3 Ways Manufacturers Can Lower Costs with Cloud ERP
Cloud computing is proving to be more than a mere trend for manufacturers. In fact, those who have embraced ERP technology view cloud as central to their ability to compete. And for good reason. The cost benefits alone make it a compelling strategy—even to those who still believe they are better off “owning” the software. Below are examples of manufacturers who have experienced how cloud ERP helps them lower costs:
1. Reduce Scrap and Inventory on Hand
Ralco Industries is an automotive manufacturer and supplier specializing in precision-welded assemblies and prototyping. The innovator turned to cloud ERP to address business problems—and along the way, it saved some money. Previously, inventory inaccuracy and the use of multiple disconnected systems led to inefficient planning, quality problems, high expediting costs, and wasted time. Moving to a single, connected cloud ERP software solution enabled Ralco to reduce inventory on hand by 15 percent, drive scrap down by more than 60 percent, reduce premium freight costs by more than 20 percent, and save nearly $100 per purchase order processed.
2. Lower IT Costs and Shifting Resources to Value-Added Activities
Jagemann Stamping Company (JSC), a full-service metal fabricator, replaced its “patched-together” business systems with cloud ERP. Maintained at off-premise data centers, JSC needs to supply only basic Internet connections and inexpensive PCs for its system users. As a result, the company saved nearly 15 percent in IT maintenance and energy consumption costs. Because the company no longer needs to oversee system maintenance internally, it has been able to redeploy over half of its IT staff to value-added activities. These include continuous improvement projects that have identified more than $200,000 of savings for the company.
3. Improve Quality While Cutting Costs
Wolverine Advanced Materials, a manufacturer of customized technologies for automotive braking systems, realized that its manual-based processes were not sustainable—especially when it came to accommodating rapid growth. The company went with cloud ERP to scale and adopt lean manufacturing, enabling it to accurately determine cost and profitability by part. Cloud ERP allows the employees on its plant floor to see all customer orders and efficiently group them by material for scheduling purposes. This has enabled Wolverine to improve productivity and reduce costs. In fact, overtime is down by 60 percent and first-pass quality has improved by 15 to 20 percent.
Posted on Tuesday, December 13, 2016