Everything manufacturers do create a domino effect and impacts various performance metrics across business processes, setting the foundation for future production. One of the most important numbers to keep an eye on and analyze is certainly your organization’s ROI.
There’s a standard formula for calculating ROI: you subtract the amount of money you’ve gained from your investment from its cost, and then you divide that sum by the cost of the investment. It sounds fairly straightforward, but there are several reasons that’s not really the case. This blog takes a look at some of the factors which can influence your organization’s ROI.
Keep an eye on the fundamentals
You’d be really surprised to find out how many companies are prone to mistakes when estimating costs and calculating ROI. Problems such as the inability to determine the minimum return, forecasting cash flows from the investment and even determining the initial cash outlay may hinder your progress. This goes back to being unable to synchronize data sources and create a unified view of the different manufacturing operations.
Data silos caused by outdated systems can slow down your entire operations, so it’s important to replace them with ones that reduce IT complexity and automate business processes. Improving forecasting and visibility whilst ensuring transparency throughout the manufacturing cycle allows you to collect data, avoid unexpected costs and anticipate expenses and component failures.
In order to increase their ROI, manufacturers can also work on reducing inventory costs by analyzing supply chains in real time, getting rid of obsolete products and tracking customer demand.
Uncovering hidden ROI
If we define ROI as a cost of doing something and the outcome generated as a direct result of your investments, there are a few things we’re missing.
Manufacturers need to find a better way to improve operational intangibles such as nurturing relationships with customers, increasing customer satisfaction, contributing to higher quality morale among employees and making sure their workforce has the tools to be as efficient as possible.
These aspects of running a business are extremely difficult to measure and keep track of in real time, but this is where a top-notch solution such as Microsoft’s Azure Business Platform can find a way to shine.
By enabling you to improve the level of interaction with your customers, gifting your workforce the tools to become more flexible and precise than ever before and providing a platform for intelligent manufacturing, a range of environments spearheaded by the versatile Dynamics 365 works to uncover every nook and cranny capable of increasing your ROI.
Figuring out the so called “intangibles” – factors which can increase revenue but don’t go into ROI calculations – are the next step in manufacturing evolution.
At the end of the day, ROI is not simply a matter of increasing profits. It’s about improving NPS, freeing up resources to innovate, and providing manufacturing companies the impetus to lead and grow.
As we mentioned, maintaining sound fundamentals, alongside uncovering hidden opportunities to evolve are the best way to increase ROI.
With the Microsoft Business Azure Platform and Merit Solutions, you can rely on a proven, integrated platform and our industry expertise to drive greater outcomes within your organization.
Read on to find out how we support manufacturers on their way to success.