2010: The Year of Distribution’s Big Break?

As we reflect on the year’s biggest developments for ERP implementations in the distribution space, increased market share stands out in various distribution verticals, from food to industrial to technology. We noticed this trend begin in 2009 and believe it will likely continue through 2011.

Wholesalers continue to lag in ERP implementations. Five years ago, manufacturing sectors were the steadfast leaders in the adoption of these technologies, but the economy has forced a recent shift. As recession challenges continue, wholesalers are taking this opportunity to invest in SAP software to become more efficient now and hopefully when their businesses start booming again.

While it may seem counter-intuitive that a recession is the best time for ERP implementations, many factors make down-times the perfect opportunity for big changes. When warehouses are at 100% capacity, it’s hard to do open heart surgery—employees are pressed to meet business demands and management can’t afford to shift labor costs from production lines to training sessions.

However, during economic downturns, companies have the time to invest in change they’ve known is necessary to create more efficient business models for when things turn around.

Mergers and acquisitions are another primary reason for the increase in ERP implementations in 2010. Money is cheap these days and companies are consolidating. These top level shifts present opportunities to introduce new business models and update process structures, which create a natural place for the adoption of ERP software into business practices.

M&A also presents new business challenges, such as dual currencies or compliance to international trade laws, which create new business needs that ERP software can address.

The increase in ERP implementations for distribution presented some big opportunities for itelligence in 2010 and we expect to see continued growth in this sector in the coming years. The challenges facing businesses today are not quickly going away, but itelligence is deeply involved as an SAP partner developing new and better ways to address these and future industry demands.

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