Margin Mastery

Improve your margins by adopting a modern ERP system

By Andrea Hill

(Originally Published by MJSA March 2024)

If you’ve watched the British miniseries “Mr. Bates vs The Post Office” or followed the UK post office scandal in the news, you’re aware that poorly implemented business software isn’t just a headache. In extreme cases, it can lead to the destruction of careers, false imprisonment, and even suicide.

Most businesses that are more than 30 years old, or have organically grown from bootstrapping startups, have cobbled together their business and accounting software systems. This assembly often involves a sequence of tools, ranging from spreadsheets and self-written databases to outdated CD-installed software that failed to keep up with changing technology. Additionally, various cloud-based programs may or may not be seamlessly linked together.

Software solutions for business initially sprouted from different starting points, each with unique strengths and limitations. However, through innovation, competition, continuous improvement, and advances in technology, the software landscape has evolved to a superior, unified framework. Today’s best-practice software systems offer diverse features and adhere to software development disciplines and implementation methods that optimally serve the needs of modern business.

Still, a majority of jewelry businesses are living with the devil they know rather than suffering through yet another software change. After all, they have more important work to do than messing with their software, right?
Well, not really. Cobbled-together and insufficient systems reduce the ability to increase margins, which decreases free cash flow. In contrast, a best-practice enterprise resource planning (ERP) system can significantly improve a company’s margins in several ways.

Efficiency. Most companies without up-to-date software tools spend an ex-cessive amount of time loading spreadsheets, copying and pasting data, and reconstructing information from multiple sources. An ERP system streamlines and automates core business processes, reducing operational inefficiencies and dramatically reducing errors. Savings in time, labor, and error mitigation go straight to net margin.

Inventory intelligence. A well-integrated system improves data visibility and accuracy across all departments. This enables better decision-making by providing real-time key performance indicators (KPIs) and helping optimize inventory management.

Customer satisfaction. ERP systems consolidate customer data across multiple touchpoints, allowing businesses to tailor products and services, create better pricing structures, reduce friction in ordering and customer service processes, and improve customer lifetime value.

Supplier performance. Comprehensive insight into supplier performance, from pricing comparisons and shipping costs to turnaround times and quality, enables businesses to negotiate more favorable terms and prioritize suppliers.

Financial management. Automation of financial processes in an ERP system provide product cost insights that are nearly impossible to gain manually. Similar 360-degree financial insights across other parts of the organization help to identify cost-saving opportunities and revenue-generating strategies and facilitate proactive cash flow forecasting, financial management, and reporting.

ERP systems are available in a variety of price points. Ideally, you should look for a system that offers:

• Integrated modules (finance, HR, inventory, etc.)
• Real-time data and analytics
• Cloud-based deployment
• Mobile applications
• Application programming interface to integrate websites, smart CRM systems, and other specialty applications
• Electronic data interchange features
• Automations and workflow management

A best-practice ERP system is a catalyst for operational excellence, increased customer lifetime value, and innovation, all of which lead to improved margins. If you’ve been avoiding upgrading business systems due to the costs without realizing the strategic value and return on investment, your bottom line is asking you to reconsider. Your future competitiveness depends on it.