Using Business Central ERP for Manufacturing Efficiency

At a Glance

Rising energy costs, labour shortages, supply chain disruption and regulatory pressures are increasing operational strain on UK manufacturers. Internal inefficiencies further drive costs. ERP systems like Microsoft Dynamics 365 Business Central help SMEs improve efficiency through automation, real-time data and integrated processes, enabling better production planning, inventory control and cost management. To find out more about how BC can help your manufacturing business, book a consultation with Brookland Solutions today.

The Manufacturing Sector

From labour shortages to rising energy prices, UK manufacturing businesses are facing pressure from various market forces. Given the ongoing economic uncertainty, many businesses are struggling to generate and sustain profits and plan for a future that may look different from what was planned. Now SMEs are looking for smarter, more efficient ways to manage increases in manufacturing costs and improve production efficiency.

This is where ERP for manufacturing businesses help. Systems such as Microsoft Dynamics 365 Business Central help SMEs automate processes and reduce inefficiencies, thereby regaining control over price increases.

In this guide, explore how automation in Business Central ERP can improve manufacturing efficiency and manage cost rises.

Why Are Manufacturing Costs Rising?

Manufacturers have been experiencing a steady increase in manufacturing costs, driven by a mix of internal and external factors.

The key drivers include:

Energy and Utility Costs

One of the biggest cost pressures comes from energy and utilities because manufacturing setups depend heavily on fuel and electricity. Any fluctuations in these costs can directly affect profit margins.

Labour Shortages and Wage Increase

The UK labour market has tightened recently, with workers demanding higher wages. It has also increased recruitment costs, with businesses finding workarounds by depending on overtime or temporary staff.

Global Uncertainty

Tensions and ongoing conflict in the Middle East, including disruptions to shipping routes due to the closure of the Strait of Hormuz, have added further strain on global supply chains.

As a result, March input costs reached their highest level since October 2022, according to S&P Global.

Supply Chain Disruption

Unstable global supply chains continue to affect the pricing and availability of materials. SMEs are forced to pay more to secure materials, hold excess stock to avoid shortages and deal with longer fulfilment times.

Regulatory and Compliance Costs

Manufacturing SMEs also have to manage changing environmental regulations, health and safety requirements and reporting obligations. While these are not direct costs, they further increase operational overhead.

How Do Manufacturing and Production Inefficiencies Increase Operational Spend?

External pressures are unavoidable, but you can iron out internal inefficiencies in routine operations that drive your production overheads.

Inefficient Production Planning

If your manufacturing SME uses disconnected systems, it can be difficult to optimise production schedules, allocate resources effectively and reduce downtime. You risk wasting time, materials and labour.

Poor Inventory Management

If you don’t get real-time updates into your inventory, your teams may overstock or understock. Overstocking can tie up your working capital, whereas understocking can lead to production delays. Not controlling your inventory can directly impact your costs and productivity.

Lack of Real-Time Insights

Accessing delayed or fragmented data can slow responses to problems that require quick attention. It can also result in cost overruns going unnoticed till it’s too late.

Siloed Processes Across Departments

When your production, finance and inventory systems operate in isolation, you risk slowing processes, generating inconsistent data and undermining team collaboration.

How ERP Automation Can Reduce Manual Processes and Errors

Automation in your ERP can improve efficiency and potentially reduce unnecessary production overhead.

Track inventory in real time: Inventory management automation updates stock levels instantly, automates reordering, and reduces overstocking and waste.
Improve production scheduling: ERPs can support better production planning and resource allocation, reducing manufacturing downtime.
Smoother data flow: With data in a single central location, you ensure information flows effortlessly between departments. Automation can eliminate duplicate and inconsistent data entries.
Reduce errors: Automation in manufacturing processes reduces human error while standardising processes. Your business can support consistent reporting, regulatory compliance and audits.