How SMEs can keep up with industry leaders
In manufacturing, David doesn't always need to fear Goliath, and SME manufacturers can compete or even overtake larger companies with the right tools and strategies. One significant way SMEs can gain a competitive edge is by leveraging Enterprise Resource Planning (ERP) software, a powerful tool for streamlining operations and boosting efficiency.
Many SMEs will, over time, create a mishmash of home-grown data management systems. These might range from Access databases, bespoke systems, or simply a collection of disjointed Excel spreadsheets and paper-based systems. Such systems require a lot of effort to maintain, with staff literally having to push paperwork through your facility. Achieving traceability is extremely time-consuming, and potentially open to gaps. In short, everything is manual and disjointed, provides no visibility and is prone to error.
Companies using an ERP system had improved operational efficiency by up to 20%. Source: Gartner.
The Advantage of Efficiency
In terms of business size, bigger isn't always better. SMEs can often operate more cost-effectively because they don't have the same overhead expenses as their larger counterparts. Adopting ERP means that you have much more bandwidth for growth without increasing internal resources such as admin staff. For SMEs, efficiency is not a mere advantage but a necessity, in order to manufacture at a lower cost and compete with larger competitors.
The Power of a Single System
An ERP system will centralise and streamline data management, eliminating inconsistencies. With a unified system, SMEs can better control critical areas like planning, purchasing, production, and stock control, reducing errors and saving time.
Purchasing and stock control are often the first to see significant benefits. Companies without ERP will often carry too much stock, yet still often have outages due to too many of the wrong items and not enough of the right ones. This in turn leads to urgent low-quantity purchases, often at higher prices. More purchase orders means more admin required to create them. Having an ERP system gives you clarity of your demand, so that you can strategically purchase, perhaps with staggered call-offs, meaning that not only can you benefit from higher price/quantity breaks, but you hold less in stock at any given time. Also, your cashflow will be improved, as you’ll only be invoiced for the call-offs that are delivered. In other words, you’ll raise fewer purchase orders, get more competitive pricing, guarantee stock availability, yet carry less stock, saving money, effort and space in the process.
Boyce Precision Engineering saw a 25% reduction in stockholding and are seeing a 20% year on year business growth with the same number of admin staff. Processes that took two staff a 39-hour week each to perform are now completed by one in half a day. The company believes that they could double in turnover with the same admin resource, purely because of the automation that ERP delivers.
Gaining Visibility for Growth
Over and above dealing with day-to-day organisation, a robust ERP system provides real-time visibility into your critical business areas. This visibility allows you to make informed strategic business decisions swiftly and adapt to market changes, keeping a step ahead of your competitors.
Focusing on Growth-Driving Activities
When key staff are spending time on the day-to-day process of running the business, this takes them away from being able to explore growth opportunities. By automating these tedious tasks, ERP software frees up teams to focus on strategic initiatives such as customer engagement, product innovation or expansion into new markets. Shifting resources to growth-driving activities is critical to thriving in today's competitive business environment.
71% of firms believe that digital technologies will drive productivity in 2024. Source: Make UK.
Focusing on Growth-Driving Activities
When key staff are spending time on the day-to-day process of running the business, this takes them away from being able to explore growth opportunities. By automating these tedious tasks, ERP software frees up teams to focus on strategic initiatives such as customer engagement, product innovation or expansion into new markets. Shifting resources to growth-driving activities is critical to thriving in today's competitive business environment.
Summary
A well-implemented ERP system can be the difference between your business stagnating below your competitors or leap-frogging them. The efficiencies that it provides not only create a lean-running operation, but also free up your staff to be more creative in their field. This will ultimately lead to a happier workforce, greater productivity, and, most importantly, growth.