Unlocking the customer-centric value of ERP systems in distribution

The real value of an Enterprise Resource Planning (ERP) system lies in customer happiness. A crucial question emerged in a recent discussion with technology executives: What is the actual value of having a well-integrated ERP system? Is it better reporting, improved efficiency, scalability, compliance, and risk management? While these are all benefits, the most important reason for implementing ERP is to make customers happy.

But can a well-integrated ERP really make customers happy? To answer this, I evaluate how ERP and supporting edge solutions such as AI, CPQ (Configure, Price, Quote), and WMS (Warehouse Management System) can boost customer satisfaction. I do this by examining their impact on the renowned four Ps of marketing: Product, Price, Place, and Promotion. This "marketing mix" forms the cornerstone of business strategy, guiding companies in crafting plans that satisfy customers and meet business objectives.

Let us dive deeper into "the mix" and explore the technology use cases that drive customer happiness:

Product

Product refers to the tangible goods or services a business offers. While you likely have an established core lineup, technology can enhance customer satisfaction in several ways:

• AI-powered product recommendations: By leveraging artificial intelligence over your ERP sales order entry system, you can provide personalised product suggestions, offering alternative and complementary items. This helps customers easily find suitable alternatives or ensure they have all the necessary components for a project.
• Visual product configuration tools: These interactive tools (commonly referred to as Configure-Price-Quote or CPQ solutions) allow customers to visualise products with various options and configurations. This technology significantly enhances customer confidence in purchase decisions for complex products with multiple customisable features.
• Streamlined product line expansion: AI and process automation can simplify incorporating new products into your operations and ERP, allowing distributors to diversify their offerings more readily. This enables you to provide more comprehensive solutions to your customers, becoming a one-stop shop for their needs.

Price

Price is a critical factor for all customers. ERP systems play a crucial role in managing and optimising product pricing:

• Real-time pricing discounts: When customers have negotiated discounts, they should see these reflected immediately when placing an order. This transparency builds trust and streamlines the purchasing process.
• Price promotions and rebates: ERP software can efficiently manage complex promotion and rebate programs. The system can automatically apply discounts, manage time-limited promotions, or calculate rebates based on predefined criteria, enhancing customer satisfaction with your pricing structure.
• Margin optimisation: AI can conduct a granular analysis of each line item on an order, allowing you to optimise margins dynamically. This enables you to present win-win quotes to customers, balancing competitive pricing with profitability.

Place

For distributors, "Place" is about ensuring product availability and efficient delivery to customers:

• Demand planning: Advanced ERP systems offer sophisticated inventory classification capabilities, analysing and predicting demand at multiple levels. This allows distributors to optimise inventory levels and placement, ensuring high product availability without excessive overstock.
• Seamless execution: An advanced warehouse management system (WMS) optimises every aspect of operations, from receiving and put-away to picking, packing, and shipping. When a customer places an order, the system can automatically determine the optimal fulfilment location, initiate the picking process, and schedule the most efficient delivery route.

Promotion

In the context of distribution and ERP systems, promotion encompasses the various channels through which customers engage with your business and place orders:

Counter Sales: ERP systems equip your sales team with real-time inventory and pricing information, enhancing the in-person customer experience.
Electronic Orders: Advanced ERP systems can use process automation and AI to efficiently handle orders received via email or EDI, including managing exceptions.
Fax/Phone/Text Orders: AI and Process Automation can enhance the integration of these traditional order methods into the same workflow as other channels.
Website Sales: A well-integrated e-commerce platform with visual product configuration tools can significantly boost customer confidence and satisfaction.
3rd Party Drop Ships: Integrated drop-shipping capabilities allow you to seamlessly fulfil customer needs, even for products you do not directly stock.

The key to customer satisfaction is providing a seamless, integrated experience across all these channels. Modern ERP systems support this multi-channel approach, ensuring consistency in pricing, discounts, rebates, credit terms, and invoicing, regardless of how customers interact with your business.

Conclusion

Customer satisfaction is a multifaceted endeavour requiring seamless integration of various service aspects. The ideal customer journey should be effortless and transparent, with distributors positioning themselves as valued business partners who consistently deliver on and refine their four Ps.

In today's digital age, ERP systems enhanced by artificial intelligence and EDGE solutions have become indispensable for distributors aiming to excel in delivering the marketing mix. These advanced technologies enable distributors to offer personalised product recommendations, implement dynamic pricing strategies, ensure timely product availability, and provide a consistent, omnichannel promotional experience.

As the distribution landscape evolves, assessing your current systems and processes is crucial. Ask yourself: Are your systems equipped to deliver this level of integrated, customer-centric service? Can they adapt to changing market demands and customer preferences? If not, it may be time to consider upgrading your technological infrastructure to stay competitive and ensure sustained customer happiness.