As accountants and management consultants, the Chortek team has the privilege of working with hundreds of small and medium-sized businesses. The manufacturing and distribution industries have always been at the core of who we serve and it’s worth noting the trends we are seeing with our M&D clients and how business software benefits them.
The COVID-19 pandemic impacted every industry in different ways. Depending on the market, some companies saw growth (i.e., home improvement products, home recreation, PPE/healthcare, delivery, etc.). Others saw their markets dwindle and did their best to simply hang on (i.e., arts & entertainment, tourism & travel, capital equipment, retail, etc.).
Throughout 2021, Chortek has seen our manufacturing and distribution clients largely rebound in terms of orders and demand. However, there are two prevailing issues they face: a general labor shortage and a supply chain disruption.
Let’s take a quick look at both issues and how the benefits of business software help companies take control of their businesses to smooth out these two issues.
How Business Software Helps During a Labor Shortage
In February of 2021, the President of Wisconsin Manufacturers and Commerce, Kurt Bauer, shared that the U.S. had a shortage of over 600,000 skilled manufacturing workers prior to the pandemic with a projected shortage of 2.4 million by 2028. Much debate has been made on the rate of return of workers as we recover from the pandemic, but it was already entrenched as a long-term challenge to businesses.
Employers will need to be creative and proactive in their approach to employee recruitment and retention. They will also increasingly need to assess automation and technology that can help alleviate human labor-intensive processes. Certainly, we’re seeing automation proliferate with recent advances and a steady decline in the price of entry for things like robots. Furthermore, businesses have been using software to help manage things via spreadsheets, accounting systems, and ERPs for decades. But there is still a lot of room for improvement for businesses to take those systems beyond simple systems of record and utilize them as engines of process automation.
So, what does that look like? What can modern business software applications offer that will assist businesses with the labor shortage?
Businesses that intend to grow must learn to do more with less. Throwing more hours and responsibilities on top of their current staff is not a long-term solution. Businesses will need to lean into integrated systems that eliminate inefficiency through automation and actionable business insights. Operations stall when materials are not available for jobs and expensive capital equipment is underutilized. All of this leads to increased costs for rush orders, wasteful changeovers, and increased material and labor. This drives up prices, making it difficult to compete.
Does your PO approval process result in a slow paper trail spread throughout the office? Do you have to walk out into the warehouse to really know how much of a given product you actually have? In order to do more with less, you need to rely on a system that removes the mundane and manual tasks currently bogging down your labor resources. This allows them to focus solely on the things that matter; adding value rather than simply treading water.
Get Actionable Insights
ERP systems are notorious for capturing a lot of data. It is difficult (and sometimes impossible) to make sense of it all. Business intelligence is a bit of a buzzword but when it comes to leaning out your staff, it’s all about working smarter, not harder. That means being able to make better decisions faster. How profitable is a certain product line? Maybe a handful of customers are dragging down your bottom line and they’re simply not a good fit for your business. In times where there is the opportunity to grow but not the labor to support growth, businesses will have to scrutinize and make tactical decisions about where time is spent.
Getting the most out of your business software platform is like leveraging an employee who never sleeps or calls in. Not only can it produce in its own right, but it can enable and improve the quality of work experience for your employees allowing them to be more productive and satisfied in their positions.
How Business Software Helps with Inventory Management
The COVID-19 pandemic also brought about unprecedented disruptions to supply chains. The lead time for materials and products keeps extending further and further which results in more panic buying and only exacerbates the situation.
What can software do to improve the availability of materials and prevent your customers from pulling up or multiplying their orders? Probably not a lot. But in a world where businesses are dealing with labor shortages and supply chain chaos, it’s all about taking control of everything that you can in order to prevent further disruption. Businesses cannot afford any additional margin of error due to the magnitude of these two constraints. So, when it comes to the supply chain, you’ll need a system that keeps your inventory accurate, your re-order points nimble, informed, and proactive, and communication as streamlined as possible.
Companies on legacy ERP systems rely on email, fax, phone, and other disconnected systems to collect essential information for decisions on product design, purchases, production, and orders. Using tools like a CRM integrated with your ERP, B2B, or B2C commerce platforms and customer and supplier web portals provide a collaborative platform connecting your business with customers, dealers, and partners to improve efficiency in all areas of your business.
We’re Here to Help
2020 was a challenging year and while 2021 looks to be a year of rebounding and opportunity, it won’t be without its own challenges and hazards. Businesses looking to grow are going to have to be intentional about how they navigate the current labor and supply chain landscape.
Businesses are going to need to adapt, do things differently than they have in the past, and be selective about how they apply the resources they have available. The Chortek Business Software Consulting team is not simply delivering bookkeeping systems. We’re implementing information system platforms that touch every corner of your business, exposing and eliminating waste wherever possible in order to keep business up and running so you’re able to accept new business and achieve your growth goals.