What Is Distribution Software?

Helen Akers

Distribution software is an application package integrated into computer systems that helps an organization manage its supply chain process. Some organizations use enterprise solutions that combine the functions of two or more departments that directly affect inventory. The different functions in a distribution software application can help with inventory management, forecasting, purchase orders, accounting, and customer relationship management.

Distribution software is often linked to SKU codes to help track inventory.
Distribution software is often linked to SKU codes to help track inventory.

Companies that distribute and maintain inventory may find that distribution software is necessary to keep track of their products. Since the distribution pipeline usually requires that products be stored in warehouses and moved from one location to another, the software application is an automated way of managing inventory levels by SKU or UPC. One of the main reasons why distribution software is used is to instill some sort of warehouse and inventory management system.

A distribution software application can help with purchase orders.
A distribution software application can help with purchase orders.

Warehouse management helps companies keep their warehouses organized. The software's functions identify storage locations for individual products by UPC number, help employees locate suitable spaces for individual shipments, and pull product as needed. It can also help warehouse personnel reorganize space to make room for new product additions or improve the efficiency of pickers by locating like products near each other.

Monitoring real-time inventory levels of each product that is stored in company warehouses is another important function of distribution software. Inventory management identifies what products are running low and need to be re-ordered in order to meet demand. Forecasting product demand based upon customer ordering history is an automated task that the software can manage once specific parameters are defined. The software is flexible enough for employees to manually adjust those parameters as necessary, if demand becomes out of line with supply levels.

Since supply chain management is largely driven by sales, enterprise systems may be used to achieve some sort of automation between the sales and operations departments. For example, a manufacturer that sells directly to retail accounts might purchase distribution software that automatically transfers sales orders to the warehouse's computer system. The system in the warehouse then deducts these inventory levels from its location and generates renewal orders from suppliers or main distribution centers. A warehouse computer system might also generate orders for pickers to locate, fulfill, and package for pick-up.

Customer relationship management (CRM) may be included in some distribution software packages. This function manages pricing, ordering levels from sales, and the ordering process. Links to external support services may be included in CRM applications. These are usually services that are beyond the scope of both the warehouse and sales personnel, such as billing or technical support.

Supply chain management software might also include sales and accounting functions. Not all organizations will use this, but it can include a general ledger to record accounting transactions. Finance management functions generate and keep track of accounts payable and accounts receivable based upon orders received from sales.

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