According to a worldwide supply chain survey done by GEODIS, 32% of firms found cost increases to be their primary market constraint while 27% found that adapting to changing customer expectations is their number one constraint. These challenges are not new, but in the ever-changing post-COVID world they have certainly been exacerbated. While these are high-priority pain points, with increased management flexibility and the successful use of data revealed by an ERP system, they can be mitigated.
Cost Management
Due to several global economic stresses, costs of some inputs such as raw materials and fuel seem to be steadily increasing. This has resulted in smaller profit margins for companies. In order to maintain the same quality of products and services without increasing prices, companies may choose to make alterations to their supply chains.
One way to reduce costs within a supply chain is to improve cost control through data utilization. ERP systems can record data and show where the inefficiencies lie. According to a study by Aberdeen Group, ERP systems have been shown to typically reduce operating costs by 13% and Administrative costs by 10%.
When we begin to work with companies using an ERP system, we find that most of them are only using 20-30% of the features and functionality available to them. Virtually none of them are using KPIs from the data available in the system. KPIs are a quick way to know if you are on track or not. When you’re focusing on the right KPIs, you’ll get more efficient and you’ll have the ability to make quicker decisions, which means you can free up your assets to generate revenue for your company.
Using the data to generate Key KPIs, key performance Indicators, on your supply chain can provide insight into many other cost-saving opportunities. When changes are made to a portion of the supply chain, the KPI obtained after can help evaluate the effectiveness of that modification. These KPIs can also be used to manage key metrics on specific areas of the supply chain. With this data, employees can better manage their workload, increase overall efficiency, and manage their output to company expectations.
Keeping up with the Modern Consumer Market
Consumer markets are in a dynamic state. Meeting these new expectations can be very difficult for a company that is not prepared. Modern-day consumers rely heavily on increased speed in the delivery of goods. The pandemic has advanced this trend by creating a strong demand for efficient e-commerce and omnichannel communication. So having appropriate data regarding where the products are in the ordering and shipping process is more important than ever.
ERP systems can simplify this process by automatically organizing your data into a single database for the whole company. With real-time information, companies can quickly and effectively make the necessary adjustments to accommodate ever-changing consumer habits. Keeping the supply chain informed as a whole can exponentially increase productivity, speed of delivery, and the ability to adapt to new customer demands.
Inter-supply chain communication is just one of many viable options to meet these challenging new consumer demands. With the increasing use of omnichannel communications, it is important that your business can meet your customers at every touchpoint necessary and also relay that information back to management and the proper suppliers.
If you’re looking to learn more about ERP and how it can help your business reduce costs and adapt, get to know Kissinger Associates. For decades, we’ve helped growing distribution and manufacturing companies increase profit and inventory velocity. Get to know more about our team and contact us for a free consultation.
