The 3 Key Areas of ROI for Manufacturing ERP

The 3 Key Areas of ROI for Manufacturing ERP

Author: | Published: 05 Nov 2019

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Manufacturers and major enterprises always look to the returns they can make from implementing new tools, especially far-reaching solutions like ERPs. With the critical role that ROI plays in both ERP selection and implementation, we’re taking a look at three core areas where an ERP can improve operational efficiencies and manage costs.

1 – Inventory management and usage

Inventory management is one of the largest consumers of money and man-hours in a manufacturing operation. Relying on disparate systems to track your inventory as it is used, or outdated platforms that don’t give you real-time levels can introduce bottlenecks and delays.

You also know that improving inventory management increases the efficiency of your manufacturing operations. ERP presents a significant opportunity to enhance efficiency and this plays a primary role in the decision to adopt an ERP among nearly a quarter of all companies.

A robust ERP makes it easy by accounting for raw materials and parts, finished products, and even the maintenance schedules on the equipment you need for your production lines. Manufacturers often improve order and line fill rates while reducing administrative expenses related to customer service and issue handling. Tracking your inventory can also prevent stock-outs as well as product loss.

For manufacturers, an ERP gives you a central location to see your inventory, orders, and customer demands. Automating its reporting and analytics functions enables your leadership to always have the right flow of goods and materials to fill orders and satisfy customers.

2 – Accounts receivables

In the manufacturing world, accounts receivables are often one of the largest assets on a company’s balance sheet. Conversion of this to your cash flow makes it easier to keep your operations running by paying suppliers, lenders, and staff. The smoother your operations here, the less likely you are to need to rely on a line of credit as well.

Manufacturing ERPs can significantly help in this regard by adjusting your accounts receivables workflow to something tailored to your business processes. The ERP delivers real-time information on customers and payments, while making it easier for you to process those payments even when accounting for multiple currencies.

Manufacturers using ERPs also have an automated tool to assist tax and fee management based on local and state jurisdictions.

Finally, an ERP that is integrated with your other customer management tools can automate functions, such as past-due notices, or provide alerts for your team to take a specified action based on account status.

3 – Supply chain visibility improvements

Manufacturing margins can change significantly when a major disruption occurs in the supply chain. ERP planning tools can help limit the impact of these events by improving your ability to make decisions in real-time and with the most accurate data available.

Quality ERP systems can give you a strong understanding by tracking things like costs and price fluctuations with vendors and options for using alternative vendors if necessary. You’ll get daily status reports covering orders and supply, with flags for areas where a supplier or even a carrier may be experiencing delays.

Knowing your supply chain also improves the other areas we discussed, such as inventory management. Your robust ERP can automatically re-order when supplies are low and choose the proper vendors, if you have multiple options, based on their cost and volume of available items.

The manufacturing ERP is all about improving data understanding and control in your operations. From day-to-day management of lines and shipments to customer, cost, and payment concerns, ERP presents a strategic advantage regardless of your size.


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