How Epicor Kinetic can make a measurable difference to your business, from inventory management to cost containment.
In today's competitive market, businesses are constantly seeking ways to improve their gross margins and overall profitability. One effective strategy that has emerged is leveraging advanced ERP systems like Epicor Kinetic. Recently Epicor commissioned Forrester Consulting to conduct the Total Economic Impact™ Of Epicor Kinetic For Manufacturing study. This blog reviews the content from this study, exploring how Kinetic has helped various organizations achieve significant improvements in their gross margins through enhanced cost efficiencies and better management practices.
The financial model created by Forrester to analyze the benefits of Kinetic focused on the gross margin improvement achieved by a composite organization representative of interviewed customers through cost reduction. It is important to note that this benefit does not overlap with revenue-related metrics. Based on the metrics cited by the interviewees, Kinetic drove net improvement in gross margins for the composite of 1.5% in Year 1 and 1.9% by Year 5.
One of the key benefits of Kinetic is its ability to provide comprehensive visibility into pricing, production, and costs. This enhanced visibility allows organizations to make more informed decisions and implement strategies that positively impact their gross margins. Several interviewees shared their experiences on how Kinetic has transformed their cost management practices.
For instance, the VP of IT for a measurement and test manufacturer highlighted how Kinetic has enabled their organization to improve cost management. They mentioned that the functionality in Kinetic has allowed them to better manage raw materials, leading to more efficient return to vendor (RTV) processes. Additionally, the implementation of a supplier scorecard within Epicor has helped them score suppliers more effectively, further optimizing their cost management.
Similarly, the financial controller from a scientific instruments manufacturer discussed the positive impact of Kinetic on their China operations. Before implementing Kinetic, their China operations lacked a sophisticated ERP system. However, with Kinetic, they have seen significant margin improvements due to better pricing and discount control. The systematic approach to pricing enabled by Kinetic has allowed them to optimize their pricing strategies and increase gross margins.
Another significant benefit of Kinetic is its ability to improve inventory management. The director of ERP for an aviation components manufacturer shared how Kinetic has led to improved transactions across all of their sites. They observed that every site brought onto Kinetic experienced a reduction in inventory levels within a short period. This reduction in inventory not only helps with cost savings but also contributes to better gross margins.
We're been seeing increases in margin. We've reduced our past-due backlog with our customers, improved our quality visibility to identify problems, and just being able to collaborate the data across all of our sites.
Director of ERP
Aviation Components Manufacturer
Many organizations have experienced significant profit gains by improving their factory operations, and the evidence is compelling. These operational efficiencies contribute to significant revenue uplift.
Interviewees from various industries shared how their organizations' revenues increased after implementing Kinetic to drive operational efficiencies within their factory locations. These improvements resulted in reduced lead times, decreased past-due backlog, and enhanced operational efficiency for factory workers and sales processes. With Kinetic, the companies gained the ability to deliver more units of product without a significant increase in resources, leading to a notable revenue uplift.
"Through growth and acquisitions, our sales have probably grown 20% annually over the last three to five years, while our SG&A [selling, general, and administrative expenses] has probably grown 2% or 3% annually. Deploying and using Epicor [Kinetic] has been a key factor in the enabling us to meaningfully grow our business while keeping our overhead in check."
CFO, PACKAGING PRODUCTS MANUFACTURER
Although the financial model results are promising, it is essential to recognize that gross margin impact can vary depending on several factors. Forrester acknowledges that the percentages of gross margin improvement may differ based on the types of products being manufactured and the industry. Additionally, the upward trend in gross margin improvement could level off after years of experience with Kinetic.
Across the supply chain, Kinetic has proven to be a valuable tool for organizations looking to improve their gross margins through better cost efficiencies and inventory management. The experiences shared by various interviewees highlight the tangible benefits of implementing Kinetic, from more efficient cost management and pricing strategies to more streamlined inventory control. By leveraging Kinetic, businesses can achieve significant improvements in their gross margins, ultimately leading to higher profitability and a stronger competitive edge in the market.
