ERP is all about control. An ERP system creates a clear picture of the flow of materials, labor and equipment utilization across the enterprise. This improved communication allows the organization to fine-tune processes, identify and eliminate waste, and streamline scheduling. Below are four specific places where effective use of ERP can capture real savings.
Reduce Inventory Levels - Inventory management is a significant portion of operating cost. Inventory consumes employee time, utilizes production capacity, and ties up valuable working capital. ERP allows a company to get a clear, across-the-enterprise picture of inventory flow. Assessment of inventory balances allows the business to decrease materials on hand without impacting production. Tracking expiration dates or discontinued items will allow the business to close out inventory balances without significant waste.
Reduce Cost of Materials - ERP systems enable efficient supplier interactions. Proper forecasting allows for materials ordering without costly last-minute requests and small batch runs. Supply chain visibility allows your employees to spend less time trying to organize and order materials. Efficient use of ERP systems can even automate some aspects of ordering materials, freeing up valuable resources. And analysis of inventory on hand allows a business to spot areas where more competitive pricing may be available.
Reduce Labor Costs - Labor is often one of the largest portions of COGS. ERP systems help you make the most of your labor investment. Improved forecasting ensures you do not waste production man-hours on unnecessary product. Proper scheduling makes the best use of your capacity, preventing product from being produced on overtime. Indirect labor is also significantly impacted. The transparency provided by an ERP implementation will make planning, scheduling and procurement more efficient.
Improve Production Throughput - The phrase Enterprise Resource Planning means using data and information to employ all of your tangible and intangible assets in the most efficient and effective way possible. ERP stores all of your production processes, all of your labor availability, all of your materials, and develops a schedule to maximize your return on investment. From minimization of costly changeovers to “right-sized” production runs to on-time delivery, ERP streamlines your operations. The result is less waste, higher quality, and improved customer satisfaction.
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