How Business Silos Prohibit Scale Due to Operational Inefficiencies

Complex and siloed business systems burden many organizations and lead to inefficient business operations. According to the IDC, companies lose 20-30% of their annual revenues from operational inefficiencies.

Most businesses start with a limited staff, a basic accounting system, and some spreadsheets. As the business grows, new systems get added to meet dynamic demands. For example, a manufacturing business will start with manual data entry of inventory, customers, sales, and project information. Slowly, the company may adopt an inventory management system, then a project management tool, and maybe customer relationship management (CRM) software, and perhaps even others. Some businesses end up with 10 or 12 siloed systems without integration.

How do operational silos cost money and hinder business progress?

Today, information has become the basis of every business, adopting various systems to store and use that information effectively. The problem is that departments work in silos. Each software platform’s data is unavailable to other parts of the organization. Let’s explore five ways siloed systems cost money and hinder business progress.

1. Wasting Time and Resources

You lose money when it takes a long time for employees to complete tasks. Many manufacturing companies have automated operational processes to increase production, improve efficiencies, and reduce costs. Cloud ERP helps optimize businesses by unifying data, enhancing collaboration, tracking human and machine performance, and much more.

2. Reporting Complexity

When different systems are used separately in the organization, reporting becomes complex. If you have to combine reports from various software systems, it is time-consuming and increases the probability of errors. For example, suppose you want stock-in-hand information and the value of that stock. In that case, you need to use inventory management software to get the stock information and accounting software to get the stock value. Data has to be pulled from two siloed systems to compile the report. When reporting gets delayed, it affects the ability to make fast and informed decisions. An integrated cloud ERP connects organizational operations in a centralized platform that enables quick retrieval and accurate reports for informed decision-making.

3. Poor Data Accuracy and Reliability

Data input into multiple systems increases the possibility of inaccuracies leading to significant business issues and financial loss. Imagine an order gets shipped to the wrong address because users only updated the address in the Finance system and not in Sales. Retrieving information from siloed systems is time-consuming, inconvenient, and often incorrect. And decisions based on inaccurate data can cost businesses an average of $15 million annually.

An integrated cloud ERP solution enables businesses to eliminate these costly mistakes and ensure data reliability. It provides access to accurate data across the organization and eliminates redundant data entry. For example, when a sales order is created, it automatically updates inventory levels based on what customers have purchased.

4. Unnecessary Costs and Complexity Due to Maintaining Multiple Siloed Systems

High maintenance costs from siloed systems can significantly affect businesses by paying multiple service providers. Integrated multiple systems can make upkeep complex, as IT or an outside resource has to ensure updates are in sync to have accurate information. The complexity and IT costs increase with every solution added. Cloud ERP integrates operations across the organization for a more streamlined organization. If you think ERP implementation is expensive, maintenance of siloed systems can be even more costly.

5. Lack of Information Access

Getting an accurate view of the business can be very challenging when using siloed systems. Multiple systems lead to fragmented data across the organization. For example, if a sales rep needs to check a customer’s shipping address and previous orders, they can find this information in the CRM software. But, the sales rep can’t see that the customer has not paid earlier invoices and that the finance department is not extending their credit because there is no integration between the CRM and the finance software.

With cloud ERP, information gets stored in one database, and staff can access it based on their roles and permission levels. Running siloed systems will always lead to challenges when getting real-time visibility into the business. It also limits companies from making informed and timely decisions.

Take Your Manufacturing Business to the Next Level

An ecosystem of siloed systems still hampers many manufacturing companies. As a result, staff spends excessive time on non-value-adding activities, there is unreliable data, and money and resources are wasted. An integrated solution, such as cloud ERP, makes it easier to achieve greater efficiency, improve data accuracy, access real-time data, and make intelligent decisions.

Investing in a cloud ERP solution that integrates critical business functions can significantly affect your organization. Leveraging cloud ERP ensures better workflow, efficient order tracking, better management of resources, and more. It also allows manufacturers to check stock levels, sales, work in progress, accounts receivables, and other critical information anytime, anywhere. Learn how cloud ERP can take your manufacturing business to the next level.

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