You may be puzzled as to how an ERP system, like Epicor software, could help your business. What solid, real money could be saved with an expensive system that needs updates, backups, and maintenance? How can you justify spending hard-earned cash on something that doesn’t produce an end product? You are not alone in asking this.
Our experience is in implementing these systems, and we have many many examples to share. These examples of savings are in 2 major categories:
Predicted savings: These are the obvious ones that make sense from a cursory understanding of how these systems work, and we’ll look in particular at how Epicor Kinetic operates.
Unanticipated savings: These are ones that you could not predict, and nobody ‘saw coming’. If your system paid for itself with the predicted savings, then these savings go right to your bottom line.
Predicted Savings Through Epicor Software
Let’s start identifying these by looking at the reasons companies buy ERP systems. Here are some of the primary reasons:
Obsolescence: Their existing system is antiquated, susceptible to viruses and malware, and no longer supported by the manufacturer of neither the hardware nor software.
Growth: Let’s say a company’s product is highly sought after, and they can’t keep up with orders. They have an online shopping cart, and it takes hours and hours to retype these orders into their sales order system, and then they have to print out a report that tells them what needs to be made. They enter that into the inventory tracking system that they got for free from the racking company they used, and they print out a report of everything that’s in the minus column, then manually type out purchase orders. (You get the drift.. etc….etc…).
Acquisition: Your company was doing just fine with your simple Cloud based system, but you bought one of your suppliers and found that their products are too complicated to be managed by your existing system. You need to replace both yours and that of your supplier, so it can handle both parts of your business.
Predicted savings from obsolescence, even if we only speak of the external threats to an old system is significant. We’ve all read about various ‘hacks’ that have occurred and ‘ransomware’ that has seized entire computer systems, and the more time goes by, the higher the cost of the key to unlock the data – and who’s to say they can’t just come back and do this again next month? It seems that ransomware cost is somewhat related to the size of the company, so if you’re a small company you might be able to enjoy the fact that bigger companies have to pay more….but that’s little comfort.
In our experience, we’ve heard of ransomware as low as $5000 to start, but that number goes up by $5000 per day until they are paid….that’s $35,000 for the first week. And that’s on the low side. We have a larger customer with 30+ companies, and we’ve implemented Epicor software in the first two. Their initial ransomware payment was $5 million, going up $5 million per day. In their case they chose not to pay, and instead bought all new servers for their 28 remaining companies, and restored from backup. The average system took 30 days to get back, which meant they went back to manual paper processing for 30+ days. Not many companies can take that kind of interruption to business, never mind the expense. Wouldn’t it make sense to avoid this kind of thing?
Epicor Software & Predicted Savings From Growth
This category is really about the normal daily efficiency gained by a system. In our example, we have an online business with no systems interfaced with each other. Orders that come in over the web have to be entered manually, 3-4 times as the transaction goes through the various systems.
From our time in the industry, reduction in administrative overhead ranges from 25% to 300%. That means companies actually reduce headcount by implementing our product. We’re sorry to those who are replaced, but if you could reduce your administrative overhead by 2/3, who wouldn’t do that? And this cost reduction is in overhead, so the savings go right to the bottom line. What’s not to like?
Predicted Savings From Acquisition Using Epicor Software
Predicted savings from acquisition is of course more greatly dependent on the exact circumstances and shares some of the efficiency from our example about growth above. However, there are some other benefits that are enjoyed in the acquisition example.
Typically, acquisitions are financed or have some component of outside funding. This means that the person lending the money wants to know what’s going on and understand how their investment is doing. An integrated ERP system is easily auditable. In fact, in Epicor, we can utilize their data tracking feature and track every field in the system, including the value before the change, the value after the change, who changed it, with date and time stamp. For critical transactions, we can force a biometric validation of the person authorizing the transaction.
Consolidated financials: When multiple organizations are combined, there are ‘intercompany’ transactions where each company buys or sells things from the other. With common ownership, the ‘consolidated financial statement’ eliminates these intercompany transactions so that you aren’t overstating income for instance. Epicor automatically tracks this and yields clean financials at the end of each period.
Visibility of inventory and combined purchasing: With a multi-company ERP, such as Epicor, each organization can ‘see’ inventory already owned somewhere in their organization and save on increasing inventory because ‘one hand didn’t know what the other was doing’. In some industries, these savings can be as much as 50% of the value of the inventory itself, and once again, those savings go right to the bottom line.
Unanticipated Savings From Epicor Software
While not predicted up front, here are some examples from our experience where companies saved significant amounts that they did not anticipate:
Significant reduction in engineering costs
Growing a business without adding overhead
We had a manufacturer of medical enclosures that had five product lines. When customers ordered, the service staff would take down the requirements and send it over to engineering. The engineers used CAD software to copy from a standard configuration and develop the ‘one off’. We implemented the Epicor configurator and built the five product line models with all of the possibilities for features and dependencies and the rules for making the products and calculating the materials lists.
One of their engineers worked on this model for about nine months as we prepared the rest of the organization to go live. Once they went live, the customer service staff filled in the data, selected pull-downs, and the configurator actually selected photos of their various systems to show the person what the product would look like so they could verify that the features were coming out correctly. On top of that, we output these photos onto the job travelers so the production staff could see photos of what they were building.
The savings from this were 5 engineers, who could then be repurposed to develop entirely new product lines. Instead of engineers processing custom orders, the existing customer service team was empowered to do it themselves. This customer has gone on to do several other projects with us to maximize the software, and recently purchased another company, and consolidated their system into ours.
Once implemented, there are not only built-in-efficiencies, but an ERP system like Epicor allows automation of processes. For instance, in Epicor, daily invoicing from the days’ shipments is a simple ‘get shipments’ function that produces proposed invoices that can be distributed to each customer by their preferred method (mail, email, electronic funds request etc). In addition, the job closing routine can be automated to close all jobs within a certain % of std vs actual cost. Only jobs that need attention would be kept back for review. We worked with a nameplate company that doubled their business without adding any overhead staff using these methods.
Contact the Experts at EpiCenter ERP Today for Epicor Software Consultation & Implementation!
Ultimately, a flexible and powerful ERP system, like Epicor software, makes it possible for the ERP to be utilized for any number of continuous improvement efforts, allowing the system to earn its way and providing great and useful information for making strategic decisions. Contact us for further information from our team of industry experts.