Hidden ROI of ERP in Improving Inventory Accuracy for a Manufacturing Client

Today, we will showcase the hidden ROI of ERP that has helped in improving the accuracy of inventory for on of our manufacturing clients.

The client is a mid sized industrial components manufacturer based in Delhi NCR. They are having almost 200+ employees with core business activity pertains to production of precision engineered pars for industrial and automotive sector.

Apart from that, the manufacturing company is supplying the various tier -1 manufacturers across India and are well known for their reliable quality. But the challenging part was mostly related to their inefficiencies in operations before they adopted ERP.

What were the challenges?

The client were stuck to the usual manual system which they were thinking had no loop holes. Spreadsheets were being used to drive their purchase and inventory systems. So, each of their departments was having the habit of maintaining their own data leading to a lot of inconsistencies.

First of all, their production schedules were getting disrupted whenever they faced a raw material shortage. When they tracked their physical stock with their system records it used to rarely match up. Also, when their vendor invoices used to come in they were never having an accurate GRN linkage which caused delays in billing and disputes. Their finance department was spending hours at every month end reconciling the mismatched data.

These type of problems brought in consequences like – production cycles being delayed, idle labor costs, and the escalations with respect to the vendors was becoming a norm and leading to weakening of trust between their internal teams. So, we needed to showcase ROI of ERP through Odoo solutions and curb all of their challenges.

Stakeholder objective & expectations

Their business goals were clear wherein they were looking out to get a 100% visibility across purchase, inventory, and vendor billing. Reducing lead time in procurement and discrepancies in the stock was to be eliminated. Apart form that, the accuracy in vendor payments and transparency of audits was to be achieved.

The stakeholder expected a transition from reactive to a data driven operations. Their finance teams were looking for accuracy along with the operations team wanting predictability.

The success metrics that they defined included above 90% accuracy of inventory, reconciliation time reduction, and a shorter purchase approval cycle.

The scope of work

We had to cover departments which included – purchase, stores, finance, and production planning. for the same we implemented modules -> Purchase, Inventory, Vendor Bills (Accounting), and Reporting Dashboards.

We automated processes which included –

• Purchase Requisition to Purchase order
• Goods Receipt to Stock Update
• GRN-linked Vendor Billing
• Automated stock valuation and real-time tracking

It was a bit complex given the nature of their multi site material movement and frequent vendor rate revisions. This required us create custom approval workflows and inter-warehouse tracking.

What solution we implemented

We choose the ERP platform as Odoo for Manufacturing (enterprise edition) to showcase ROI of ERP. Below find the configuration we made –

• Set up minimum and maximum stock rules which helped in automating reordering
• For clean vendor billing we did a three way matching -> GRN-PO-Bill
• For an error free tracking we set up barcode enabled stock movement
• Provided analytical dashboards for vendor performance and consumption of their materials

Related to integrations, purchase and accounting modules were connected which helped them get an instant reflection of each and every cost along with any commitments in the financial reports.

Execution challenges

Moving away from the excel sheets was somewhat we had to handle and it was creating initial user resistance. Apart from that, their old legacy file data that needed to be migrated initially was creating errors, along with difficulty in aligning vendor codes and SKU names.

To handle this we resolved it through proper user trainings where we conducted department wise. We cleaned all of the historical data before migration. Naming conventions were standardized and within few weeks the users of the system appreciated the transparency of the system.

Let’s see what were results and impact

Well, talking about the quantitative gains there was a –

• 95% inventory accuracy which they achieved within first three months
• Almost 40% reduction in their procurement cycle time
• Month-end reconciliation time went down from around three days to half a day
• A near reduction in vendor disputes by around 90%

Operations also had an impact wherein their teams were now working collaboratively. Purchase and finance teams could now rely on a single source of data.

Management gained strategic benefit wherein they gained confidence in forecasting and cost control. The vendor relationships were improved due to timely payments and visibility.

Client’s testimonial

“Earlier, we worked on assumptions. Now every decision is backed by real data. Our teams trust the system and each other.”
— Operations Head, Manufacturing Client

Our client’s journey showcased that Odoo ERP proved that return on investment is not always visible to you on your balance sheets. It’s more in how your teams are efficiently working and how confidently you are making the decisions.

Now, our client has extended Odoo implementation plans to production planning and quality control. All of this is also based on the data driven clarity foundation we already showcased.

Want to know more on how integrated purchase, inventory, and vendor billing can transform your efficiency and bottom line with ROI of ERP? drop us a line at sales@apagen.com ore call us on +91 9971800665.