The rising cost of ingredients is met head-on by an unwillingness by customers to pay more for the products they know and love.
Rather than reducing the quality of their product, manufacturers and their sales and distribution partners must instead reduce the cost of producing food and beverage products to cover those increases. For businesses operating multiple sites and trading internationally the pressure is greater still because the cost of inefficiency increases exponentially. Key to creating much-needed efficiencies is data, and the ability to understand how your business is performing, or under-performing.
Spreadsheets Are Costing You Money
Some businesses still rely on a series of spreadsheets to manage critical business processes. Obviously this method works – but it is also extremely ineffective. Ventana Research found that employees spend as much as 1.5 days every month consolidating, modifying and correcting spreadsheets.
Spreadsheets themselves are not the only problem however, the data stored in them is also an issue. Statistics published in the Journal of Accountancy from accountancy giant Coopers & Lybrand suggest that 90% of spreadsheets contain errors.
Data inefficiency is not only caused by spreadsheets though. Any sales process or supply chain that relies on multiple applications is unlikely to be optimised for efficiency – your team will waste time flicking between them all to access the information they need to do their jobs. When dealing with manufacturing facilities in multiple locations, data-driven decision making may be almost impossible – especially if the information supplied is inaccurate..
Data quality is a major factor in efficiency and cost control. Decisions made using faulty data risk being similarly inaccurate, adding to operating costs including:
- Correcting mistakes to customer orders.
- Warehousing excess stock.
- Re-stocking fees charged for returning goods to suppliers.
Faulty data also places relationships with customers at risk – an inability to deliver the correct order, on time, is a great way to push them into the waiting arms of your competitors.
ERP Allows You To Monitor Processes End-to-End
The sales manager may be relatively happy with the way their team works – but this could be because they lack the tools required to “see” exactly what is going on. It may also be the case that the sales manager cannot see processes outside their department – and this lack of transparency cannot be ignored. Optimised selling relies on knowing how purchasing, warehousing and deliveries are performing, so your team can avoid promoting the “wrong” products.
For multi-site manufacturers operating internationally, ERP is non-negotiable – it is simply impossible to stay full;y abreast of operations and performance without a single, central point-of-truth.
“While there is functionality contained within these tools that can help a small business, growing organisations may find that they quickly grow out of these tools. Organisations that use a set of multiple disparate applications, however, lack this unique advantage of ERP.”
– ERP and the Small Business – Nick Castellina, Business Planning and Execution Vice President and Research Group at Aberdeen Research
With a central ERP application, the sales manager finally has a single point of reference for the data generated by their team. This information can be sliced and analysed in any way to reveal the performance of the team as a whole or an individual, a single customer or a complete territory. By collating, sorting and cross-referencing data, you can better understand how you are serving your customers, and where you are under-performing.
ERP – Protecting Profits & Reducing Complexity
Granular access to data from across your entire organisation will be key to identifying and eliminating procedural inefficiency. You can also reassess processes, recognising and removing complexity to lower the cost of production and sales. For every efficiency gain made, you can extend a portion of your profit margin.
Your existing systems may be perfectly adequate for maintaining the status quo, but if they rely on data that is stored in standalone applications, you have very little insight with which to create new efficiencies. And if you cannot improve internal operations, rising prices will continue to eat into your profits.
