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Workflow of the future: Time for distributors to move to Cloud ERP

Zakir Ahmed, Vice President and General Manager for Asia, NetSuite | April 8, 2016
Zakir Ahmed of NetSuite shares his thoughts on the workflow of the future for distribution companies.

This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.

Distribution companies have no easy task when it comes to maintaining their daily operations. The need to control manufacturing and inventories, coupled with the requirement to track a huge range of products over widely dispersed distribution networks make it one massively complex operation to handle. 

Many distributors are still relying on aging, on-premise systems to operate their businesses and supply chains. Not only does this add the burden of cost and complexity to their day-to-day operations, but it also results in slower employee productivity and eventually dampens business sustainability in the long run.

With customers' demands growing more personalised and diverse in today's burgeoning e-commerce landscape, there is a critical need for companies to deliver everything 'real-time'. Businesses are forced to think on their feet in order to stay above their growing number of competitors.

As companies look to replace legacy ERP solutions, they increasingly shift to cloud ERP-including in Asia. Cloud-based enterprise resource planning (ERP) has been around for more than a decade and has changed the way enterprises do business.

According to a survey done by the Asia Cloud Computing Association, Singapore is seen as a leader regionally in the adoption of technology tools. But it has also been illustrated elsewhere that less than 50 percent of SMEs in the island state have an online presence (e.g. website), let alone any experience with cloud-based productivity solutions, implying that there is room for growth.

Challenged by a greater risk
While Asia Pacific is one of the leaders in growth in the cloud IT infrastructure market, a shift to cloud migration may not be in the list of priorities for wholesale distributors, particularly due to costing issue. However, it is important to note that the limitations of customising on-premise ERP is the main issue behind supply chain inflexibility. Organisations are forced to adapt their business processes to the constraints of their software, rather than adapting the software to their business processes. This makes it hard to keep up as supply chains continue to mature, become faster and more interconnected, not to mention far more complex.

It is understandable to detect the hesitancy given that it can be expensive and disruptive for many distributors to remove an existing system and install new ERP, but the impact of not doing anything can be far more costly. The internal disruption caused by launching a new ERP project pales in comparison to the industry disruption that distributors running on-premise systems are forced to adjust to.

Apart from the technology aspects, the missed opportunities may as well be the biggest cost for many companies. Think about all the changes sweeping through the manufacturing and wholesale distribution industries in Asia, as traditional models are rapidly changing and forcing organisations to find new ways to cost-effectively increase market share and reach new customers.  Businesses are becoming increasingly connected by integrating with suppliers, tying into online channels like Amazon and Alibaba, or providing real-time status updates to downstream customers. They also face a rise in telecommuting and offshoring, making it key to ensure workers can access their applications from anywhere.

 

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