The Cost of Not Implementing an ERP System
By Katie Foley
What are the benefits of ERP in a manufacturing business? There are countless articles and blogs about the benefits of ERP systems, but what if we flip the question it on its head and look at the cost of not implementing an ERP system. What are the risks associated with not having an ERP system in place?
While the cost of ERP may be high (and a reason many companies resist investing in a system), the cost of not implementing ERP is likely much greater. Let's take a closer look.
Operational Inefficiencies
The most obvious cost of not implementing an ERP system is operational inefficiencies. Without an ERP system automating many day-to-day business processes, it's going to take employees more time to keep track of data and there will likely be more errors from manual processes. This means higher labor costs and lower productivity.
Customer Dissatisfaction
In business, there is nothing worse than a dissatisfied customer. Without an ERP system, your organization is risking a higher rate of unhappy customers. This could be due to issues such as delayed shipping times and poor communication with customer.
Compliance and Security Issues
ERP systems are helpful in ensuring that reporting and processes are up to certain standards, which reduces the risk of legal issues down the road. Companies relying on outside manual processes are more susceptible to compliance issues as well as security breaches. In the manufacturing field, ERP is essential for tracking quality and lot number tracking. This becomes a problem if a customer reports an issue with a product and the company can't track the batch it came from.
Inventory Management Problems
Managing inventory efficiently is extremely important in the manufacturing industry. Without an ERP system it is near impossible to track inventory in real time. This can lead to overstocking and ultimately waste if a product expires, or a stock out where a product is not available due to the lack of necessary supplies. This means wasted resources on expired product or unhappy customers due to products unavailability or delayed shipment times.
Conclusion
You may think that ERP is too expensive or too complicated for your organization if you are a small or mid sized manufacturing business. This is often a myth as ERP is essential for most manufacturing companies. Visibility offers cloud based deployment which will often save your organization money on the IT and technical services side.
Reach out to one of our ERP experts to learn more about the power of getting Visibility into your business.
