Lets say you work at a large-scale manufacturing company…..
In most manufacturing companies, the top three expenses are: salaries / employee pay, facility cost and material cost. An ERP system can help alleviate at least two of those major costs. By lessening a major overhead cost, ERP software is a great investment which will continue to help save money both in the long-term and short-term.
The average investment for a newly implemented ERP system for 10 users can be around $30,000 to $40,000. The cost can fluctuate, depending on amount of users, customization, ERP brand and overall need.
Aside from cost of the software, there should also be time accounted for time employees to learn the new system as well as the initial time for the implementation to occur.
The ERP system which you and your company decide to implement should be known beforehand so that you can map out an appropriate strategy. If you’re not completely sure what you need, this can best be determined by working with your ERP consultant. He or she can help you determine an overall digital transformation strategy, goals of implementation and common pain points which ERP can help to address. Most ERP Consultants at Panorama have a background in both business and technology plus have many years in a multitude of industries.
Saves Labor costs
For skilled labor, the hourly cost can vary but the national average for a variety of skilled labor positions can be between $17 to $25 per hour according to the Bureau of Labor Statistics. In manufacturing, having skilled labor is key.
Assuming that all workers in your facility earn hourly pay that is somewhere within this range, these costs can add, especially if many of them regularly work overtime. Not to mention if your manufacturing company is large and you have 1,000, 10,000 or 100,000 laborers. Regular overtime can put strain on company budgets not to mention it indicates that there is some inefficiency somewhere.
With ERP implementation, your employees can more easily track jobs, material and track efficiency which can cut down on overtime while improving efficiency.
In some cases, ERP implementation can help companies save up to 20% in labor costs while making employee efficiency go up as well.
Saves Admin Costs
With ERP software, many functions are combined all on one platform which means that employees can spend less time researching questions for clients, less time switching between individual systems and less time tracking down invoices and payments. These sorts of admin costs can eat up a lot of time which is usually superfluously spent time anyway.
In some cases, admin costs can be reduced by 10% and again make for more efficient operations as well as lessening employee stress by allowing them to constructively use their time.
Saves Material Cost
Along with staff and salary-based cost savings, ERP also helps employees track material costs as well as helps with material planning. It is not uncommon for a manufacturing operation to order too much or too little material to fulfill an order. If too much material is ordered then it may just sit in a corner unused. If too little material is ordered, the cost of ordering more on quick demand can get expensive.
ERP software can help with material planning and inventory tracking and save, on average, 10 to 15%.
Clearly, the savings that ERP can provide outweighs the initial investment required to start its implementation. Shaving these percentages from your facility helps save both money and time not to mention will make for happier employees who no longer need to spend their time inefficiently.