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How Can Distribution ERP Systems Support Granular Financial Analysis?

September 17, 2013BY AMS Editor

Granular Financial AnalysisToday’s distribution ERP systems can help distributors gain better insight into the details of their operations with minimal effort.

According to an article on the EBN website, companies should evaluate their finances on a granular level as opposed to the aggregate. An aggregate is just a homogenous snapshot that doesn’t break down data so it can be analyzed by product type or region, for example.

“A snapshot is inadequate for drilling down and determining how you can increase profits,” author Frank Cavallaro writes in the article. “You need to get granular with your financials.”

The author’s statements about the need for more granular financial analysis are correct. However, what he does not address is how to get this without burdening internal resources. For the type of analysis being called for, it is important that the distribution ERP system provide a built-in, real-time analytics engine.

It is also imperative to do away with the separation of general ledger transactions and underlying business transactions common to older distribution ERP systems. There is a new breed of ERP, such as SAP Business ByDesign, that does not require that the parameters being analyzed be built into the general ledger account structure.

In order to support the author’s desired reporting in more traditional distribution ERP applications, it would be necessary to build multi-segmented general ledger account structures where there are defined segments for attributes such as customer class, product line and geography.

This should not be necessary since all of these attributes and more are already part of the underlying business transaction. So long as the built-in analytics engine of the distribution ERP system has the intelligence to tie the transactions to the financial postings, it should be easy to get the analytics that the author of the EBN article points to in real time with only a small amount of internal resource effort.

In the end, that means distributors can run their businesses faster than ever with real-time data, and they don’t need a data scientist to figure out what it all means or to do advanced reporting. Users can make better, faster decisions, promoting growth by enabling all employees to access the data they need to accomplish the company’s goals.

Source: EBN, August 2013

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