Distribution ERP Selection - A Playbook for Real‑World Distributors

The real ERP cost in distribution isn’t the license—it’s hidden margin loss from weak pricing controls, rebate leakage, stock‑outs, fragile integrations, and endless credit/rebills. The cure is to evaluate software the way your branches actually operate: by process fit (quote→order→pick/pack/ship→invoice, returns→credit/rebill, branch transfers, drop‑ship), pricing & rebates depth, WMS/TMS sophistication, and the integration posture you’ll live with for years.

What follows is the short, practical guide I wish every team had before talking to vendors. It’s vendor‑neutral and shaped by work in high‑volume branch networks where hundreds of sites, thousands of associates, and complex contracts must run without drama.

What “distribution‑grade” ERP really means

If a platform can’t do these well, it’s not built for distribution:

• Branch‑first inventory with network‑wide visibility (ATP that “sees” nearby branches; easy, auditable transfers).

• Pricing engine that’s your margin engine - Matrix & contract pricing, SPAs, customer/product groups, escalators, price protection.

• Rebates you can trust - Accrual at order/ship/invoice, claim automation, and reconciliation without spreadsheets.

• WMS/TMS that fits the dock - Directed putaway, wave/zone picking, cartonization, route/stop planning, freight allocation back to the line.

• Planning that respects reality - Seasonality, supplier calendars, lead‑time variability, multi‑echelon options.

• Integration by design - EDI 850/855/856/810, cXML/PunchOut, API/webhooks for ecommerce, CRM/CPQ, 3PL and carrier feeds.

• Field sales & self‑service - Fast CPQ/quotes, substitutions, and a portal that reflects real availability—not last night’s batch.

Distribution ERP selection criteria that matter more than a feature grid

1. End‑to‑end process fit

   1. Quote→order→pick/pack/ship→invoice; returns→credit/rebill; cross‑dock & drop‑ship; branch transfers to save a sale.

2. Pricing, contracts & rebates depth

   1. How are matrices stored? How fast do queries return prices? Can the system accrue/claim SPAs and rebates without side ledgers?

3. Warehouse & logistics

   1. Directed work, replenishment, waves, cartonization, carrier‑compliant labels, route/stop, and freight allocation back to the line.

4. Inventory & demand planning

   1. Service‑level targets by item/location, ABC/XYZ, supplier calendars, constrained planning.

5. Integration architecture (API/EDI)

   1. Event‑driven design, webhooks/retries, EDI exception queues (vs. email folders), iPaaS patterns when needed.

6. Analytics & data model

   1. Margin at line level, GMROI, turns, lost‑sales capture, backorder visibility; clean customer/item hierarchies.

7. Platform & extensibility

   1. Low‑code extensions, upgrade cadence, sandbox quality, security and SOD controls (especially for price overrides).

The weighted scorecard (keeps decisions objective)

Assign 1–5 for each, multiply by weight, and compare totals:

• Distribution process fit (×20)

• Pricing, contracts & rebates (×10)

• WMS/TMS (×10)

• Inventory & planning (×10)

• Integration & EDI (×10)

• Commerce/CRM/CPQ (×6)

• Project/Bid & job mgmt (×6)

• Analytics & data model (×6)

• Platform/extensibility (×6)

• Security & compliance (×4)

• TCO & commercials (×6)

• Partner & support quality (×6)

Tip - Lock the weights with stakeholders before any demos. It prevents post‑demo re‑weighting to force a favorite to win.

Script your demos like real life—not like a brochure

Bring these five scenarios (with your data) and score what you see:

1. Branch transfer to save a sale

   1. Start a quote where the home branch is short; system suggests nearby branches/ETAs and transfer cost; margin recalculates; transfer order auto‑created.

2. Rebates & SPA control

   1. Create a municipal/project price with SPA; book order; accrual happens automatically; run a claim and match remittance; no spreadsheet gymnastics.

3. Drop‑ship with EDI

   1. Customer PO → EDI 850 to supplier; 855/856 updates surface in ERP and portal; 810 reconciles with tolerances and freight rules; exceptions queue only.

4. Credit/Rebill (returns reality)

   1. Return from a multi‑shipment order; automate credit/rebill with restocking/freight; commission and margin corrected transparently.

5. Project releases over time

   1. Staged releases over months; price locks and escalators; allocate long‑lead items; release calendar with ATP that spans the network.

If a vendor can’t demo these without workarounds, they don’t really do distribution.

RFP questions that expose reality (steal these)

• Show table design for pricing matrices/contracts/overrides; max row counts and expected query latency.

• How do you accrue and claim rebates & SPAs end‑to‑end (no spreadsheets

  )?

• What events publish (order, ship, invoice)? Webhook retry semantics and dead‑letter handling?

• WMS specifics - Slotting, replenishment triggers, waves, cartonization, labels.

• Planning - How are service‑level targets set and maintained by item/location?

• Security - SOD controls and audit trails for price overrides and credit/rebill.

• Upgrades - Cadence, regression testing, and how customizations survive updates.

• References - Three distributors +/- 2× your size—with contacts.

Data migration & change management (where projects live or die)

Migrate, don’t retype these data elements: items & attributes/cross‑refs, customers/sites & contracts, price matrices, suppliers/price files/lead times, open quotes/orders/POs, on‑hand & in‑transit, rebate programs/SPAs & open claims, COA, open AR/AP, taxes, freight tables.

Common pitfalls

• Dirty customer/product hierarchies break pricing rules.

• Rebate/SPA data scattered across silos.

• UoM conversions and pack sizes inconsistent.

• Freight & landed‑cost rules not codified.

Approach that works

• Start with the canonical pricing & rebate model and map the world to it.

• Freeze data ownership by domain; run mock conversions; pilot with one or two branches.

• Govern changes with real change‑control and test discipline so your validated state survives iterations. (The same rigor we use on regulated projects—change tickets, approvals, test evidence—keeps distribution rollouts clean.)

12 KPIs to baseline before you sign

Fill rate (OTIF); GM% at line; rebate capture vs eligibility; GMROI; turns; backorder % and age; lost‑sales capture; dock‑to‑stock & putaway accuracy; order cycle time; credit/rebill rate & margin impact; freight recovery vs cost; supplier OTD; user adoption of standard workflows.

Risks & anti‑patterns (and how to avoid them)

• Underestimating pricing/rebate complexity → Model in detail; demand a data‑backed demo.

• Partner lacks distribution depth → References with similar branches/volume; score their demo like yours.

• Integration fragility → Event‑driven design, contract tests, visible EDI queues.

• Data quality derails go‑live → Mock conversions, golden‑branch pilot, DQ scorecards.

• Scope creep in WMS/TMS → Phase by value; tie to KPIs; keep carrier integrations in scope.

• Customization debt → Prefer configuration/extensions; enforce design guardrails and change control.

FAQ (healthy internal debate starters)

• “Should we shortlist by logo or by process?”

  • Process. A mid‑market cloud ERP with the right pricing/rebate/WMS mix often beats a larger logo with gaps.

• “Can’t we just bolt on rebates later?”

  • You can, but leakage will have already happened. Bake it in.

• “What about TMS?”

  • Start with freight allocation and route/stop planning that ties to margin; deepen from there.

Next steps (one page to action)

1. Shortlist three vendors aligned to your size and complexity.

2. Run the five demo scenarios above with your data.

3. Score with the weighted template and debrief with branch leaders the same day.

4. Pilot with one or two branches, then scale.

If you want a head start, I can share a ready‑to‑use scorecard + demo script and facilitate a fast 2‑week bake‑off—vendor‑neutral and focused on evidence.

Why listen to this advice?

Because it’s been forged in multi‑branch distribution at Fortune‑500 scale, where the cost of getting pricing, rebates, transfers, dropship/EDI, and credit/rebill wrong shows up in millions of dollars of lost or delayed margin. The playbook above captures what actually moves the needle, not just what looks good on a slide.

Implementation note - Our programs use formal change‑control, test evidence, and release practices so selections convert into stable go‑lives—habits borrowed from validated environments and adapted to distribution rollouts.

Selecting a distribution ERP isn’t about reading feature lists—it’s about proving which platform can handle pricing, rebates, transfers, drop-ship, credit/rebill, EDI, and warehouse reality without workarounds. Use this playbook, scorecard, and demo scripts to cut through the noise and see which vendors can actually run your business on Day One. If you want help shaping a fast, evidence-based selection process, I can guide your team through a structured, vendor-neutral approach.

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