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Challenging Economic Conditions for Manufacturing and Distribution

The exponential success of supply chain giants is causing distributors and manufacturers alike, to evolve their business models to accommodate mixed mode transactions. Mixed mode meaning -the organization must adopt a larger vision of serving their customers’ needs to stay competitive in the marketplace. For example, a manufacturing organization would add services and/or distribution to their offering. This introduces operational challenges – requiring more complexity and flexibility at the same time. Today it’s not uncommon for an organization to receive a wide variety of orders – from traditional bulk retailer orders to orders that may consist of just one item to be picked, packed, and shipped to an individual customer. We are in an age where online transactions are increasingly prevalent. Customers have very high expectations for order timeliness, quality and accuracy – they demand a high-level of accountability and service from providers.

An organization’s vision as it relates to its workflow process is critical to its success in this new global economy. Many enterprise resource planning (ERP) systems are one step behind; they’re designed for one vertical (manufacturing vs. distribution vs. service). Companies are now looking to ERP vendors that have experience in managing this growing business model to help them manage their operation.

Inventory and warehouse management are becoming key performance drivers. Smaller margins and higher costs mean the organization needs to be able to execute more efficiently to match demand. Adding a service offering is a cost-effective way to remain competitive without requiring significant capital investment.

One of AIT Business Services’ (AIT) customers is a leading manufacturer of commercial broilers used by the fast food industry. They’ve grown their business to include an international network of service and distribution partners. We worked with them to upgrade their ERP system to manage manufacturing, distribution, and service operations. Another customer – a leading distributor of home décor products to large national retailers, recently ramped up manufacturing and service call operations. AIT helped them solve the problem of accomplishing high mix, high volume made-to-order manufacturing in what was previously a simple distribution environment.

We recommend that you look for an ERP solution with a workflow and interface that can adapt to mixed modes of value. Companies that transition their operations to compete in this hybrid manufacturing/service-based distribution era have the brightest future.

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