How ERP Can Cut Business Costs

PostedOn: 2017-08-10 12:18:50

The business of business is generating profits. That's the bottom line.  

Both large corporations and small, family-owned businesses are always on the lookout for ways to cut operational costs while improving efficiency. Getting more work done for lower costs means business growth and improved profits.

One way a business can increase its operational efficiency is by integrating its operating systems into a single program. The software solution needed is an Enterprise Resource Planning (ERP) system.

Initial Costs Vary

The initial cost of an ERP system is a distress when a business first looks to implement an integrated operational system. However, multiple factors can influence the price of an ERP system, and the initial cost is often a negotiated contract price.

Some common factors that affect the price for an ERP software system include: 

  • Location of the system hosting: local servers vs cloud
  • Number of users, with cost increasing with user number
  • Types of applications needed and number required
  • Level of customization requested

Cost Savings in the Big Picture

Decreased costs mean higher profits. An ERP software system offers accuracy and automation that together reduce operational and administrative costs without cutting corners. An ERP system allows businesses to improve the management of their operations while giving users the information they need to make quicker, better-informed decisions.

A properly run ERP system can improve communication between all departments across the business. Easier, more effective communication means increased worker productivity and improved employee job satisfaction. Each department will have access to a central database, which lowers costs associated with setting up and maintaining multiple data centers. This saves employee time and cuts overall business expenses.

An ERP system works to bring all aspects of the business into one central system. Thanks to this increase in organizational efficiency, you'll be able to see unprofitable areas and cut down on waste. It can greatly reduce control and inventory management costs, and it can cut the operational costs in help desk support and marketing.

Some Specific Areas for ERP Cost Savings

Here are specific areas where ERP can shine in your business. 

  • The flow of information. ERP lets your business information flow smoothly and efficiently across all departments. You'll be able to see what's happening in your business in real- or near-real time. When you get better, faster and more accurate information, you'll be able to make better-informed decisions. 
  • Inventory control. Nearly every business lists inventory as a major expense. ERP can help you balance what you have on hand with your customers' needs. You'll find you no longer have extra inventory sitting around just taking up space. 
  • Control your supply chain. From ordering to warehousing to inventory control and shipping, ERP gives you better control of your supply chain.
  • Improved invoicing. ERP can speed up your business cycle with timely invoicing. The faster your invoices go out, the quicker you get paid.
  • Nip problems in the bud. A minor problem can balloon over time into a major difficulty. With an effective ERP system, you can recognize these problems as they develop and get ahead of them.
  • Improved accuracy. Errors happen; it is a fact of life. In business, however, mistakes can cost you money. Your ERP can reduce the error rate in your business practices by standardizing procedures and workflow throughout all departments.

Implementing an ERP system across your organization can transform the way your business operates, and that in turn can improve your bottom line.