The average ROI of Enterprise Resource Planning (ERP) implementations is $7+ for every dollar spent.
But what does that mean exactly – what is the real ROI of ERP?
Read time: 2.5 min.
No sector creates more economic value than the manufacturing industry. Terillium is proud to help manufacturing companies implement Oracle ERP – solutions that help manufacturing businesses thrive with benefits like improved supply chain management, shop floor flexibility and better customer service. We’re sharing knowledge we’ve gained over the course of 20 years spent serving the industry – topics such as The Real ROI of Enterprise Resource Planning for Manufacturing.
The Magic Triangle of a Solid ERP Implementation
There are many facets to any ERP project, big or small. For one, there is the matter of converting and migrating data (not a small feat for any business of any size). There is process planning for purchasing, sales and receivables. Production planning is a key consideration. Transportation, inventory, forecasting and expenses are additional factors that have to be considered in order to create one system that holds all important company information.
All of these parts (and more!) are instrumental in the bigger picture of ERP project success. But the three specific areas of an ERP system that lead to the fastest ROI for manufacturing businesses are:
- Accounts receivables
- Inventory management
- Modern purchasing
When these three processes are in place and configured in an ERP system that meets the needs of the specific manufacturing business – this is the real ROI for an ERP project.
With a robust ERP system your Account Receivables process can be transformed and modernized to include:
- Tailored workflow to your business processes
- Real time information regarding when and how customers are paying, and the discounts they are using
- Multi-currency processing and international tax management
- Defined collections criteria using a combination of variables
- Simplified handling of nonstandard customer deductions
- Notifications to immediately alert when customers are past due
A modern ERP system helps manufacturing companies with inventory management by providing:
- Flexibility for defining customer and product processing with multi-tiered rules
- Closely manage supply to meet customer expectations
- Improved customer service while reducing administrative expenses
- Improved order and line fill rates
For VMI, a robust ERP system offers outbound inventory management to: reduce inventory management costs, improve collaboration and customer loyalty, reduce risk of stock-outs, reduce demand uncertainty and improve forecast accuracy, increase visibility into financial ownership of inventory, enable flexibility to track inventory balances and transact in dual units of measure, ability to create mixed orders.
An integrated procurement system provides the purchasing professional with links to information across all of an organization’s functions and departments. Some of the links include activities and information, including receiving transactions, order revision data, supplier profiles, accounts payable status, special order processing, and the tracking of incoming purchases through receipt routing.
ERP software implementations are complex projects. Ensuring that the project is successful and will reduce costs through greater business process efficiency is key in making a case for implementing Enterprise Resource Planning.