routes to increase cost efficiency. By accelerating fulfillment processing times, distributors can scale their business, deliver products faster and increase profitability.
As packaging demand continues to grow in the U.S., the volatile economic environment brings new challenges, including supply chain disruptions, inflation and labor shortages. With an integrated business system that offers automation features, distributors can maintain competitive advantage, improve customer service, and increase business efficiency.
Laura Maready is senior principal industry product manager with Oracle NetSuite.
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