5 ways to improve your manufacturing business’ cash flow with SAP Business One

As a light manufacturing business, maintaining an even cash flow is vital.

The amount of cash you have on hand indicates your ability to operate from day-to-day and meet your financial obligations. Without consistent cash flow, it can become extremely difficult to pay creditors and keep your overall operation going smoothly. However, when you’re dealing with multiple suppliers, purchasing stock, managing inventory and juggling various sales contracts, maintaining a positive cash flow can be challenging.

Purchase excess inventory, for instance, and your cash flow and storage costs can suffer. On the flipside, if you don’t carry enough stock, you could be exposed to costly out-of-stock situations which can damage your customer relationships and their ongoing loyalty. To control your cash flow, you need to balance these two competing elements – ensuring you always have the right amount of inventory in order to fulfil orders. And doing so requires having access to real-time data insights, such as those provided by SAP Business One.

At Leverage Technologies, we have helped a wide range of businesses streamline their cash flow by implementing SAP Business One. Based on our experience, here are five key ways SAP Business One can help you control costs and maintain that all-important cash flow.

#1 – Identify slow-moving or fast-moving stock

With SAP Business One, you can maintain tight control over your inventory – noting exactly when it arrives at your warehouse, and when it leaves. As such, you can easily identify any stock which is slow-moving – or fast-moving – and adjust your product offering or sales processes accordingly.

#2 – Use data to accurately predict future demand

You can also use the data within SAP Business One to accurately predict demand for your products based on existing patterns, and use this to determine how much inventory you require.

For instance, through the material requirements planning (MRP) wizard feature in SAP Business One, you can call upon data from several different sources to inform your inventory ordering. SAP Business One will use your data to make specific recommendations regarding your material needs – letting you know what you’ll need, how much and when, as well as your specific resource requirements. Once you have reviewed these recommendations, you can then easily and quickly generate the production and purchase orders that you need to manufacture your product in the quantity and time specified by the production schedule. This takes into account all requirements for production components and resources, so you always have a very accurate understanding of what you need, and when.

#3 – Control your inventory ordering process 

With SAP Business One, you can automate and control the inventory ordering process – to ensure it’s done in the most efficient and balanced way possible.

As soon as a sales order is received via SAP Business One, for instance, it will automatically check for availability in your warehouse. If the items are confirmed as being available, then the quantity is committed in the inventory – preventing overlap from concurrent orders and ensuring your order and inventory levels match up. Your warehouse staff can then easily see what’s required, and remove the products from the warehouse, ready for dispatch. Once an order is collected from the warehouse, it is also then entered into the system – and the reduction in inventory is automatically registered.

By automatically connecting demand from sales orders with the feasibility of stock levels, you can gain greater control over your inventory, and avoid imbalanced inventory, which can impact cash flow.

#4 – Accurately measure all costs associated with goods importing and transfers

In the manufacturing sector, transporting goods from one location to another can be one of your most significant – and potentially variable – costs. These costs aren’t just limited to freight. The cost of planning and organising transfers can also be expensive and take precious time away from other tasks. When not managed efficiently, this can significantly affect your business’ cash flow.

To control your transport costs, you need to have visibility at every step of the process. This includes detailed data on how you prepare the goods, count and label them, pack them ready for transfer, arrange the services, shipping or trucking costs, and how you conduct tracking.

At every step of the way, the more information you have on your specific costs – and potential areas for efficiency – the better. This is where a system such as SAP Business One can add huge value.

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With SAP Business One’s inventory management feature, you can achieve efficient inventory management in real-time across multiple warehouses. This means you can maintain cost-effective production, optimise your inventory levels, and improve on-time delivery with the ability to track and record all stock movement. You can also manage detailed warehouse data and gain the capacity to plan production orders based on material requirement planning.

SAP Business One offers full transparency of inventory and accounting transactions with powerful reporting tools to help you improve business insight. You can generate up-to-the-minute reports based on continuous inventory data for powerful item management, and the inventory management module fully integrates with other modules within the solution such as sales and purchasing to provide efficient and accurate stock management.

View the case study from one of our customers in the manufacturing industry to learn how SAP Business One can empower your manufacturing business to grow smart.

You can also very accurately track stock transfers, record goods receipts and issues, perform cycle counts and enable consignment and drop-shop options. Plus, you can maintain multi-level Bills of Materials, which helps you maintain prices consistently, regardless of where in the world your stock happens to be. You can also:

• Employ various costing models such as average cost, FIFO, etc. as defined throughout the business or by warehouse.
• Automatically create warranty records with Serial Number Tracking.
• Gain full traceability with Batch and Lot Tracking functionality.
• Manage the picking and packing process with multiple queues and automatically generated pick lists.
• Quickly perform cycle counts with stocktake capabilities.

All of this can help you identify and resolve areas of inefficiency, to ensure you’re keeping your cash flow on an even keel.

#5 – Vary costs and prices across your supply chain

When it comes to cash flow, you need to ensure you’re always on top of your costs – from both a buying and selling perspective.

A useful feature within SAP Business One is the fact that it supports multiple unit types, so you can purchase and sell your inventory in different units (e.g. buying a product in cases, but selling it in individual bottles). You can also set up warehouses in different zones, managing inventory by its bin location in each warehouse. Plus, you can create an unlimited number of price lists, integrate multiple currencies, pre-assign prices to specific customers, and define discount rules that are automatically applied to transactions with certain vendors and customers. All of this helps you manage cash flow and maintain tight control over your inventory.

Special pricing tools within SAP Business One also allow you to manage discounts for your customers based on the volume of a product they are purchasing and whether or not they are paying in cash. The software also supports both serial and batch number management. This means you can generate and assign serial or batch numbers to items received from vendors, and draw from available batches when items are released. Different costing methods can also be used to give you a deep understanding of your item costs; letting you accurately define prices and item discounts.

Conclusion

Leverage Technologies has extensive experience in the manufacturing sector. We’ve proven, time and again, that we can quickly and efficiently implement low-risk, best-practice ERP solutions, and that we can deliver a lower cost of ownership for our clients.

Plus, when you choose to work with Leverage Technologies, you gain access to a team with extensive, shop-floor experience, and we can also offer manufacturing guidance to help you enhance your overall operational efficiency.

To find out more about SAP Business One, call us on 1300 045 046 or email info@leveragetech.com.au.