Posted by Ranga Bodla(opens in new tab), Director of Industry Marketing, Manufacturing/ Wholesale Distribution, NetSuite
To grow their markets, distribution companies often face the challenge of providing more products and services options to their resale partners and customers. To do that, they need ERP systems flexible enough to support these increasingly complex packages. A case in point is Soligent, the largest distributor of solar panels and equipment in the U.S. Soligent sells more than 2,000 different types of solar equipment from 150 solar technology makers to resale partners throughout North America. As changes in its markets have picked up speed, it needed an enterprise platform to help it keep pace.
Soligent's business is expanding as solar power continues to rise in popularity, with not only large companies and real estate developers investing in it, but increasing numbers of homeowners and small businesses as well. But as the market expands with smaller customers, prices for solar panels have declined, making for tighter margins for both distributors and resellers, as well as a rising demand for financing services to help these new customers pay for their investments.
Soligent realized that its resale partners needed more than just products, but help with financing and administrative help processing the finance applications.
“Distributors are moving beyond providing boxes of widgets,” observed Rich Tiu, Soligent’s vice president of supply chain.
In order to manage the buying, selling and shipping of so many different products, as well as provide value-added services, Soligent wanted an ERP system with end-to-end integration of processes and data, including supply chain, distributor sales, and financing, as well as reporting and analytics capabilities to help it track and evaluate trends in the data.
Soligent chose NetSuite's cloud-based ERP solution as its core platform for managing all of its operations. By residing in the cloud, NetSuite is easily accessible to its resellers, without requiring any integration with the reseller's own ERP system. In turn, that makes ramping up a new partner much easier.
Two other major advantages are data transparency and reporting and analytics tools. These two, together, have enabled Soligent to more accurately track key performance metrics and target areas for improvement.
"It provides end-to-end transparency from order entry all the way to fulfillment," explained Tiu. "The data transparency, usability and reporting has helped us become a more metrics driven culture."
This closer attention to metrics has lead to another important change in Soligent's business model, this one in its supply chain operation. The company realized that a lot of its cash was tied up in inventory. Under the traditional distributorship model, suppliers sell and ship products to distributors, who turn around and sell and ship to resellers. That leaves the distributor having to keep a lot of funds tied up in products just sitting in its warehouses. By moving to a consignment model, Soligent's suppliers still ship their products to Soligent's warehouses, but don't take payment on them until they're actually sold and shipped to resellers.
"It offsets our inventory write-down and mitigates our risk," said Tiu, noting that this type of risk-sharing with suppliers has been particularly helpful in light of falling prices in the market.
The flexibility of the system also enables Soligent to move some suppliers to the consignment model immediately, while allowing others to transition to it in the future.
As Tiu noted, "It's our building block for moving forward."