How ERP Software Helps Businesses Stay Competitive

How ERP software helps businesses remain competitive

In today's highly competitive business environment, pricing plays a crucial role in attracting and retaining customers. One of the most effective ways to maintain your place in the market is by utilising ERP (Enterprise Resource Planning) software to keep your pricing strategies agile and relevant, ensuring you stay ahead of the competition.

This technology can integrate all the essential processes of your company, from sales, purchasing, and finance to manufacturing and supply chain, into a single, unified system. By streamlining operations and providing real-time data, ERP can help you to make better informed decisions and optimise your pricing strategies.

Knowing the real cost of manufacturing

Being able to quote accurately can be a real challenge for many industries, especially those with volatile pricing such as metals or long component lead times such as electronics. ERP can provide a robust platform to store all supplier prices and internal manufacturing method costs. It can even store alternatives, such as choosing to outsource or purchase pre-assembled goods rather than manufacturing them yourself – useful in times of low stock availability or for rush orders.

The real cost of manufacturing

The costs associated with time

Whilst estimating time taken from order receipt to product manufacture and despatch is a method used by many, it is certainly not the most accurate way to calculate associated time costs. Over time, processes can evolve and become more or less efficient, meaning your margin could be too high, too low, or somewhere in between. Of course, having a high margin is great for your business, but you could be losing out on sales if your competitors are offering a lower price. Conversely, a lower margin could also result in an unnecessary loss of profit.

Collecting shop floor data can help to improve the accuracy of your manufacturing costs, without adding time or complexity to your operations. Using tablets (via apps such as 123mobile) to clock on and off each stage of the manufacturing process as well as booking items in/out of stock and more, you can start to build a much more accurate picture of how long a product really takes to make. An added benefit is that this data can be used in other ways, such as evidence for performance-based staff bonuses.

By monitoring other elements such as 'landed costs' (which include shipping and other logistics expenses), you can make more informed pricing decisions, reflecting true costs and maintaining healthy profit margins. 

Waste not, want not

Waste can play a part in helping you to remain competitive. If you use items with an expiry date, such as paints or resins, then having strong FIFO (first in, first out) stock management can help you to utilise products before they expire and are no longer useable. Keeping an eye on waste in production can also deliver dividends. By combining jobs as larger runs, you may be able to reduce overall runtime or reduce waste byproducts during the manufacturing process - helping to keep overall costs under control.

Examples of ERP-driven Competitive Pricing

Here are some real life examples of how companies have employed manufacturing software to help them stay competitive:

  • Instant margin visibility: During the implementation of a new system, a company manufacturing all-terrain vehicles immediately put a stop to an order that was going through production as they realised that they were losing money on the deal. This only became apparent as they entered data into the system for the first time, giving them visibility of the real costs.
  • Speedier turnaround of custom price lists: A die casting manufacturer dealing with extremely volatile material costs was able to generate regularly adjusted custom price lists for its customers, as their ERP allowed them to export prices to Excel, modify them, and then re-import them, ready for distribution to customers.
  • Faster lead times improves margins: An instruments manufacturer was able to reduce the lead time on their core product range by 75% by utilising software tools, largely due to strengthening stock control. Not only did this improve their capability to deliver goods much faster, but also allowed them to build quotes based on more accurate costs and trustworthy margins.
  • Accuracy on quoting for different quantity breaks: A biscuits manufacturer gained confidence requoting previous jobs at different quantities, with ERP providing easy access to historical data and the ability to cost different methods. This allows them to quickly and accurately make decisions on whether new jobs were profitable or not.

Summary

The right ERP software can be a powerful tool for maintaining competitive pricing and staying ahead in the market. If you’re ready to streamline operations, reduce waste, and access real-time cost tracking, speak to a 123Insight adviser today.