Cutting costs: maximizing results

Nothing is free in today's business world, but cutting costs can increase your profits enough that your supply chain success almost feels like it. Using an Enterprise Resource Planning (ERP) system can help you reduce those supply chain costs. Learn how to use ERP in three big ways to manage supply chains to your advantage.

Supply a Lifeline

Your supply chain is your lifeline to products and materials. The old saying, "a chain is only as strong as its weakest link," is just as true in today's supply chains as it has ever been. Therefore, in order to reap the most benefits from your supply chain, you want to link your chain together with the strongest companies possible.

ERP can help you do that. Take an example from the $5.5 billion food-service giant, Dot Foods. By incorporating ERP solutions into its everyday processes, it's been able to:

• Negotiate the best deals from over 650 food manufacturers.

• Offer 105,000 products to companies in all 50 states.

• Consolidate deliveries to include refrigerated and frozen foods and dry goods in one truck.

So how can your company follow in those footsteps and achieve the same success? Choosing an ERP system that reduces supply chain costs greatly increases your profitability. Improved communication, managed inventory and elimination of waste all work hand-in-hand through your ERP solutions.

1. Improve Communication

One way ERP reduces costs is by improving communication with suppliers and vendors. Real-time communication provides every member in the chain with valuable information about supply and demand that helps keep costs in check. When Wal-Mart and Procter & Gamble teamed up by communicating inventory levels directly from Wal-Mart's distribution centers through ERP software, both organizations cut costs and improved profits through the increased communication about specific inventory needs.

2. Manage Inventory

Keeping products moving is crucial to your capital, and ERP can help you manage inventory levels so that costs are reduced. Inventory costs are a major contributor to every company's profit margin. The more stock you have to store, the more it costs your company to store it. The increased communication and collaboration with suppliers provided by ERP solutions helps you reduce wasted inventory space and negotiate better supply terms along the chain.

3. Eliminate Waste

It's probably already clear the impact increased communication and inventory management have on eliminating waste. But there's one more area to eliminating waste that ERP helps with: employee efficiency. When workers have the tools they need for communication, they can perform their jobs more efficiently.

Some of the latest technology in ERP software is the ability to use wireless scanning and printing. This creates a seamless route of communication between supervisors and employees, especially when used with smartphones, headsets and vehicles equipped with printers. Some areas of increased efficiency provided by these ERP solutions include:

• More efficient location and loading of product for delivery by employees.

• Real-time updating of inventory levels.

• Automated tracking of costs, time and order completion.

• Immediate addressing of problems with inventory or delivery routes.
  

By increasing efficiency, waste can be more successfully identified and eliminated on an ongoing basis.

If your company is looking to cut costs in the supply chain, incorporating ERP software is a successful solution. Look for solutions that improve your collaborations up and down the supply chain by managing inventory and increasing efficiency, and your profits will increase accordingly.