How to Align Sales Activity with Supplier Management

As the economic climate continues to strengthen, small and mid-sized businesses can take advantage of new and growing business opportunities. To ensure your sales staff can close new business with confidence, you need to integrate critical sales data with back-end inventory and supplier management.
This post demonstrates how a modern ERP system streamlines sales with inventory and supplier management and the benefits of doing so.
Understanding How Sales Changes Impact Profits
Revenue growth often means closing new sales orders that fall outside of normal business rules. To understand how profitable your new business is, you need to compare it with the revenue and cost data associated with your traditional sales activity. Modern ERP allows for that by providing multi-dimensional views of the revenues and costs associated with each product, item, or cost center. The system also allows users to establish distribution rules by characterizing business activities and allocating a revenue or cost account to the corresponding distribution rule.
Knowing your baseline distribution rules, cost, and revenue data sets the stage for handling and measuring special sales opportunities. Your sales team can now offer special pricing for unusual or new customer orders and understand how that pricing affects profitability through linkages to supplier data. Moreover, in the case where a new order has a much larger quantity than normal, you can define quantity-specific prices associated with order volume and define how long those prices are valid. The system will automatically account for date changes and allow users to define discounts for various terms of payment.
To further streamline handling special circumstances, users can deviate from the defined price lists that ERP already links to specific customers and suppliers. By creating dynamic links between price lists, users gain automated updates to pricing whenever the primary price list changes.
Substitute to Optimize Profitability
Modern ERP enables you to maintain a cross-reference table of supplier part numbers to stock part numbers. As such, you can choose to fulfill new orders from stock or identify ways to increase profits from new purchase orders. For example, consider a scenario in which your company plans to order a huge supply of a component from a certain supplier at a discounted rate (due to volume and timing). If you determined that that component is an acceptable substitute for components in other products you sell, you could lower your costs on those other products by including additional volume in your supplier order.
With today’s markets looking brighter each month, you may find that the valuation you’ve placed on certain items in stock no longer reflects market conditions, and modern ERP allows for material re-valuation. In the above scenario, for example, a substituted component satisfied customer demand at a lower price; however, if there were no appropriate substitutes and the market was demanding higher volumes, the stock value could be adjusted upward in ERP.
  
How to Learn More
There are numerous areas in sales and inventory/supplier management where your company can identify ways to boost revenues and profits. As you’ve seen from this post and prior posts, there are many ways modern ERP makes your business more profitable.  If you’d like more information just contact us.

LBSi offers SAP® Business One sales and services.  We sell, install, implement, train and support our customers for this software solution. For over 30 years, our team has helped clients determine and implement solutions to their problems to maximize potential profit and success. We look forward to the opportunity to get to know you.

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