In the distribution industry, demand prediction is a top priority. With the market always changing and new competitors constantly entering, predicting customer needs can be tough. However, leveraging your ERP (Enterprise Resource Planning) system to create powerful data analytics offers a way to make it easier and more accurate.
The Need for Demand Prediction for Distribution Companies
In the complex arena of distribution, getting demand prediction right is crucial. It acts as a cornerstone for various operations, dictating a company’s strategy, growth trajectory, and bottom line. Let’s delve deeper into the significance of demand prediction for distribution companies and what type of data analytics ERP systems offer:
Inventory Management:
One of the most tangible impacts of accurate demand prediction lies in inventory management (view webinar).
- Cost Efficiency: Holding onto excess inventory is expensive. It’s not just about the price of the products, but also the storage costs, potential spoilage for certain items, and the opportunity cost of not using the warehouse space for inventory that could be selling better.
- Avoid Stockouts: Running out of stock can be detrimental to any business. Not only does it result in immediate lost sales, but frequent stockouts can also lead to longer-term brand damage. Customers might perceive the company as unreliable, pushing them to consider your competitors.
- Optimal Reorder Points: With precise demand prediction, companies can set better reorder points for their products. This ensures that a fresh order for stock is placed well in time before the inventory levels dip below the desired threshold.
Supply Chain Efficiency:
The supply chain—a complex web of manufacturers, suppliers, and transporters—relies heavily on demand prediction.
- Smarter Purchasing Decisions: Companies can negotiate better with suppliers when they have easy access to the full picture of their inventory and a deeper understanding around timing of their requirements. This can lead to bulk purchase discounts and/or better credit terms.
- Reduced Lead Time: When demand is predicted accurately, the lead time (the time taken from a customer placing an order to receiving it) can be optimized. This ensures that products arrive just when they are needed, not too early or too late.
- Resource Optimization: Transport and logistics are key components of the supply chain. Predicting demand helps in optimal route planning, vehicle capacity utilization, and reduces environmental footprint by minimizing unnecessary transportation.
Customer Satisfaction:
In today’s competitive market, customer satisfaction is paramount for any company’s survival and growth.
- Meeting Expectations: Customers expect products to be available when they want them. Accurately predicting demand ensures that customer expectations are consistently met, if not exceeded.
- Building Trust: Regularly having the products that customers want in stock establishes trust. It sends a message that the company understands its customers and caters to their needs.
- Enhancing Brand Loyalty: When customers are satisfied and trust a brand, they’re more likely to return for repeat purchases. Over time, this loyalty can also translate into word-of-mouth marketing, further driving sales.
- Quick Response to Market Changes: Accurate demand prediction also means that companies can swiftly adapt to changing market conditions. Whether it’s a quick surge in demand due to external factors or an unexpected drop, being prepared helps maintain consistent customer satisfaction levels.
“Demand prediction is essential to any organization’s success – especially when it comes to creating repeat customers and exceeding their expectations because it helps businesses find long-term cost savings. We have seen our clients who leverage Acumatica’s Distribution module thrive thanks to the system providing a better ability to forecast based on past successes or seasonality.”
Becky Goll, Business Consultant at PC Bennett
What Data Analytics Are Available in ERP Systems?
ERP systems combine different business processes into one platform, including sales, finance, purchasing, and more. By adding data analytics to these core business functions, companies can get incredible insights into trends that help in predicting product demand.
Key Features of Data Analytics in ERP Systems:
- Real-time Data: Get up-to-date insights on inventory, sales, and more.
- Trend Analysis: See which products are selling fast and which ones are not performing as well.
- Predictive Analysis: Use past data to make future predictions.
- Dashboards: Make sense of the data with visual aids.
“The need to leverage data and analytics to be a more successful operation is a primary reason businesses bring on ERP systems. Leaning on these core features encourages inventory, sales, and fulfillment teams to be more efficient and effective, all while reducing the number of errors or poor customer experiences that may have popped up without having this deep level of insight. This is especially important to consider with an ERP system because it acts as a single source of truth for an entire organization. The system is able to leverage data points from across the company instead of certain metrics of being siloed in on-prem desktops or fragmented systems.”
Becky Goll, Business Consultant at PC Bennett
PC Bennett’s Approach to Distribution
PC Bennett provides solutions tailored to the challenges distribution companies often face. We help organizations implement and maintain software that makes using data analytics for demand prediction efficient and effective. Our distribution solutions encourage businesses to operate more effectively by having the following core processes all baked into one system:
- Integrated Processes: Link sales, inventory, purchasing, and finance data for a more unified view.
- Supply Chain Management: Improve product purchasing processes and build better relationships with suppliers.
- Warehouse Management: Keep track of inventory, process orders faster, and improve shipping methods.
- Advanced Analytics: Dig into the data to get important insights that can guide decisions.
Using ERP Data Analytics for Predicting Demand: Step-by-Step
- Data Integration: First, make sure all your data from different sources goes into the ERP system.
- Data Cleanup: Remove any mistakes or inconsistencies from your data. Good analysis requires good data.
- Set Goals (KPIs): Decide what you want to achieve with your demand predictions.
- Use Analytical Tools: Take advantage of ERP tools that help with analysis and predictions.
- Review and Adjust: Regularly check how things are going and make adjustments as needed.
Distribution ERP Data Analytics FAQs
How soon will I see results from using ERP data analytics?
While some benefits can be seen right away, it may take a few months to get the full advantages of demand prediction felt throughout the organization.
Will moving to an ERP system disrupt my business?
With the right planning and support, the transition can be smooth with minimal interruptions.
How is PC Bennett’s solution different from others?
PC Bennett focuses on solutions specifically designed for distribution companies, ensuring a more precise fit for their needs.
Conclusion: The Role of Data Analytics in Distribution’s Future
The distribution sector is always evolving. Companies that leverage their ERP system to drive data analytics will be better equipped to adapt and succeed. PC Bennett’s software solutions offer distribution companies the tools they need to effectively predict demand and stay ahead.
“When you adapt to a more modern way of doing business, like by bringing on a modern, cloud-based ERP system, you can set up a variety of parameters that enable your technology to automatically calculate which items need to be purchased at any given time. This ensures your business operates in a way that maximizes cost effectiveness and customer satisfaction. This is part of what makes PC Bennett your partner for the long term. We want Acumatica to be the tool that encourages your success and helps you prepare for whatever market conditions are down the road.”
Becky Goll, Business Consultant at PC Bennett
For more details on how PC Bennett can help with your demand prediction needs, check out PC Bennett’s Distribution Solutions. If you’re interested in automotive-specific solutions, please visit our automotive ERP page.
