Alongside the vast number of benefits that an ERP (Enterprise Resource Planning) c (as well as a manufacturing system) can bring to a business is its ability to help reduce costs and increase profits.

The ERP system integrates itself into the pre-existing business to bring together all the separate components and departments. This is to enable the system to improve communication throughout the company whilst also allowing it to take control over some of the more mundane jobs that occur within a business; in the accounting and manufacturing departments for example.

It is reported that since implementing ERP, companies are seeing a reduction in production costs of up to 15% with others reporting reduced costs in other areas too. So how does an ERP system reduce costs for businesses?

First and foremost, an ERP system increases productivity within the company. It can track the progress throughout the manufacturing line and make recommendations when required. For example, if the ERP system notices that the business is lacking in stock it can alert the appropriate person to re-order more. It also monitors that the whole production line runs smoothly creating a more efficient order from customer, to production and back to customer in a quicker timeframe.

Prior to the development of ERP, there will have been many instances where the same data would have had to be inputted multiple times over multiple departments. This was not an efficient use of staff time or skillset. Now with ERP systems there is a unification of communication between all departments therefore the data needs only to be entered once and all relevant parties will have access to that data. Now, the staff that would normally have to re-enter the same data are free to continue with other work. Therefore the ERP system creates a more efficient usage of staff time.

ERP systems can track all sales and monitor the speed and consistency at which products are selling. This information that is gathered can then be analysed to ensure that the business has better control over purchase management. They can ensure that they do not over-stock a less popular product and also make certain that the more popular products are always in stock. This increases productivity as there is a more efficient use of storage in the warehouse by not wasting space on undesirable products.

The ERP system improves productivity, creates a more efficient use of staff time and has better control over the monitoring of stock levels. When you add all of this together you get a more efficient lead time on products for the customer, less overheads and ultimately more profit at the end line.