Understanding the Unique Challenges of ERP Systems and the Promotional Products Industry

ERP systems are essential for businesses in the promotional products sector, but they come with unique challenges. The industry has specific needs that most ERP vendors tend to underestimate. By understanding these requirements and the available options, you can ensure a more successful ERP journey.

Below, we’ll explore some of the most common challenges when implementing ERP systems for promotional products companies:

(This is the first of a series of articles on ERP Systems and the promotional products industry).

Configured Orders

At first glance, the promotional products industry may appear simple, but most ERP systems are not designed to handle the intricacies of highly customized orders. These orders often involve various options such as colors, sizes, logos, imprint methods, and locations. Managing these configurations effectively requires both industry knowledge and technical expertise, as these fields are not standard in traditional ERP systems. Suppliers often need even more granular control than distributors, restricting available imprint methods and locations to ensure orders are entered correctly. Without proper customization, many ERP systems cannot handle this, and it’s often a surprise during implementation.

Multi-Vendor Orders

Many promotional products orders involve multiple vendors. For example, a blank apparel item may be shipped to a decorator before being sent to the customer. Managing this process can be costly and complex, especially when it comes to reconciling invoices from multiple vendors. Coordinating these transactions becomes a critical challenge when the process involves taking items from one supplier, shipping them to a decorator, and distributing them to hundreds or even thousands of end users. Properly accounting for all the associated costs and ensuring they are correctly applied to the right sales orders or inventory items adds further complexity, and not all ERP systems handle this out of the box.

Apparel Orders

Apparel orders present unique challenges, particularly when it comes to managing multiple variations. A seemingly simple order may involve many options based on gender, color, size, and even decoration details. Each combination generates multiple SKUs, turning a straightforward order into a complex inventory management task. As these variations grow, the need to track and manage configurations becomes increasingly difficult. Moreover, when you add decoration details like location, method, and artwork, it makes it even harder to manage these orders within an ERP system. Most systems will require each line item to have its decoration details added individually, making the process inefficient and cumbersome. This often requires customization unless you’re using an ERP system with promotional product-specific features.

High-Line Count Orders

Orders with multiple variables, such as apparel, often result in purchase orders with numerous line items. For example, a 5-line purchase order with multiple colors and sizes can quickly expand to well over 30 line items. This not only leads to overwhelming order confirmations and invoices but can also cause significant performance issues, particularly with cloud-based ERP systems. Ensure that your system is configured to handle large orders without compromising performance.

Multiple Ship-To Addresses

The ability to ship to multiple addresses is critical for both suppliers and distributors in the promotional products industry. Many distributors prefer to send an Excel file with different shipping addresses, but this can overlook the need to determine taxes based on each destination, and it often fails to track shipments separately in the ERP system. Additionally, many ERP systems require a separate line item for each shipment for standard orders, so a 100-unit order with 100 different shipping addresses would require 100 line items. Firms often don’t realize this issue until the system goes live, leading to confusion and delays.

Tax Issues

The promotional products industry faces significant challenges with varying tax codes and rates for different product types and locations. Ensuring that each item is taxed correctly is crucial for compliance but can become a cumbersome task without the right tools. As tax laws evolve, staying compliant can become even more difficult.

Proofing and Logo Management

Proofing and logo management is another critical area. Distributors and suppliers need to ensure designs are approved before production begins, making this process much more than just ordering blank goods. Once the proof is attached to the order and client approval is obtained, the artwork needs to be maintained to ensure that the correct designs are used for decoration. Managing order entry, artwork, and files efficiently is essential to ensure the product is made and delivered correctly. Without proper integration, ERP systems struggle to manage this process effectively, usually requiring external software to handle the process which reduces the benefit of your ERP as the system of record.

Delays in Invoice Processing

Timely invoice processing is essential for maintaining cash flow and managing accounts receivable. However, delays in receiving invoices from decorators and other suppliers can make it difficult for distributors to bill clients promptly. These bills are often received after a period has closed, complicating proper accounting for the cost of goods sold (COGS).

Customer Expectations

Clients rarely plan far in advance, making most orders time-sensitive, if not urgent. Despite these time constraints, customers are eager to approve proofs and often request changes after the order has been placed. Your ERP system must be flexible enough to handle these challenges while still ensuring timely delivery and high-quality service.

(This is the first of a series of articles on ERP Systems and the promotional products industry).

If you are considering changing your ERP system, reach out to eXtendTech for guidance and support.  eXtendTech offers pre-ERP selection consulting services as well as services to support you through your ERP journey.  eXtendTech does not implement ERP systems, however, we do provide applications and services to optimize NetSuite within and outside the promotional products industry.   Take a look at our NetSuite applications specifically built for the promotional products industry.

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