No, It’s Not a Contradiction: How Investing in Microsoft Dynamics NAV Saves Serious Money

In times of extensive financial and economic turmoil, investing is not real popular. Businesses are looking into ways to cut costs, not increase them, and postponing investments into information systems seems only natural.

However, investing in Microsoft Dynamics NAV can be a very sound decision, precisely because of the current economic situation. That is, investment into a good ERP system can yield a very quick return, and start saving considerable sums in a very brief time span-usually enough to pay for the system within a year or two.

An ERP system can save money in a number of ways. One of the best, and fastest ways, is by applying Microsoft Dynamics NAV out-of-the-box features to cut inventory costs. Excessive and unmanaged inventory is a huge drain on cash flow, fixed operating costs, and supply chain efficiency. Microsoft Dynamics NAV has several features which can rationalize your inventory, boost your agility, eliminate excess fixed costs and streamline your supply chain-in the end, bringing costs down, and resulting in  significant savings.

Replenishment and planning

When it comes to minimizing inventory levels, Microsoft Dynamics NAV has several powerful features.. In the early stages of inventory optimization, you can set up a fixed reorder quantity or maximum quantity reordering policy, which ensures your stock is always as low as possible, but high enough to fulfil your demand. Then you can gradually move to more agile approaches, such as lot-for-lot reordering policy. A next step can be moving even further toward just-in-time inventory, taking advantage of stock keeping units functionality and putting cross-docking to work.

Depending on your replenishment and planning configuration, Microsoft Dynamics NAV can calculate requisition plans for your inventory, taking into account your demand, quantity at hand, scheduled receipts, transfers and production orders. Requisition plans not only provide for meeting the demand by creating new replenishment orders; they also make sure everything is optimal, by rescheduling existing ones, changing quantities, or even cancelling unnecessary orders, and do all of these for all types of replenishment orders: purchase, production and transfer.

Other than minimizing inventory and optimizing the supply chain, replenishment and planning functionality is the basis for another important ERP function: order promising.

Order promising

Being able to tell your customers exactly when their shipments will arrive at their doors increases your trustworthiness and reliability. These two will in turn increase customer satisfaction and retention, both of which are critical when the economy is down. Microsoft Dynamics NAV includes an order promising feature that helps you set fixed delivery dates to your customers, even when your inventory cannot immediately fulfill the needs. ERP systems have long known about two paradigms, Available-to-promise (ATP) and Capable-to-promise (CTP), both of which are fully covered in Microsoft Dynamics NAV.

The Available-to-promise feature helps you forecast delivery dates to customers by taking into account inventory at hand, scheduled receipts and current gross requirements, including sales and production. It also takes into account any lead times related to purchases, production, transfers from other locations or any combination of these.

When you don’t have any goods on hand to fulfill customer needs, and there are no replenishment orders under way, you can make use of the Capable-to-promise feature, which forecasts items availability that could be achieved by issuing new purchase or production orders. Again, all lead times, such as inbound and outbound warehouse handling times, safety lead times and shipping times are taken into account.

By putting these two features to work, you can both optimize the goods flow through your warehouses, and increase your trustworthiness and reliability. The optimized goods flow will lower your inventory levels and allow you to cut fixed costs of your sales, purchases and warehouse processes.

Other features

If you believe that you can’t successfully implement any of the strategies or features mentioned above, Microsoft Dynamics NAV can still keep your costs down, and help you maintain a healthy cash flow. Detailed, up-to-date and accurate customer and item statistics are available at all times, and help you understand the trends in your costs, margins, and profits. You can use this information to easily detect low-profit items or customers, and focus your efforts on those market segments that require lower operating costs, and result in higher profits.

If you already have Microsoft Dynamics NAV implemented in your organization, you need to determine if you are using such features. If not, now is the right time to start doing so.

If you don’t have an ERP system in place, and you manage all of the discussed tasks manually, or don’t manage them at all, you need to ask yourself this question: Can your business survive the upheaval the global economy is going through?

Microsoft Dynamics NAV is a truly affordable solution, and all these features come out of the box. With very little investment into licenses and implementation services, and very little organizational changes, you can quickly have a turnkey solution ready to boost your business through the survival-of-the-fittest times that are just around the corner.

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