For any food business, the investment they make in technology like enterprise resource planning (ERP) is to streamline operations and boost profit margins. The right software solution can bring a multitude of benefits: increasing efficiency, enabling automation, improving data insights and decision-making and optimizing traceability to name just a few. But these are not end goals in themselves - they serve the larger purpose of driving greater revenues.
This should beg the question - is your food ERP system delivering the return on investment it should be? While every business with an ERP solution recognizes its financial potential, far fewer are able to quantify what, if any, ROI they are getting. For a company with an older system especially, there is a danger that it stops providing real value, stops being supported by the software supplier or even becomes an active hindrance to profit-making.
If you’ve ever stopped to wonder what the true value of your business’ software solution is, read on to find out how you can get a better idea.
Determining your current ERP’s value can be challenging - especially if you have relied on it for many years. The best - and hopefully easiest - place to start is by calculating any and all costs associated with the solution over its lifetime. These are highly likely to include:
These costs then need to be weighed against the value the system has brought over the years; this is where things get a bit more complicated. If your business hasn’t actively been working out the savings and improvement the ERP has brought, you’re going to have to analyze your historical operations records in some detail. There are some key areas you’ll want to consider - comparing between performance levels before and after the implementation. These include, but are not limited to:
Making these judgements is not an exact science. Some of these criteria are a lot more abstract than others - so the more data you review and the longer you spend reviewing it, the more accurately you’ll be able to define the true value the ERP has brought to the company. As a rule of thumb, you’ll be able to calculate a percentage return on investment by using the following calculation:
ROI = [(Value of Investment – Cost of Investment) / Cost of investment] x 100%
Of course, solutions with the best reporting, data interpreting and Business Intelligence features will make your ROI calculations easier and more accurate.
Once you’ve researched the value your system is bringing to the business, you might be left feeling underwhelmed. If using an older ERP, a particularly common thing to discover is that ROI was high initially but has petered out over the years. The food industry changes quickly, and so do the demands put upon businesses and staff. The best technology helps you meet these challenges.
If this is sounding alarms, it may be worth considering whether your current system is the best option for you now and in the future. There may be even more reason to look elsewhere if:
If you’re interested in learning more about food ERP that delivers a strong return for your investment, you can read about our solution - Aptean Food & Beverage ERP - or get in touch with the team for more information.