Use Right Cost For Right Product

When a new product is manufactured, a price is set before introducing it into market. The price is set based on the comparisons of the prices of competitive products. One major issue is how a manufacturer can arrive at the right cost of the product? The manufacturing cost will define the market price of the product and eventually the fate of the company. Because a further percentage overhead is added over manufacturing cost which is called profit margin.

There could be two worst case scenarios. One is the product manufacturing cost is higher than the market price of the competitive products. Second you are selling the product in market lesser than your production cost. Both cases will deteriorate your market competitiveness and profit respectively.

So in order to avoid such situation, the companies need to understand the elements which create aforementioned problem. First We discuss some of those elements and then we will see how ERP help us to solve the issue.

Manual and Distributed Data

Usually the information collected about costs of various components of the upcoming product is gathered in a spreadsheet or on papers, It is very difficult to synthesize all data to determine the meaningful financial reports.

Maintenance Cost

In this modern era of technology and automation. The machines have replaced a big portion of the labour. Despite this the labour cost is considered as one of major manufacturing cost overheads ignoring the expensive maintenance of machines.

Organizational Functions

Some other elements like administration, transportation, procurement, marketing, sales and engineering must be considered. Similarly many a times service providing companies do not have a proper cost controlling structure. Companies in software, banking and insurance need to have a cost system like manufacturing companies.

How can we arrive at right cost of the product

We Need Centralized Data Rather Than Distributed

As we mentioned above, with distributed data it becomes difficult to reach the correct cost of the product. You must possess the capability to produce relevant financial reports based on real data which represents company’s monetary health. These reports help investors and financial executives to make decisions. But what we need?

Timely and dependable information is essential for initial production cost. Microsoft Dynamics 365 Business Central provides a centralized data collection service which connect data of procurement, management and finance departments. So now you can make a consolidated report which was hard to make with manual distributed data. It also helps to reduce redundant data, rekeying error, provide real-time and accurate data.

Follow Standards

By following the standard you can improve the accuracy of your production cost. An abnormality can be identified if something varies from a set level. Using standard values management can find out the sections which are not performing up to the mark. Hence they can avoid the situation of higher production cost than expectations.

Microsoft Dynamics 365 is designed to support global manufacturing, distribution, retail processes and requirements. It’s mean multiple currencies, compliance's, banking and reporting standards are available in one software. So distracting from right direction is no more a possibility.

ERP Solution Selling – What Clients Look For

The above line almost sounds like “Pssst, I will tell you the hidden rules of making a sale”, but it is not. To truly and accurately grasp the psyche or bearing of your prospect is a never ending process because the variables are dynamic and one cannot always go by logic to ascertain the next step. However, one still has to pursue and persevere and meet multiple stakeholders during the process, each one having their own concerns which bundle up together as the problem statement. Let us delve into some of the key pointers or philosophies to be followed for erp solution selling.

In the Services & Consulting industry, and particularly in the ERP domain, the prospect himself goes through an internal sales cycle whereby an identification of need transcends to a space time continuum whereby the need has become want and the offer in hand falls in perfect alignment. This journey can take few weeks or even several years which explains that you shall meet innumerable objections and obstacles during your path. While trying to sell a solution, the most important aspect is to adjudge where the prospect is sitting in this cycle. At the same time, it is not definite that this is a linear path with defined stages.

At the core of an erp adoption is the cost-value curve. However the best solution sellers are those who surpass this parametric definition and intimately link themselves to the business objectives for the client. In other words, you need to critically process the existing challenges for the client by listening deep; and based on that prepare a charter for him for the next several years wherein your solution will be an essential component in helping him realize his vision and mission.

Hence, clients are more often inclined towards good listeners, and not those who plainly glorify their solution as the best in the market. Take it like building blocks. Your block might be the best but unless it finds synchronicity with the place where it has to land, there are chances of rejection. Solution selling is about speaking a common language, of instilling the faith that your services will help the client effectively implement the best business practices, and that you have thoroughly comprehended or deciphered the various components or phases for this journey that shall be collectively pursued. It is this sense of relationship building that takes true erp service providers far ahead in their practice.

It must be mentioned again that as a solution implementer; you shall meet a varied set of individuals who will put you to task in their own ways. Hence solution selling is more of an art and it takes sound judgment to prepare for every state of affair. This art can include putting yourself in his shoes and presenting a neutral stance. Perhaps you may even have to put forward what is not achievable through your solution against the desired outcomes; in order to strengthen your authenticity & credibility. While the future can never be precisely ascertained; the best solution sellers are those who can either create that picture for the prospect or else if he is well informed with clear visibility; become an essential part of that framework themselves!.