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What a distribution ERP needs to do
A distribution ERP keeps orders, stock, pricing and purchasing on one set of data, so a promise made by sales is backed by what the warehouse and suppliers can deliver. For wholesalers and distributors, the core areas are these.
| Area | What it covers | Why it matters |
|---|---|---|
| Quotes and sales orders | Live available stock, delivery dates, credit limits, backorders | Stops promising stock you do not have |
| Pricing rules | Price lists, customer and contract prices, quantity breaks, promotions | The right price without checking a spreadsheet |
| Purchasing and replenishment | Reorder points, supplier lead times, minimum order quantities | Cash goes into stock that sells |
| Multi-location inventory | Warehouses, bins, transfers, stock in transit, cycle counts | Stock elsewhere can be found and sold |
| Pick, pack and dispatch | Pick lists, barcode scanning, carrier labels, proof of delivery | Fewer wrong items and missed shipments |
| Landed cost | Freight, insurance, duty and charges added to the supplier price | Real margin on imported products |
| Returns | Return authorisations, inspection, credit notes, restock or write-off | Returns are tracked, not lost |
| B2B ordering | A customer portal with their prices, stock and order history | Fewer orders by phone and email |
Signs your current setup is failing
Most distributors outgrow their setup gradually, so the warning signs start to feel normal. If several of these happen every week, errors and rework probably cost more than fixing the system would.
- OversellingSales confirm an order, then the warehouse finds the stock was already allocated to someone else.
- Price errorsCustomers are charged the wrong price because agreed prices live in one person’s spreadsheet.
- Gut-feel purchasingReorders depend on what looks low on the shelf rather than sales history and lead times.
- Hidden stockStock in another warehouse or in transit is invisible when quoting.
- Unknown marginsImported products are costed at the supplier price, so freight and duty quietly erode margin.
- Double entryOrders from email, the online store and sales reps are rekeyed into the accounting software.
Our distribution and wholesale industry view explains why separate versions of the truth hurt service even when everyone works hard.
Live stock, pricing and the quote-to-order flow
The quote and sales order screen is where most distribution promises are made, so it needs live available stock and the correct price at the moment of entry. Available stock is not stock on hand: it is what is on the shelf, less what is allocated to other orders, plus purchases due before the delivery date.
Pricing should follow rules applied in a fixed order, for example a contract price first, then the customer’s price list, then quantity breaks, then the standard list price. Set a minimum margin so lower quotes need approval, and give special prices an end date so they do not run forever.
Many distributors also lose hours turning emailed requests into quotes. Our article on quote automation covers how AI can draft those quotes from live prices and stock for a person to check and send.
Purchasing, replenishment and multi-location stock
Replenishment should come from data, not from what looks low on the shelf. The simplest method is a reorder point, which business.gov.au defines as the smallest amount of an item you want in stock before you order more. Its example: if you sell 10 chairs a week and delivery takes two weeks, reorder at 20 chairs.
An ERP can calculate reorder points from sales history, add safety stock for seasonal peaks or unreliable suppliers, and round suggestions up to supplier minimums and pack sizes. A buyer then reviews and approves purchase orders rather than building them from scratch.
With more than one location, track stock by warehouse and, where it helps, by bin. Transfers should show stock in transit, and regular cycle counts of fast movers keep the numbers trustworthy between full stocktakes.
Landed cost and traceability for importers
Landed cost is the full cost of getting a product into your warehouse: the supplier price plus freight, insurance, customs duty, broker and port charges and local delivery, converted to Australian dollars. Without it, imported products look more profitable than they are.
The Australian Border Force notes that, generally, all goods imported into Australia are liable for duties and taxes unless an exemption or concession applies, and that GST is payable on imported goods unless they are exempt. A distribution ERP should let you add these costs to a shipment, spread shared costs across its lines by value, weight or volume, and update product costs when the freight invoice arrives after the goods. Ask your accountant or customs broker how duty and import GST should be recorded.
Food and some regulated products also need lot or batch tracking. Food Standards Australia New Zealand requires food manufacturers, wholesale suppliers and importers to have a written recall plan, and advises including batch codes and contact details of everyone the product was sent to. An ERP that records lots at receiving and dispatch can produce that list quickly.
Warehouse, returns, B2B ordering and integrations
Pick lists sorted by bin and confirmed by barcode scanning reduce wrong items, and dispatch should record the carrier, consignment number and proof of delivery against each order. Returns need their own flow: an RMA (return merchandise authorisation) number, inspection on arrival, then a credit note and a decision to restock, repair or write off.
A B2B portal lets trade customers see their own prices, stock and order history and order directly. Behind it, integrations keep data entered once: the ERP holds products, stock and orders; the online store sends orders in and receives stock levels; and accounting software such as Xero or MYOB receives invoices and bills for GST and BAS. Agree which system is the master for customers, products and prices before connecting anything.
Where to start
Start with the problem that costs you most each week, not with the longest feature list.
- Fix the master dataClean the product list, units, pack sizes and customer price agreements before anything is imported.
- Choose the first flowIf promises are broken, start with quotes and orders on live stock; if cash is stuck in slow stock, start with replenishment.
- Connect accountingSend invoices and bills to the accounting software so the bookkeeper keeps working as before.
- Add one module at a timeAdd scanning, returns, landed cost and B2B ordering once the first module is in daily use.
If packaged software forces too many workarounds, a custom ERP for distributors can be built around your pricing rules, warehouses and channels.
At Optivise AI, a custom ERP module typically takes about a week to build, plus testing, and connects to existing accounting, CRM and e-commerce tools through APIs. Each module is accepted before the next one starts.
Questions
What is a distribution ERP?
A distribution ERP is a business system for wholesalers and distributors that manages quotes, sales orders, pricing, purchasing, stock across locations, picking and dispatch, and returns on one set of data. It usually connects to accounting software for invoices and GST, and to an online store or B2B portal so customers can order directly.
What features should wholesale distribution ERP software have?
The core features are live available stock on quotes and orders, customer-specific pricing rules, purchasing with reorder points and supplier lead times, multi-location inventory, barcode picking and dispatch, returns handling and integration with accounting. Importers should also look for landed cost, and food or regulated products need lot or batch tracking.
How do I calculate landed cost for imported goods?
Add every cost of getting the goods into your warehouse to the supplier price: international freight, insurance, customs duty, broker and port charges and local delivery, all converted to Australian dollars. Spread shared shipment costs across the items by value, weight or volume. Check with your accountant or customs broker how duty and import GST should be treated.
When should a wholesaler move from spreadsheets to an ERP?
Usually when stock is promised that is not there, prices are quoted wrongly, purchasing relies on memory or orders are typed into more than one system. If several of these happen every week, the cost of errors and rework is likely higher than the effort of putting orders, stock and pricing on one system. Custom ERP
Do distributors need a separate warehouse management system?
Not always. Many small and mid-sized distributors manage bins, picking, barcode scanning and dispatch inside the ERP’s inventory module. A separate WMS (warehouse management system) becomes worthwhile with high order volumes, many pickers, complex storage such as directed put-away in pallet racking, or logistics customers who need their own reporting.
Sources
RelatedCustom ERPDistribution & wholesale industry viewQuote automationERP and AI glossary