Utilize This Economic Slack to Better Your Business

economic slack 2019

 

The United States of America (USA) and China, two largest economies of the world, have been engaged in a trade war for some time now, which has had ramifications on the two giant economies. And while these countries are doing just fine as of now, the talks of an impending economic slowdown can’t be brushed aside.

During the April-to-June quarter of this year, the fourth largest economy of the world- Germany shrank to a negative growth. United Kingdom (UK), another powerhouse economy, is on the verge of facing an economic downturn on the back of a chaotic no-deal Brexit. Emerging economic superpower India too has had three successive quarters of slowdown.

That’s been the story of major world economies in recent times, as they are witnessing a slowdown, and a subsequent fall in demand as well as excess supply. And almost everywhere, the manufacturing sector has been at the center of this downturn.

While the economists are busy decoding whether this downturn is cyclical or structural in nature in order to find out when things can be expected to get back on track, the reactions from manufacturers around the world have started coming in. And these reactions have been mixed so far, as what some see as desperate times that require a check on expenses, capacity expansion, or foray into new markets; others, who are the smarter of the lot, see it as an ideal time to eliminate the waste, streamline and consolidate the processes, and improve the overall operations so that the business is best placed for stupendous growth when the economy gets back on track.

What most businesses do during economic slack?

Most of the businesses have a knee jerk reaction to the economic slowdown. When their sales revenues and profits witness a slump, they undertake a slew of initiatives in the direction of cutting down on the expenses. This includes a recruitment embargo, laying off few of the existing employees, a temporary ban on buying new equipment, a limit on the expenses incurred on research & development, etc.

Among other things, manufacturing businesses also put a stop on the launch of new products, and curtail expenditure on marketing and advertising activities. These efforts not just impact their businesses, but affect other businesses that provide goods/service to those businesses, as well, apart from affecting consumer confidence.

How smart businesses see the slowdown?

As mentioned above in brief, the manufacturing businesses that are smarter of the lot, have a thoroughly planned reaction to the slack. They understand that a knee jerk reaction most certainly won’t ensure that their business is going to be safe during the trying times. And instead, they see this downturn as an opportunity to invest in their business- to go lean, to streamline the business processes, to improve quality, to launch new innovative products at competitive prices, and to improve their customer services and overall operations, so that the business is in the right position when the economy recovers.

And how do they go about it – by implementing ERP solutions.

ERP – silver lining for your business in dark clouds of slowdown

An Enterprise Resource Planning (ERP) software is one of the most effective tools that helps business organizations survive the testing period of economic slack. It gives the manufacturing businesses a tight control over their operations, helps them achieve optimum inventory levels, cut down on waste and surplus, and improve the manufacturing efficiencies, processes, overall quality, and productivity. In fact, it benefits the manufacturing businesses on the whole, allowing them a greater level of hold over its different components such as men, machinery, money and materials apart from managing just the operations. Let’s take a look how:

ERP helps get lean: Lean manufacturing is an approach of producing more at less cost. Its prime objectives such as avoiding waste, reducing inventory wherever possible, and optimizing production go well with ERP too. So, no wonder, there are a lot of synergies that exist between the two. Through its inventory management module, an ERP system helps manufacturing businesses manage their inventory efficiently and go lean. Under its scope fall a gamut of activities such as inventory usage planning, replenishment, surplus, turnover tracking, demand tracking, planning & scheduling of shop floor processes, capacity planning of machines, tracking their availability etc.

Also, by connecting the shop floor with the top floor (management), ERP empowers the businesses with real-time updates on productivity and processes from each of the machines and facilitates sound decision making. All-in-all, an ERP helps businesses identify practices that add value to the manufacturing process and eliminating those that don’t, so that they are in a much better position to deal with the slowdown.

ERP helps streamline processes: What an ERP solution essentially does is that it integrates all the interrelated parts of a business into a unified database. This centralizing of the entire business data improves visibility into it, and assists business managers with accurate goal-setting and trend predictions. Besides, with all the business functions now being on the same page, the ERP system expedites the flow of communication between departments. This, along with the process automation introduced by the ERP, improves overall organizational productivity. ERP’s flexible reporting also allows the businesses take crucial decisions at any point of time in order to remain a cost-effective entity.

This way, an ERP not just contributes to greater efficiency within the business, but also prepares organizations to deal with any economic slack efficiently.

ERP helps improve operations: Through its wide range of features, ERP software gives the manufacturing businesses complete control over the business operations. Financial management, supply-chain management, purchase, sales, planning & scheduling, production management, Quality Control, CRM, cost analysis, and Business Intelligence, among others, are some of the top modules of an ERP system that help businesses gain command over the respective business function. ERP also ensures uninterrupted flow of work with all the parts working in close sync. It also makes available the real-time data to businesses so that they have bird’s eye view over the general operations, and can take corrective measures whenever necessary through swift, data-backed decision making. This way, businesses become proactive, and are well equipped to deal with any adversity or economic slack.

ERP standardizes the processes: An ERP system helps businesses standardize their processes keeping in mind the best industry practices that are prevalent. This not just allows the businesses to drive continuous improvement in their organization, but also to remain ready, and fully compliant, to march ahead of the competition when the economy gets better. Some of the benefits standardization of processes brings into the system are improved quality, productivity, customer service, transparency, and employee morale.

We understand that investing in an ERP can be a costly proposition, especially in the times of economic slack. However, opting for a Cloud ERP software gives businesses a definite cost advantage. It comes with no hidden expenses such as licensing fees, data storage fees, costs for updates and upgrades, support and maintenance fees etc., and all you need to pay is an affordable monthly fee, that’s it.

Conclusion: Economies are cyclical in nature, and start recovering after hitting the low. However, not all businesses impacted by its downturn deal with the slowdown effectively. While some are reactive, and give in to the urge of making knee jerk reactions, the smarter ones are proactive, and actually keep themselves well-equipped to deal with such situation by implementing ERP systems. It is a conscious choice for you to make as a business that whether you want to repair and repent, or prepare and prevent. If the latter is your choice, write to us at sales@batchmaster.com, or visit here, today.

We, at BatchMaster, can help you know more about what an ERP software can do for your process manufacturing business, and how you can actually utilize this economic slack to better it.