How Can ERP Prevent Profit Erosion?

Profit Erosion ERP

Grow Your Profits with ERP Software 

The scary thing about profit erosion is that it creeps up on your business without anyone even realizing it. Profit erosion isn’t something that results from losing one huge deal or a shutdown of your most important equipment. It comes from long-term, subtle issues, such as increases in a few overhead costs or a slow decline in revenue. How can your business detect these shortcomings before they hurt your bottom line? 

Answer: enterprise resource planning (ERP) software. ERP gives manufacturers and distributors the visibility and control necessary to prevent profit erosion. Below, we provide some methods for using your ERP to strengthen your profit margins.  

Real-Time Data 

When it comes to your business, you can’t solve problems if you don’t even know they exist. That’s why businesses need a solution that can capture a wide array of data. ERP software has become incredibly sophisticated when it comes to generating valuable insights. Epicor, for example, includes an award-winning business intelligence (BI) tool called Epicor Data Analytics. It also provides embedded analytics and real-time metrics in its active home page, giving users the power to drill down into an array of reports and track relevant KPIs. With data at your fingertips, you can become a more proactive decision maker.  

ERP insights allow users to detect potential issues before they erode your profits. A few ways you can use ERP data to avoid profit erosion include:   

  • Measuring Performance: ERP solutions allow you to set up KPIs to track your performance in real time. For example, you can monitor Overall Labor Effectiveness (OLE) and Overall Equipment Effectiveness (OEE) to detect lapses in the performance of your employees and equipment and create strategies to optimize productivity.  
  • Cost Breakdowns: Pricing becomes difficult for businesses with complex products. Fortunately, ERP makes it easier by consolidating your data in one place. ERP can break down the costs of your final product into all its components, allowing you to price effectively and identify unnecessary expenses.  
  • Lean Metrics: Reducing scrap, rework and other forms of waste is critical to cutting costs and bolstering your bottom line. Epicor provides lean metrics, so you can find areas of waste and enforce lean manufacturing strategies. 

Process Automation 

Mistakes happen, especially if you’re a manufacturer that depends on manual processes. When employees spend a lot of time keying in data and performing other rote tasks, they’re liable to make errors occasionally. Unfortunately, these mistakes could cost you big. By automating routine processes, ERP cuts down on human error. This increases precision and helps you avoid costly issues.  

Additionally, workflow automation enhances efficiency. Employees don’t have to waste time on menial tasks, giving them more time to focus on decision making and value-added tasks. Greater efficiency also enables your business to meet customer demands quickly, thereby increasing customer loyalty and revenue. Another benefit is reduced overtime pay, since users will be able to complete more operations in less time. By reducing overhead costs, minimizing mistakes and increasing productivity, process automation tackles common causes of profit erosion.  

Inventory Management 

You’d be hard-pressed to find a manufacturer that doesn’t list inventory as a major expense. Inventory management typically entails relying on spreadsheets and hand-checked lists. As you can imagine, it’s difficult to obtain visibility into stock levels or maintain accuracy with this method. This results in high storage costs for businesses with excess inventory, or large payments for expedited shipping when companies experience stock outs.  

ERP software includes comprehensive inventory management capabilities to cut inventory expenses. Epicor allows users to track several variables, including material cost, parts, FIFO cost, reorder analysis, stock status and more. This gives you deep insight into inventory processes and costs, so you can identify areas of waste. Epicor also provides detailed audit control to help you maintain quality and avoid recalls. With greater inventory visibility, your organization can reduce annual costs to prevent profit erosion.  

Supplied Materials 

Some costs seem difficult to reduce, such as costs of raw materials. However, ERP can help you find ways to lower these expenses by providing greater control over supplier relationships and purchase management. Epicor Commerce Connect is more than an eCommerce solution for customers; it also serves as a self-service portal for you and your suppliers, so you can quickly handle inquiries and streamline communication. This tool gives manufacturers the ability to react rapidly to any change in supply.  

In addition, ERP automates purchasing, improving your company’s ability to meet material requirements and on-time delivery schedules. Your ERP will also approve suppliers before submitting orders and work to find materials at the best prices. Epicor creates a detailed receipt of suppliers’ lead time and delivery to ensure you make the right choice. This helps you maintain quality and make smart purchases. With ERP software, you don’t have to worry about ordering the wrong quantity of materials or purchasing from unreliable providers. This goes a long way in getting rid of profit erosion.  

Wrap Up  

Profit erosion isn’t easy to avoid, but when you strategically use your ERP solution, you can gain greater visibility into your business performance and effectively reduce costs. However, to unlock this power, you’ll need the guidance of a software guru.  

At Datix, we’ve been helping businesses maximize the value of their software for over 20 years. We’re an Epicor Gold Partner with experience in multiple manufacturing and distribution environments. Our consultants understand the challenges of various industries and how to align ERP software with your unique requirements. Datix offers a wide range of services and solutions designed to boost profits and productivity.  

Don’t let profit erosion hurt your bottom line. Get in touch with one of our ERP experts today!  


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