How manufacturers can increase profit with ERP
Many businesses hope that implementing an ERP system will improve their business' profits. By magic...
It can push up profits, if you deploy it in the correct manner and realise that ERP is a means to an end. This article is going to look at six key areas that ERP can help to increase profit.
1. Reduce overtime
An obvious place to improve profit is through reducing overtime. Preventing your profit margin from eroding is the job of every manager. Having a better view of your capacity levels allows you to load your business effectively. Scheduling work orders more effectively is also critical here. Good ERP systems will help you do both with less effort.
Fraction ERP's fast, visual, scheduling screen
2. Generate more turnover on basic hours
Again, through better scheduling and improving your utilisation levels, you can reduce your costs. Fewer costs usually equates to higher profit.
Another key point here is ensuring that your ERP system helps your production to flow. Work stations stopping and starting is a surefire way to reduce profit levels. Good shop floor tracking tools, effective scheduling and good communication resolve this point.
3. Work on strategic projects
Freeing yourself up from mundane tasks, like hunting for production, is the purpose of ERP. You can then redirect your efforts onto more important tasks.
Most production staff tie themselves up chasing production. They spend very little time on improvement projects.
If you can flip this approach, the level of profit your ERP system can help you to achieve is up to your imagination!
4. Win better work
When you win better work, you usually attract better profit margins. Winning better work is often a result of proving yourself as a 'go to' supplier for your customers.
How do you become a 'go to' supplier?
Two practical ways are improving your on time delivery performance and improving communications. You can improve delivery performance through using the tools of an ERP system.
- Using exception reporting to focus on the right production issues,
- Effective scheduling of your resources,
- Managing production in real time.
The other key element is good communication with your customers. By having data at your fingertips, as you can with a good ERP system, you can proactively work with your customer.
View key information with just one click, from Fraction ERP's dashboard
5. Save money on materials
Lowering your cost of production includes the material spend. Better buying decisions, using up offcuts / existing stock and managing your inventory are important factors.
An ERP system should help you to do this from day one. Having good stock searching facilities and simplifying purchasing demands are essential features. When you save money in this area, it directly improves your profit.
Fast search tools appear throughout Fraction ERP
6. Other benefits
There are other benefits of having an ERP system that can help improve profit. Most of these benefits orbit around the idea that burnt out staff don't work at their best.
Improved sanity(!), a clear mind, feeling less stressed... You get the idea but they all lead to your team performing better.
When you perform better, you produce better results. This can translate across to improved profit.
So, can an ERP system help you to improve the profit levels of your business? Yes it can, if you use it as a tool to help you release the profit from your business. All the points made above only happen if you use an ERP system in the right way.
Another point that we need to make here is around having easy access to your data. The decisions that you need to make for the above points requires accessible data. This means that the data is both available for you to interrogate and on a device when you need it.
That brings us back to Fraction ERP.
We built Fraction ERP because we wanted a fast, cloud based, ERP system. That is what we got.
It has fast access, from any device. It has fast searches and you can search through your data with speed. It has flexible workflows that let you work in the way that you want to work. It has effective production tracking tools and simple scheduling options.
In short, we have built an ERP system that helps manufacturing businesses to achieve higher levels of profit. Our belief in it is so great that we use it in one of our own manufacturing businesses.
Below is an overview video. If you want to find out more, then sign up for a free demo using the form below. If you like the demo, you can then have a free 14 day trial.