How to Minimize Margin Erosion with ERP Software

The manufacturing industry is facing a perfect storm of challenges. Increased competition from low-cost producers, changing customer expectations, and the constant pressure to comply with evolving regulations are just a few of the factors squeezing manufacturers' profit margins. In fact, Ready Ratios data indicates that half of all manufacturing industries are experiencing significant margin erosion, while the industry as a whole is barely keeping up with inflation.

In addition to these external pressures, many manufacturers are grappling with internal inefficiencies that erode profitability. Outdated systems, siloed data, and manual processes hinder visibility, slow down operations, and lead to costly errors.  

The Cost of Inflexible Ecommerce Systems

Operating without a modern ERP system can have significant consequences for manufacturers. Manual processes and disconnected systems drain resources, impede production, and create gaps in decision-making. Manufacturers struggle to make informed decisions about inventory, production schedules, and customer orders without a clear, real-time view of their operations.  

This lack of visibility and agility can lead to missed sales opportunities, inefficient order management, and poor customer service, all contributing to shrinking margins. In today's fast-paced market, manufacturers who fail to embrace digital transformation risk falling behind their more agile competitors.  

Composable Commerce & ERP: A Powerful Solution

To combat margin erosion and thrive in the digital age, manufacturers need to adopt a composable commerce approach (also known as omnichannel or unified commerce) that leverages the power of a modern ERP system. This means connecting best-in-breed solutions to create a flexible and scalable technology ecosystem that can adapt to changing business needs.  

At the heart of this technology strategy lies the ERP system, which serves as the central hub for data and processes. A robust ERP solution like Acumatica provides manufacturers with the real-time visibility, automation capabilities, and control they need to optimize their operations and protect their profit margins.  

Real-Time Data Integration & Inventory Optimization

One of the most critical aspects of fighting margin erosion is gaining control over inventory. By integrating data from across the organization, a modern ERP system can provide manufacturers with a real-time view of their inventory levels, demand patterns, and supply chain dynamics.  

This granular visibility enables manufacturers to:

• Optimize inventory levels to minimize holding costs while avoiding stockouts.  
• Improve demand forecasting and planning to ensure the right products are available at the right time.  
• Streamline order fulfillment processes to improve delivery times and customer satisfaction.  

Acumatica's ERP system offers a range of features designed to help manufacturers optimize their inventory management, including:

• Warehouse Transfers - Establish replenishment profiles to understand how planned transfer orders impact stock at each warehouse location. 
• Kitting - Gain visibility into demand for kit components through sales data. 
• Replenishment - For manufacturers, it's all about time-phased material planning (MRP). This takes replenishment to the next level by consolidating all supply and demand inputs to determine what to buy or build and when it is needed to fulfill customer demand while minimizing carrying costs and maximizing inventory turns.

With Acumatica, manufacturers can improve inventory management, connect disparate data silos, and gain insights to make better decisions. For example, American Foam & Fabric (AFF|group) implemented Acumatica and saw significant improvements in their operations.

As Ben Leinster, CEO of AFF|group, states, 

"We've increased our production capabilities by 30% just by knowing when to manufacture what. Before, we would outsource a problem, but now with Acumatica, we outthink the problems."

Enhanced Production Scheduling & Cost Control

In addition to inventory optimization, a modern ERP system helps manufacturers streamline their production processes and reduce costs. By automating tasks such as production scheduling, material planning, and quality control, manufacturers can:

• Minimize downtime and optimize resource utilization.
• Reduce waste and improve product quality.
• Lower labour costs and improve accuracy.
• Increase manufacturing throughput.
• Maximize resource utilization.
• Control costs for improved profitability.

Acumatica's ERP system provides manufacturers with the tools they need to:

• Plan and manage production orders based on real-time demand and resource availability.
• Track materials and components throughout the production process.
• Monitor quality control metrics and identify areas for improvement. 

Acumatica's ERP system provides manufacturers with the tools they need to plan and manage production orders based on real-time demand and resource availability. The system offers flexibility in managing production for make-to-stock, make-to-order, engineer-to-order, configure-to-order, project-centric, job shop, batch, and repetitive manufacturing environments. Acumatica supports various manufacturing modes and provides insights into production orders, work-in-progress, and job costs.

The Ecommerce Connection: ERP as the Backbone of a Composable Commerce Strategy

A modern ERP system is crucial for manufacturers looking to establish or enhance their ecommerce presence. It is the backbone of an omnichannel commerce strategy, providing the foundation for a seamless and efficient experience across all channels. This includes selling direct (via in-house sales and CRM), selling online to businesses (B2B) and direct to consumers (DTC), selling through marketplaces, and selling through brick-and-mortar stores with connected retail point-of-sale (POS) apps for stores and showrooms.

By connecting Acumatica's ERP with your ecommerce platform and other best-in-breed solutions, you can:

• Ensure accurate inventory data across all channels - Real-time inventory updates from Acumatica prevent overselling and stockouts, improving customer satisfaction and reducing costly errors.
• Streamline order fulfillment - Automate order processing, picking, packing, and shipping with integrated systems, reducing manual effort and improving delivery times.
• Provide personalized customer experiences - Leverage customer data from Acumatica's CRM to personalize product recommendations, promotions, and marketing messages.
• Gain a 360-degree view of your business - Access comprehensive data and insights across your ecommerce operations, enabling data-driven decision-making and continuous improvement.

A robust ERP system like Acumatica can transform a manufacturer's online presence.  Acumatica provides a solid foundation for data management, automation, and integration, empowering manufacturers to create a truly composable commerce experience that drives growth and profitability.

Don't Get Left Behind

As manufacturers face mounting pressure on their profit margins, embracing digital transformation and leveraging the power of a modern ERP system is no longer optional - it's essential for survival. Acumatica's ERP solution empowers manufacturers to combat margin erosion and build a more profitable and sustainable future by providing real-time visibility, automating key processes, and enabling data-driven decision-making.