If your business engages in distribution, manufacturing, retail, reducing costs will be an important pursuit. Increased revenues lead to increased expenses — something you’ll be keenly aware of if you experienced.
While it’s too late to make big adjustments to your enterprise resource planning (ERP) and distribution systems in time for the end-of-year-spike, now is the time to take a big-picture look at your processes so you are prepared for the next seasonal peak.
Many businesses aren’t doing the basics as well as they could. Here are a few things to consider when looking to reduce your costs:
1. Inventory is expense.
Everything in your warehouse is incurring a cost. This year make sure that your erp software solution allows you to manage your warehousing costs efficiently.
The best way to do this is to keep inventory as low as possible by implementing systems that allow you to treat your warehouse as a node in the link between your supplier and customer, and not as a home for goods.
You should also use your ERP system to identify slow-moving inventory and price it to reflect its higher warehousing cost.
2.Manual processes equal added costs.
There’s no longer an excuse for slow and mistake-prone manual systems of any kind.Business-wide electronic and real-time tracking will not only reduce costs by improving processes within your business, it will also make you more attractive for customers (and suppliers).
Use your ERP system to share your data with customers and suppliers so that they know what you have stocked, what you can source, where products are and how long they’ll take to arrive. Doing so will help to move your inventory — creating revenue while reducing storage costs.
3.Prioritise cost reduction.
Make reducing costs a priority by creating KPIs around expense reduction. If you don’t have one already, create a dashboard view of your expenses, report on them, and ensure that the business is aware of where its costs lie.
It may not be as glamorous as sales, but reducing costs plays just as valuable a role in improving profit.
4.Embrace E-commerce.
E-commerce is the most revolutionised way of selling products in a relatively low cost way. By introducing self-service functionality for your customers, you can drive new sales opportunities by extending the hours you can trade and regions you can target.
Providing a self-service portal for customers also frees up your customer service resources. The availability of real-time data from the ERP system onto the store front allows customers to view available inventory, latest order status, and track shipments with tracking numbers. This helps in reducing your cost of operations and improves customer experience with your store front.
Another benefit is that all web sales information will instantly appear into your ERP system. So with the most up-to-date web sales information and inventory, the ERP user can properly plan the purchase and thus reduces the inventory cost.
