Business Automation and Software Blog

3 Real ROI Areas for Manufacturing ERP

Posted by Robert Baran on Wed, Jan 08, 2020 @ 11:00 AM

There are many reasons a manufacturer will implement an ERP, all leading to that much-coveted return on investment—or, saving more than you spent. According to one study, the average ROI of an ERP implementation is $7+ for every dollar spent. ROI plays a critical role in ERP selection and implementation, but what exactly does that mean? What is the real ROI of a manufacturing ERP?

There are many pieces that play a part in the big picture of ERP success. These three core areas show precisely where an ERP can improve manufacturing operational efficiencies and manage costs.

1: Inventory Management and Usage

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 Relying on disparate systems to track your inventory as it is used, or betting on outdated platforms that don’t give you real-time levels can introduce bottlenecks, delays, and decisions made on incorrect information.

Improving inventory management increases the efficiency of manufacturing operations. Adding a manufacturing ERP presents a significant opportunity to enhance efficiency. This plays a primary role in the decision to adopt an ERP among nearly a quarter of all companies.

A robust ERP accounts for raw materials and parts, finished products, even the maintenance schedules on the equipment needed for production lines. With a manufacturing ERP, businesses can often improve order and line fill rates while reducing administrative expenses related to customer service and issue handling. Tracking 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 gives leadership the confidence of knowing they always have the right flow of goods and materials to fill orders and satisfy customers.

2: Accounts Receivable

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

Manufacturing ERPs can significantly help in this regard by adjusting your accounts receivables workflow and tailoring them 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 while 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 other customer management tools can automate certain functions such as past-due notices, or provide alerts for your team to take a specified action based on account status.

3: Improve Supply Chain Visibility

Any time a major disruption occurs in the supply chain, manufacturing margins can change significantly. 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 while offering options for alternative vendors if necessary. You’ll get daily status reports covering orders and supply, including flags when a supplier or carrier may be experiencing delays.

Knowing your supply chain also improves the other areas, such as inventory management. A robust ERP can automatically re-order when supplies are low and choose the best options from multiple suppliers based on 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, a manufacturing ERP presents a strategic advantage regardless of your size.

Better ROI With PositiveVision

Whether you’re new to manufacturing ERP or looking to move to a more robust option for a greater ROI, PositiveVision has a long-standing track record of business software services that help customers save money while reducing inefficiencies and growing revenue. Choosing the right software can seem daunting, but finding the right partner shouldn’t be. Work with a PositiveVision expert today to find out how you can boost your ERP ROI ASAP. Let’s chat.

Topics: manufacturing ERP