The Distribution Blog

Why Distributors Should Invest in Modern Distribution Software

March 15, 2023

Table of Contents

In today's fast-paced business landscape, neglecting to invest in your tech infrastructure, software, and other operational solutions can be a recipe for disaster. Just ask Southwest Airlines, which suffered a major PR crisis in late 2022 as a result of its outdated systems and manual processes or Dish Network whose old on-premise billing software has been held hostage by ransomware since February 28!  

These aren’t isolated incidents. We expect dozens of new tech-related PR crises to learn from between the time we wrote this and when you’re reading it. But to illustrate our point, we'll focus on Southwest.

Southwest blamed its massive flight cancellations during the busy holiday season on “outdated scheduling software.” The result? Underinvestment in modern technology could cost the airline up to $825 million.  

A big winter storm was the first in a short (yet detrimental) line of dominos that fell for the commercial airline on a December weekend last year. While the rest of the industry recovered by Monday, Southwest remained stuck in a tech snarl that resulted in over 15,000 canceled flights and mounting frustration among customers and employees alike. Although the storm itself was beyond their control, it was the airline's outdated technology that truly caused the chaos that followed.

Distributors, are you paying attention? One industry magazine warns, “As data management charges ahead at the speed of light, many distribution systems are still saddled by a historical lack of investment that prevents their lumbering operations from running like a well-oiled machine.”  

Here’s how to avoid becoming the Southwest of the distribution world.

Distributor Software is an Ongoing Investment That Pays for Itself

It doesn’t matter whether you view the latest innovative technology as a disrupter or an enabler of your business. Technologies like enterprise resource planning (ERP) and customer resource management (CRM) platforms are the tools you need to eliminate manual processes that bog you down.  

Still, there’s a highway-sized gap between the potential digital transformation of your business and “the way it’s always been done.” That’s what happened to Southwest. When their outdated scheduling software jammed due to volume, they resorted to manual processes. The airline needed to upgrade its 1990s tools to respond to today’s realities. Instead, they were living on borrowed time.

Distributors risk the same fate as Southwest if they don’t invest in technology. Costly downtime, frustrated customers, and a soured reputation from a crisis they could avert.

Importance of Investing in Distributor Software: ERP and CRM

What does investing in new technology and distributor software do for distributors? Plenty. Your CRM and ERP systems are the glue that keeps departments and teams working in lock step (inside sales, outside sales, customer service, marketing).

Upgrading your CRM or ERP alone can help your organization:

  • Keep up with industry changes and advancements: These platforms constantly evolve to meet the changing needs of distributors. Keeping your ERP and CRM systems up to date ensures that your organization takes advantage of new features and capabilities that improve efficiency and productivity.
  • Stay competitive: Modern, fully functional distribution software is essential to staying competitive today. The latest IT upgrades automate processes, reduce errors, and help you make better decisions. If you’re looking for a competitive edge, you’ll find it in these digital tools.  
  • Improve scalability: Don’t be Southwest. As your business grows, your ERP and CRM must be able to handle increased volume and complexity. Regular investments in your core IT systems ensure they can scale to meet the demands of your organization, your clients, and volatile markets.
  • Enhance security: Cybersecurity threats are evolving at digital speeds. Internal tech systems must respond with the latest security enhancements to counteract these threats. Upgrading your technology architecture with the latest security enhancements will reduce your risks from cyberattacks and data breaches.
  • Maintain compliance: Distribution businesses are subject to ever-changing local, federal, and global compliance regulations and standards such as GDPR, HIPAA, SOX, etc. Updating your ERP and CRM systems helps ensure your organization’s compliance with these regulations and standards.

Impact of Not Continually Upgrading your Distributor Software

Cautionary tales aside, what is the reality of failing to upgrade your distribution software in today’s changing markets? For distributors, there is risk inherent in our failure to modernize, including:

  • Employee frustration: The Great Resignation brought the issue of employee satisfaction to national attention. Unhappy employees that stick around experience higher stress and less productivity if the tools they use are a hindrance and not a help. Here’s another reality that distributors should pay attention to: Nearly 50% of employees say they will quit their job if the tech they use is outdated. How could this impact your customers and your profit? Look at Southwest for your answer.
  • Loss of corporate historical data: Outdated platforms almost guarantee that your employees will resort to other methods for capturing critical data. Your goal should be to house data within the confines of the technology to ensure that no valuable information walks away when an employee resigns. You do not want institutional knowledge to walk out the door when an employee switches jobs or retires. Yet there is a one in three chance that your company will lose intellectual property when an employee leaves. To lessen this risk, you need an ERP and CRM usability upgrade.
  • Missed sales: Winnable upsells with existing customers and new business opportunities slip through the cracks when your data is siloed. Failing to modernize by integrating upgraded ERP and CRM software with legacy platforms means you will miss revenue opportunities.  
  • Inefficiency and higher costs: Time is money, so if your software slows you down, it impacts the bottom line. Outdated tools mean your team will not work at peak efficiency or waste time mired in manual processes. This inefficiency leads to higher operating expenses, slower throughput, and lost opportunities for revenue.
  • Inability to scale: Growing distributors struggle to meet customer demand when they have outdated tools. The volume and complexity of today’s supply chains, increased competition, and increasingly discerning consumers require modern software to handle these pressures. Without the right software, you’ll experience lost sales and a decline in customer satisfaction, just like Southwest.
  • Customer frustration: Most importantly – your customer experience suffers when mired in outdated technology tools. If delighting your customers is at the top of your priority list, you must invest in continuous ERP and CRM improvements. Frustrate your customers, and they’ll take their business to your competitors.  

Signs Your ERP and CRM Aren’t Up to Date

There were probably plenty of signs that a storm was brewing at Southwest long before their elderly IT infrastructure took them down.

In distribution, an outdated ERP does not offer the level of visibility and control necessary to manage your business. A legacy CRM creates inefficient workflows that slow down your teams and costs you sales.  

Here are some signs that your ERP and CRM aren’t modern enough and what to look for in your current workflows that could signal a future problem.  

  • Your user interface (UI) isn’t user-friendly.
    If your UI is character-based, it isn’t up to date. Thanks to modern graphical user interfaces, today’s college graduates have never seen a character-based menu. If that’s what you have, your employees will find these systems difficult and frustrating.
  • You still rely on manual processes.  
    Modern automation software can eliminate your reliance on Excel. If your employees are still manually inputting data or using spreadsheets to manage processes, it may be a sign that your core platforms need to be updated.  
  • Your team complains of slow software performance.
    Distributor software that lags is a sure sign that your technology needs upgrading. If your ERP or CRM can’t handle the volume and complexity of your business as it grows, processing speeds will slow down.
  • Your software doesn’t play well with other systems.
    The best platforms fully integrate through application program interfaces (APIs). If your ERP system can’t integrate with other systems, such as a CRM or ecommerce platform, it’s a sign that the tool can’t meet the needs of a modern wholesale distributor.
  • You use a spreadsheet to run reporting and analytics.
    If your distribution software tools can’t provide real-time insights and analytics, it may be a sign that it is outdated and unable to support data-driven decision-making.
  • You’re worried about GDPR or other compliance requirements.
    Modern ERP and CRM systems meet current compliance standards, such as GDPR, HIPAA, SOX, and more. If you feel uncertain about compliance, it’s time to feel uncertain about your software.  
  • Your employees are frustrated by limited or no remote access.  
    Today’s cloud-based distribution gives you the tools you need for a mobile world. Legacy platforms do not provide you or your sales teams the competitive advantage you need to succeed.  

When you choose to limp along with obsolete distributor software that might still get the job done, although less efficiently than a modern tool, you’re playing with fire.  

Ultimately, Southwest remains a cautionary tale for distribution companies that struggle with legacy platforms.  

We can help you determine whether your ERP or CRM needs an upgrade.  

Looking for an ERP system that is configured for the modern distributor? Reach out today to see Infor’s software in action.  

Proton’s AI-powered CRM was purpose-built for distributors. Schedule a demo today to see how it can support your sales team, boost sales, and enhance the customer experience.

Check out our other blog articles

Ready to make Proton your secret weapon?