Distributors in modern supply chains face a ton of challenges. Most industries are highly competitive.
Speed and accuracy are key to customer satisfaction, and efficiency is critical.
It’s a tough problem — tough enough that as many as one fourth of distribution centers were planning to spend $500,000 or more on warehouse technology in 2022.
Unfortunately, many distributors are quickly overwhelmed by industry needs.
Companies need to manage extensive product catalogs, arrange competitive pricing across multiple markets, and meet unique customer demands — all while trying to stay profitable.
It’s a big ask, and a handful of mistakes can result in huge losses.
Automating some aspects of the ordering process can help, and that’s where Configure, Price, Quote (CPQ) solutions are most effective.
These tools work to simplify the ordering process and help distributors generate accurate quotes more easily.
Here’s a closer look at how it works.
What is CPQ software, and why does it matter in supply distribution?
Configure, Price, Quote (CPQ) software describes a collection of tools aimed at handling various aspects of the sales process.
Broken down, CPQ helps teams do three basic things:
- Configure product solutions more effectively.
- Set accurate pricing using customized rules.
- Generate quotes from user-selected product configurations.
Most CPQ solutions use onboard product catalogs and built-in pricing engines to automate this process.
This allows suppliers to set up their own rules around pricing and ordering, based on things like sourcing requirements, product popularity, or existing supply chain issues.
After orders are built, CPQ platforms usually offer onboard quote generation.
This can vary from simple designs based around templates all the way to PandaDoc’s from-scratch document generation tools.
For suppliers, the real power of CPQ is the ability to streamline order workflows and expedite sales cycles.
Using CPQ, sales teams can quickly create orders that are tailored to a customer’s needs, push those inputs through an automated quoting process, and deliver a specialized quote in minutes.
The entire process is also managed by pricing rules set up within the product, so discounts and extra charges can be applied to orders automatically.
For the sales team, that means less time focused on details and more time spent building customer relationships or winning new business.
With razor-thin margins, a company’s operational efficiency and customer experience directly determine its survival.
This makes CPQ more vital now than ever before.
How CPQ improves sales and ordering workflows
Sales processes are time-consuming and error-prone, especially when quotes are calculated by hand. That can make a mess of an already complicated supply chain.
Reps building quotes in Microsoft Word or similar tools need to copy product information, pricing details, and requested totals into a pre-built quote template in order to finalize and deliver a quote to customers.
Any mistakes in this process can lead to confusion and lost profits. CPQ automates this process so that operations are faster, smoother, and more reliable.
Faster product configurations
Creating custom orders increases in difficulty as products become more numerous and complex.
Even with top-notch inventory management, extensive product catalogs can be difficult to navigate.
This is problematic, because sales reps need to know that a product or solution is available to be sold before they can include it as part of a bespoke solution.
It’s also easy for reps to overlook component parts if they’re unfamiliar with the finished product.
For example, if a customer wants to order wood for a construction project, nails or screws are likely required for assembly.
But a new team member can easily overlook those details when calculating orders by hand.
Integrating CPQ technology tackles this problem through digitization and custom product configurations.
Product catalogs, like what we offer at PandaDoc, are searchable.
Rather than sifting through dozens of line items on a spreadsheet, reps can sort by category, product name, and more.
Products with component parts can also be bundled together, ensuring that customers get everything they need in their first order.
For suppliers, this powerful feature can also be used to bundle popular products into single-click items within the CPQ. Done this way, solutions can be built in a few minutes — often in real time.
Accurate, rules-based pricing
Pricing can be tricky for distributors working across a broad area. Regional costs, shipping fees, and customer-specific agreements add complexity.
A single mistake can eat into your margins and cause unnecessary customer frustration.
CPQ solves for this with pricing generated from rules that you create within your software.
For example, PandaDoc CPQ allows teams to define discounts for bulk orders, apply shipping fees and taxes based on a specific region, or trigger discounted pricing when specific customer accounts are selected for a quote.
In practice, this means that a rep can create a specialized order for a long-time customer with a nationwide presence and generate a quote with all the appropriate discounts, fees, and taxes applied.
The best part: Because administrators set the rules, CPQ software can be customized to your pricing strategy and market preferences.
All of these details are handled automatically, so reps can meet customer expectations without worrying about those minor details.
Dynamic quote generation
Creating quotes via traditional methods often involves juggling spreadsheets, product catalogs, templates, and pricing information.
It can be a multi-hour process when done from scratch, and approval processes can delay that even further. Ultimately, that means a longer quoting process and further delays in the sales cycle.
CPQ software tries to streamline this process by consolidating all order and product information into a single output.
However, results can vary. Many CPQ tools provide quote templates that lack the flexibility and versatility required for multi-industry distributors.
You might also be able to upload a custom quote template but, in these scenarios, other software solutions (design or proposal software) may be required.
PandaDoc excels in this area because our CPQ solution is built on top of our drag-and-drop document editor.
Administrators can design their own quote templates from scratch or modify a template from our existing library and make it their own.
It’s easy to do this for multiple industries to create targeted quotes and proposals that work seamlessly with the bill of materials generated by our onboard CPQ mechanics.
Great-looking, branded quotes make your business and your product offering stand out. That can be a lasting advantage in a crowded marketplace.
Easy collaboration workflows
Especially in supply and distribution, sales is a collaborative effort.
Quotes can require input from multiple departments, supervisory approvals, signoffs from finance teams, and more.
Without a unified system, documents need to be emailed or printed and shuffled across separate teams.
That’s a ton of extra work, and most of it can be eliminated through CPQ automations.
Because pricing rules are automated, teams will need to determine those restrictions and requirements before the system goes live and keep them updated as business evolves.
For example, if product pricing changes or a customer account graduates to a new tier, the backend rules need to be updated to reflect that change.
This is also true for taxes, fees, and other calculations that your CPQ needs in order to create accurate quotes.
Rather than cross-communicating between departments, selected members on each team can simply update the rules in the CPQ and leave sales reps to handle the rest.
PandaDoc goes a step further by offering collaborative workspaces and editing environments for every document.
Once a deal is sent, customers and teams can review and comment on the document to negotiate changes in a live environment.
Error reduction — with safeguards
Errors in product configurations and pricing estimates can lead to profit loss and unhappy customers. Without automation, these mistakes are all too common.
Manual processes leave room for human error. Sales reps might miscalculate a bulk discount, overlook critical components, or fail to factor regulatory costs like taxes and tariffs.
These small mistakes add up over time, eroding customer trust and forcing companies to cover unexpected expenses.
CPQ works to actively reduce these errors with automatic calculations, but onboard rules leave room for edge cases and unusual situations.
In PandaDoc CPQ and similar tools, when a deal is constructed that falls outside of normal parameters, it’s flagged for an automatic review as part of an approval workflow (crash course here).
The deal isn’t automatically rejected or marked as invalid. Instead, supervisors can review the quote and either approve or reject it.
This approach provides team members with a standard operating playbook while leaving added flexibility in place.
Where is CPQ most useful in supply distribution?
CPQ systems are industry agnostic. Most can be customized across a broad range of industries.
That’s good, considering that upwards of 30% of distributors align themselves with the tech industry, where complexity is par for the course.
Particularly in supply and distribution, these tools stand out when products are complex, varied, and the rules surrounding customers and regions vary.
Industrial equipment and machinery
Heavy machinery and specialized industrial equipment can come with several configurations tailored to specific customer requirements.
This could include everything from multi-part components and devices with specific compatibility requirements all the way to upgrades or accessories.
Regardless of the circumstance, these options and add-ons (even if optional) can further complicate an already-complex process.
CPQ platforms can help to streamline this configuration process by ensuring that selected components are compatible (adjusted via backend rules).
If they aren’t, an approval process can be used to prompt a secondary review.
Electronics suppliers
The tech sector is full of products and components that only function if specific hardware specifications are met.
Some companies even systematize their product offering so that compatibility is limited to brand-only products.
Distributors handling these products can leverage CPQ tools to ensure minimum specifications are met, bundle products together to meet component requirements, or sell preset configurations as single line items.
For example, sales reps in this space can quickly assemble a complete order for a data center installation, including servers, cables, and racks.
When configured correctly, CPQ software can automatically add missing essentials to ensure that no components are overlooked.
Building materials and construction supplies
Many construction projects require large-scale orders with diverse materials (lumber, concrete, hardware, etc.), and distributors in the space may need to keep multiple types of a product in stock to meet demand.
CPQ solutions need to be able to clearly distinguish between various materials while also supporting order logistics.
Using rules, the CPQ should be able to factor for volume discounts, regional pricing, shipping logistics, and more.
These and other features help suppliers generate quotes quickly, complete with full cost breakdowns for customer review.
Food and beverage distribution
Speed is critical in food distribution because goods are perishable. The ability to produce accurate quotes quickly for buyers helps to move products out of the warehouse and onto customer shelves.
CPQ solutions are particularly useful in this sector when tailoring quotes for large-scale food orders.
Rules can help suppliers stay compliant with regional regulation while ensuring that the sales process remains fast and smooth.
Imagine building a bulk order quote that accounts for all regional taxes and shipping costs in a matter of seconds. With CPQ, it’s simple, easy, and achievable.
Choosing the right CPQ for supply distribution business
Because suppliers and distributors often feature robust product catalogs, CPQ systems can go a long way in smoothing out rough sales processes.
While there are plenty of options on the market, some CPQ solutions are better than others.
If you’re shopping around, here are the main features you should consider before you buy.
Flexible configuration options
Product configurations can be a game changer for distributors.
While reps can always configure solutions manually, the ability to bundle products together makes one-click ordering a reality for sales reps.
Added flexibility in the ordering process also makes it easy to accommodate diverse customer needs without sacrificing accuracy or speed.
For example, administrators could use CPQ tools to bundle common orders from longtime clients.
When the client requests fulfillment, reps would only need to select the bundle, input the customer’s quantity requirements, and finalize the quote.
Advanced pricing rules
As distributors grow and scale, pricing becomes more complicated.
More products, more customers, preferred accounts, and component parts are just a few of the issues that can create snags in the ordering process.
CPQ solutions with advanced pricing rules offer automation that accounts for these variables without lengthy debates and decision-making processes.
The ability to apply correct pricing across a wide range of dimensions (account, region, quantity, etc.) as certain rules and conditions are met streamlines the entire ordering process.
Rather than getting into the weeds with granular details, reps can focus on delivering accurate quotes and great customer service.
Customizable templates
The ability to make quotes and proposals look and feel on-brand can go a long way toward building a strong reputation.
Not only does a custom design allow quotes to stand out; it also gives teams the opportunity to add additional, personalized collateral that can close deals faster or expand the scope of an existing business relationship.
Multiple formats and layouts can be used, each tailored to a specific use case or opportunity.
PandaDoc excels in this area by allowing teams to design documents entirely from scratch.
Distributors searching multiple markets and business sectors can take advantage of this functionality to create standardized documentation that closely aligns with a specific industry.
After the template has been created, administrators can lock it and add it to the content library for use.
When reps select a template at the end of the CPQ process, the system can pull in product and pricing information automatically.
Approval workflows
While it’s true that automation expedites sales workflows, it also runs the risk of becoming too rigid for the task at hand.
Adding an approval process ensures that outliers and edge cases aren’t squashed beneath predefined rulesets.
Some deals need added flexibility to succeed. That might require a small discount that exceeds a standard practice or the ability to add unusual quantities to a quote.
Regardless of the circumstances, an approval workflow gives deals with unusual exceptions a path forward.
In addition to strong rules and logic, effective CPQ tools also allow for the creation of customizable approval processes that can trigger a review from qualified team members.
In PandaDoc CPQ, it’s possible to establish conditional approval workflows, depending on which rule is broken and what steps need to be taken to move deals down the pipeline.
Strong integration options
Good CPQ tools can empower your team by integrating with the rest of your tech stack.
This allows data to pass seamlessly from one platform to the next and helps to keep data consistent across all platforms.
For example, PandaDoc CPQ integrates with CRM tools like HubSpot and Salesforce (and others) so that all opportunities and customer data remain within your preferred platform.
When the CPQ process is triggered, PandaDoc will pull data from the CRM and match it to the document variables within a template.
Once the deal is signed and finalized, PandaDoc pushes a copy of the completed document over to the CRM platform, where it can be linked to an existing opportunity in the sales pipeline.
If your CRM is also connected to your ERP system for inventory management, marking a deal as finalized in the sales pipeline could trigger a quantity reduction on selected items.
When integrated, all of this happens on the backend. All the end-user has to do is follow the normal opportunity process within the CRM.
Everything else happens seamlessly, expediting processes with minimal change in the standard workflow.
Streamline your distribution orders with PandaDoc CPQ
As an industry, supply and distribution is more cutthroat than ever in a post-pandemic world. Digital commerce, which has seen steady growth since 2001, is more prevalent than ever before.
High-tech solutions are more complex, and customer expectations are at an all-time high.
Teams need to be able to respond quickly when customers reach out, and CPQ tools can greatly ease that process.
If you’re looking for a great CPQ solution, we’d recommend giving PandaDoc CPQ a try.
Our ordering platform includes document design tools, unlimited electronic signature capture, payment gateways, and much more.
Sign up for a demo to get a personalized tour from one of our product specialists and see the PandaDoc difference firsthand.
Frequently asked questions
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Yes. Most CPQ platforms allow you to set up account-specific pricing rules that cover things like pre-negotiated product rates, account-wide discounts, and more.
With PanadDoc CPQ, it’s possible to have more than one rule assigned to this task, allowing for an added layer of granularity.
For example, one rule might add a discount for the account while another might offer free shipping for company orders over a set amount. One rule applies automatically, but the other only applies for that company if certain conditions are met.
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Most major CPQ options are industry agnostic, meaning that they can be tailored to fit your specific use case.
Using rules, an onboard product catalog, and features like product bundling, it should be easy to serve multiple industries from within the same CPQ platform.
PandaDoc CPQ offers categories and tagging to help out with this. As products are imported into the catalog, administrators can sort them into categories and tag them to improve search functionality.
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Definitely. Smaller distributors will benefit from removing repetitive tasks and error-prone processes from their selling workflow.
In addition to those benefits, the ability to set rules and automate workflows allows supervisors and managers to spend less time reviewing deals and more time working on other projects.
In startups and small/medium businesses, many team members fill multiple roles. The ability to step away from these very hands-on processes and only check in when an approval process is triggered can be a time saver.
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It doesn’t; you do. CPQ systems are rules-based, so your team will need to set those terms programmatically within the system.
While this is a no-code exercise, administrators will need to understand company pricing policies and which accounts have prenegotiated terms. Once those rules are set, the CPQ will automatically apply those rules as conditions are met.
However, the system won’t update its ruleset. If a partner reaches new terms or the company discount structure changes, someone will need to input that information into the CPQ.
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Sometimes. Several CPQ tools offer self-service support options through a digital portal. This works in a similar way to a standard e-commerce website, where customers select their own product and can even build their own quote.
Guided selling — seen in many CPQ tools, including PandaDoc — is similar. In this scenario, customers fill out a form and products and recommended solutions are generated from the input. This narrows the product selection for sales reps, so they can focus on closing deals without sifting through the entire product catalog.
Disclaimer
PandaDoc is not a law firm, or a substitute for an attorney or law firm. This page is not intended to and does not provide legal advice. Should you have legal questions on the validity of e-signatures or digital signatures and the enforceability thereof, please consult with an attorney or law firm. Use of PandaDoc services are governed by our Terms of Use and Privacy Policy.
