About the series. September 2024, a panel of five manufacturing experts at Chortek shared strategies and tactics for exploring top-line growth while protecting the bottom line. The following is one of five articles produced as a result of that forum.

Maximize Margins: ERP Best Practices for Profitable Manufacturing 

In an increasingly competitive manufacturing environment, the ability to streamline operations and maximize profitability hinges on one key tool: an effective Enterprise Resource Planning (ERP) system. For manufacturers, a modern ERP system can bridge the gap between disjointed processes and real-time data visibility, ultimately driving top-line growth and protecting bottom-line margins. 

The Importance of Real-Time Data Visibility 

At the core of a profitable ERP system is the ability to gather and analyze data in real time, providing business leaders with the transparency they need to make informed decisions. “To be able to run your business with insight, you need great data,” explains Jarrad Maga, Business Development Manager at Chortek. Without accurate and timely information, businesses are left reacting to challenges rather than proactively managing them. A modern ERP system ensures that manufacturers can monitor key metrics like job profitability, inventory, and production efficiency in real time. 

Eliminating Data Silos with a Single Source of Truth 

Many manufacturers are still using legacy systems or rely on disconnected processes, where different departments use separate platforms that don’t communicate with each other. This creates a lack of visibility across the business, where “the left hand doesn’t know what the right hand is doing.” A purpose-built ERP system solves this by creating a single source of truth, ensuring that data flows seamlessly across departments—from quoting and order entry to production and delivery. For manufacturers, this unified platform is essential for minimizing inefficiencies and increasing profitability. 

Role-Based Functionality for Targeted Efficiency 

Another critical component of a robust ERP system is role-based functionality. Modern ERP platforms, such as Acumatica Cloud ERP, allow businesses to tailor the user experience based on the role within the company. This means that whether an employee is in production, sales, or management, they are only accessing the data and functionality relevant to their specific role. By streamlining access, ERP systems ensure that employees have the tools they need to perform their tasks effectively without getting bogged down by irrelevant information. 

Purpose-Built for Manufacturing’s Unique Needs 

ERP systems also play a vital role in managing multimodal manufacturing environments, where businesses may be handling a mix of make-to-order, make-to-stock, or engineer-to-order processes. “A general ERP system isn’t enough,” Jarrad notes. “You need a solution that’s purpose-built for manufacturing, designed to handle the unique workflows of the industry.” Purpose-built ERP systems are equipped to manage the complexities of manufacturing, ensuring that data related to production, scheduling, and inventory is accurate and available in real time. 

Scalability to Support Business Growth 

A modern ERP solution not only integrates all parts of a manufacturer’s operations but also provides the scalability needed to grow. Many manufacturers today are expanding into areas like service and warranty, and an effective ERP system should be able to accommodate these growth areas. “As your business grows, your ERP should grow with you,” Jarrad advises, highlighting that scalability is key to ensuring long-term operational success. 

ERP’s Role in Cash Flow Management 

Beyond streamlining operations, ERP systems can significantly impact cash flow management. For example, one manufacturer that Chortek worked with had $3 million in excess inventory, tying up valuable resources that could have been reinvested into the business. By using ERP to optimize inventory levels, the company was able to free up capital and improve overall cash flow. “Inventory management is a critical area where ERP can make a direct impact on profitability,” Jarrad points out. 

The Value of Automation in Manufacturing 

A key theme throughout ERP best practices is the need for real-time data visibility. When manufacturers have up-to-date information on production, inventory, and financial performance, they can make proactive decisions that protect margins and improve customer satisfaction. Whether it’s identifying supply chain issues before they become critical or responding to shifts in customer demand, having real-time visibility allows manufacturers to stay ahead of the competition. 

Automation is another benefit of ERP that can’t be overlooked. By automating routine tasks, manufacturers can reduce manual input and free up employees to focus on more valuable work. “The time spent manually entering data or managing spreadsheets can be used more productively,” Jarrad explains. With automation, employees can focus on producing and selling, rather than managing data. This efficiency leads to faster production cycles, improved accuracy, and, ultimately, higher profitability. 

Conclusion 

For manufacturers looking to remain competitive, implementing a modern ERP system is no longer optional. It’s an essential tool for driving operational efficiency, improving margins, and ensuring long-term growth. By following these ERP best practices, manufacturers can better manage their resources, reduce costs, and maximize profitability. 

Chortek has over 20 years of experience helping manufacturers evaluate and implement ERP solutions. Whether your business is just starting to explore different options or ready to jump into implementation mode, we can help. 

Author Bio: Jarrad Maga is the Business Development Manager for Chortek’s software consulting practice. With over 15 years of experience in working with manufacturers, Jarrad specializes in helping businesses find the right ERP solutions to address their unique challenges. His expertise lies in implementing modern ERP systems, such as Acumatica Cloud ERP, to drive operational efficiency, improve visibility, and maximize profitability for manufacturing clients. 

Suggested Reading: 

Read the entire Manufactuing Forum: The Future of Profitability series. 

From Data to Dollars: Unlocking Profitability with Manufacturing Analytics   

Maximize Margins: ERP Best Practices for Profitable Manufacturing   

Tax-Proof Your Profits: Strategic Tax Planning for Manufacturers   

The Role of IT in Driving Manufacturing Profitability   

M&A Trends in the Manufacturing Industry: Seizing Opportunities in a Changing Market