Improving Profitability Through Supply Chain Management and Enterprise Resource Planning

Most business leaders focus on marketing and sales strategies when looking to improve profitability. However, supply chain management via ERP is just as important.

The relationship between productivity and efficiency is essential for the sustained success of a business. By making the very best use of the resources available, businesses can ensure that they are streamlined, nimble and punching above their weight. Moreover, streamlined processes can lead to increased profitability and consistent growth over time. One crucial area that businesses should target to increase efficiency and propel growth is the supply chain. By tightening up supply chain management, businesses can improve customer satisfaction and, therefore, growth is secured. Investing in enterprise resource planning is a tried and tested method of achieving this. Here, we take a look at the relationship between supply chain management and profitability and how an ERP system can help.

The Relationship Between Supply Chain Management, Inventory and Profitability

When businesses look to improve their profitability, they will often turn to their marketing efforts and sales strategies. Understandably, the logic dictates that an improvement in marketing and sales will lead to increased revenue. This is true. However, by tightening up the supply chain and inventory management, businesses can extract great profit from every sale.

Supply chain management involves a suite of methods and techniques used to regulate administrative, logistical, transport and inventory costs. Managing the flow of goods and services from production to the warehouse and on to the customer is intrinsic to a business’s bottom line. Speeding up that process and reducing the related cost of the supply chain ensures that the right quantity of product gets to the customer on time and that it does so in the most cost-effective way. This, in turn, strengthens profitability. Once this process has been tightened, then upgrades in marketing and sales strategies will pack a bigger punch.

How Enterprise Resource Planning Can Improve These Processes

Understanding exactly how much you are spending on your warehouse labour costs and where hidden inefficiencies are in the supply chain provides you with the tools to improve processes. Knowing precisely where products are in the supply chain can help you understand where you are extracting your revenue from and help you plan for growth. This is exactly where enterprise resource planning comes in.

By implementing an ERP system, you can enjoy complete oversight of the data you require to improve supply chain management. When an ERP system is integrated with your existing internal IT systems, you can see where any of the hidden inefficiencies are, where production can be improved and make the required changes that can tighten processes and, ultimately, improve profitability. From analysing warehouse labour costs to understanding the journey a product takes from production to the customer, an enterprise resource planning system gathers all of the necessary data in real-time to paint an accurate picture of the entire process.

ICS: Global Experts in ERP Consulting

Here at ICS, we offer a host of services to provide seamless ERP system implementation, specialising specifically in the customisation and maintenance of Microsoft Dynamics AX and D365FO solutions. As well as this, we are experts in ERP integration services, helping you integrate your ERP system with other business applications. Contact the team at ICS to learn more about implementing ERP solutions for your business today.