ERP for Logistics and Distribution Companies : A Definitive Guide

Nikunj Dudhat

Nikunj Dudhat

Senior editor

Parul Saxena

Chief editor

Last updated: July 7, 2021

Logistics management is an intricate web of complex activities. It involves managing the supply chain, freight, transport management, warehousing, storage, and more. It is always susceptible to various changes, market uncertainties, and cost fluctuations. Let’s explore how enterprise resource planning solutions for logistics can help.

What is an ERP system?

An ERP system creates a centralized platform for managing various business functions. These functions include supply chain management module, manufacturing, human resource management, accounting, and more. It is a robust platform that helps businesses manage the flow of information. It ensures easy access to real-time data, anytime and anywhere.

Businesses across various industries are implementing ERP solutions to enhance their bottom line. Here are some facts and figures to put things into perspective-

  • The ERP market is in a state of rapid expansion. Its total market size will most likely exceed $49.5 billion by 2024.
  • In 2020, the global ERP software market grew by 9%, resulting in a revenue of approximately $39 billion.
  • 53% of IT decision-makers called ERP an investment priority.
  • 50% of companies are planning to get a new ERP software or upgrade their existing ones.

ERP for Logistics and Distribution Management

Logistics management involves planning and executing the transfer of goods. These goods are generally transferred from suppliers to customers or even storage facilities. Here are some of the main aspects of logistics and distribution-

  • Inbound/ Outbound Transportation
  • Fleet Management
  • Warehousing
  • Materials Handling
  • Production and Packaging
  • Inventory Management
  • Security of Goods

ERP systems for the logistics industry can streamline and automate these processes. They can remove various challenges in logistics and distribution management. It can help businesses achieve higher operational efficiency and maximize their profitability.

In 2020, the Performance Logistique Conference was underway in Montreal. Distributors, 3PLs, and carriers took a poll. They voted for what they thought was the most critical factor for success in logistics. Here’s what they answered:

  • Client Expectations- 50%
  • Technology- 33%
  • Human Resources- 16%
  • Transportation Management- 4%

Forbes predicted that more logistics companies would use technology in 2020. They would do this to ensure faster, cost-efficient deliveries.

It could not be more obvious- ERP systems for the logistics industry are here to stay!

Looking for ERP Software? Check out SoftwareSuggest’s list of Best ERP Software solutions.

Features and Benefits of ERP Systems for the Logistics Industry

ERP software solutions are powerful platforms. They can create immense value for businesses of all sizes across all kinds of industries. The logistics industry is no exception. ERP for logistics enables you to track and manage various functions on a standard dashboard. Let’s explore its features and benefits for the logistics industry:

1. Delivery Planning

ERP solutions for the logistics industry enable optimal use of your available resources. They allow you to plan the working hours of your drivers based on fleet availability. They ensure that your resources are being used as per their full potential.

2. Distribution Management

ERP systems for logistics enable you to achieve timely deliveries. They plan distribution routes according to the size and nature of the freight. They take into account delivery areas, and more to optimize routes. Some solutions even incorporate live traffic updates to ensure effective distribution.

3. Real-time Tracking

ERP systems for logistics arm you with a host of tracking features. They enable GPS tracking for your fleet and delivery professionals. They allow you to track the status of delivery in real-time.

4. Documentation and Compliance

Logistics companies have to deal with various statutory and regulatory compliance procedures. ERP software for logistics can process and file various compliance documents. These documents include consignment notes, invoices, freight forwarding, and more.

5. Customer Satisfaction

ERP systems for logistics provide customers with self-service portals. Customers can use them to track the real-time status of their shipment. They send customers automatic status updates about their shipments. They collect customer feedback through various channels.

6. Reduced Costs

ERP systems for logistics allow the optimal use of resources and reduce wastage. They automate various labor-intensive tasks and speed up processes. They improve operational efficiency and reduce errors. All these factors save organizations a ton of money in the long run.

7. Human Resource (HR) Management

Managing employees can be especially challenging for logistics companies. A massive chunk of their staff tends to be mobile. ERP systems for logistics can handle end-to-end HR management. They can oversee attendance and leave tracking, performance management, payroll processing, and more.

8. Finance Management

ERP solutions for logistics can raise and issue invoices. They can send automatic payment reminders Emails and collect payments to ensure healthy cash flow. They can even help companies track their expenses and reimbursements. They enable timely payments and also create various financial statements.

9. Inventory Control and Stock Visibility

Optimal inventory levels are vital to ensuring uninterrupted logistics and distribution. ERP integrated with the inventory module enables you to maintain full control of your entire inventory. The dashboard will show you the status of orders, stock levels, deliveries, and more at a glance.

10. Data Management

ERP database management module empowers organizations with data. They create a centralized database and act as a single source of truth. Real-time, accurate data allows businesses to take timely, data-backed decisions. It also helps them personalize their customer service.

11. Reporting and Analytics

ERP for logistics can present data in the form of insightful reports. These reports help with various aspects of logistics management. They allow the management team to make crucial decisions based on large amounts of data. They enable accurate planning and forecasting.

12. Mobility

ERP for logistics enables you to access information and update it anytime, anywhere. Most ERP solutions offer mobile apps. These apps are accessible to authorized people anytime, from any part of the world. Thus, they do not have to restrict themselves to a specific device or office location.

13. Scalability

ERP software for logistics can scale to accommodate dynamic business needs with ease. Scaling manual processes can be quite expensive and time-consuming. Scaling ERP software solutions are far more manageable. 

14. Integration

Most ERP software solutions can integrate with your existing technology stack. They also offer various communication modes like phone, email, chat, etc., on a common platform. Thus, you do not have to switch between applications to provide customer support. They allow you to manage all your social media channels on a single platform.

Example of Successful ERP Implementation in an Organization

R.A.S. Logistics Inc., an appliance installation firm, was founded in Milwaukee, Wisconsin, in 1998. The company’s business grew overnight when GE began to deliver appliances for Home Depot. GE used R.A.S. to handle the delivery and installation of its appliances for Home Depot customers. R.A.S. soon secured other large contracts from Wayfair, Mattress Firm, and more. 

Soon, R.A.S. grew to operate from 21 locations drawing more than $40 million in sales. Its existing financial system began to crash often, and the data would often be erroneous since it had to be entered manually in the system. There was an urgent need to connect various business processes and make them less labor-intensive. 

Moreover, the company’s CFO, Glenn Pearson, wanted real-time data to assess their financial situation every day. He wanted to empower his location managers with financial data so that they could improve their performance. He was also keen on a web-based solution owing to an issue with their internal servers. Finally, R.A.S. implemented an ERP solution for logistics.

The newly implemented ERP software began to provide R.A.S with real-time data every day. Earlier, they would only be able to access this information every month. Also, where it took R.A.S. 14 days to close their financial statements for the month earlier, they could now do it in two to five days. 

Moreover, previously they would have to spend a day or two to research answers to the various queries they received from their location managers. Now, they were able to provide their location managers with data instantly. The ERP solution also allowed R.A.S. to manage all the operations for all their locations on a common platform.

With the help of ERP for logistics, R.A.S. was able to automatically process chargebacks, invoices, and memos for all their locations. The system provided the company with a real-time view of each delivery’s live status and its associated costs. As a result, managers were able to understand the cost implications of missed deliveries.

R.A.S. aims to reach $80 million in sales in the next five years. The company is confident that its ERP system will get them there without adding more people to their team. They are better positioned than ever to track profitably by location, customer, and product. ERP software has enabled them to identify newer markets for expansion and make better decisions with ease. 

Key Takeaway

ERP software solutions for logistics reduce the many risks in logistics management. They improve operational efficiency and create significant cost reductions. Over time, a capable ERP software for logistics will help you achieve the following-

  • Enhanced Productivity
  • Systematic Business Processes
  • Better Time Management
  • Improved Accountability
  • Optimal Use of Resources

ERP software for logistics organizes all data related to orders, deliveries, and more. It makes historical data such as sales trends and delivery times available in a few clicks. It allows the company to make data-driven decisions and sound predictions.

ERP software solutions for logistics issue immediate notifications for low stock levels. They provide constant status updates for inbound and outbound orders. In this way, they enable businesses to take swift action in case of any issues. They also allow companies to preempt any problems beforehand and nip them in the bud.

Wrapping Up

The biggest economies across the world will collapse without proper logistics planning. ERP software can streamline production, transportation, and storage to a large extent. They not only fuel business profitability but also create a lot of value for the end customer.

Nikunj Dudhat
A digital marketing and content curator at SoftwareSuggest, a software recommendation platform. I am passionate about Digital Marketing, and all things digital. Also interested in technology and innovation. In my spare time, enjoy playing cricket, and Badminton.

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