- 27 April 2016
Discrete manufacturers face constant pressure to deliver a quality product on time, every time. Economic fluctuations, skilled labor shortages, and market governance and compliance mandates are only a few of the complexities manufacturers face every day. It is not easy to reduce costs and increase profitability while remaining competitive, but an enterprise resource planning (ERP) system can help.
The right ERP can can improve your product planning, manufacturing, and product delivery. Our clients use ERP to improve their decision-making, to be more efficient and collaborative, and to strengthen every aspect of their business. Ultimately, ERP makes them more profitable.
ERP can make your enterprise more profitable, too. If you’re considering implementing an ERP system for your enterprise, it will help you improve everything from your inventory levels to your procurement practices. All of that adds up to big savings for your company.
Here are some of the ways ERP can improve your profitability.
Control Selling, General, and Administrative Costs
While selling, general, and administrative (SG&A) costs can seriously impede your profitability, ERP can help you cut costs and boost profits. Deloitte points to ERP’s ability to lower SG&A costs as one way ERP provides value to enterprises. What would a 1% reduction in your SG&A costs mean for your enterprise? Two percent? ERP can find money your enterprise is leaving on the table.
Maintain Proper Inventory Levels
Inventory bloat is expensive. With ERP’s forecasting and demand management capabilities, you can keep your inventory at the right level – not so high that expenses get out of control, and not so low that you can’t respond to sales opportunities. ERP can help you with inventory control and track your raw materials, products in progress, and finished goods.
If your company has multiple divisions or acquisitions to absorb, it can be difficult to keep all the financials straight. ERP can consolidate your financials and improve your financial data access and reporting. You will spend less time searching for the relevant numbers, and more time acting on what the numbers are showing you, to make your enterprise more profitable.
Finding, evaluating, and engaging suppliers can be time- and labor-intensive. ERP’s sourcing and procurement module encourages strategic sourcing, which helps you maximize returns while minimizing inefficiencies.
In 2013, the Government Accountability Office (GAO) released a strategic sourcing study which showed officials from leading companies saved between 4-15% over prior year spending as a result of strategic sourcing. Your company could probably save money in sourcing practices too, and ERP can help you do it.
Cutting Time to Market
The longer your product development cycle, the greater your costs. Rapid deployment reduces your costs and delivers the responsiveness customers need.
ERP provides information on your product development cycle that identifies the areas that need improvement. As your process improves, your time to market will go down and you may even find you can increase production, leading to more profit.
Information is power. In today’s agile manufacturing environment, where needs and parameters are constantly changing, an ERP system can guide you through the change, giving you all the information you need to improve every aspect of your discrete manufacturing process. As these benefits show, ERP can help you reduce your costs and maximize your profit.
Every organization could benefit from trimming inventory levels, reducing SG&A expenses, and cutting time to market. An investment in ERP is an investment in the future of your enterprise. Don’t wait to take the important step of implementing an ERP system in your enterprise. Start reaping the benefits now.