The Costs of Inefficient Business Processes
It may be difficult to sniff out inefficiencies in your business processes when you’re ensconced in doing the same thing you always have while everything is fully functional. But once you dig into your operations and find how much inefficient business processes are costing your bottom line, you’ll be more than ready to trim the fat.
Two years ago, an IDC study found inefficiency costs companies between 20 to 30 percent of their revenue each year. That’s a big chunk of anyone’s revenue, let alone SMBs. But money certainly isn’t the only factor affected by inefficiencies in your business processes.
Other ways your business is impacted by inefficiency include:
- Time – If employees are wasting time navigating through complicated processes, they’re not spending time doing the actual work you need them to do.
- Work quality – The efficiency of your operations directly impacts the quality of work your company does. If things take longer, there are more errors. If employees struggle with morale because of frustration, the work quality of your entire company falls.
- Risk – Inefficiency in business administration creates risks for your company. Turnover, for example costs money. If you lose key employees well-versed in city, state and federal regulations, for example, failure to comply with laws and regulations can be expensive.
- Strategy – Without knowing exactly how much money is coming in and going out, you’re missing out on key data that is important to your strategic financial decisions.
You can avoid these pitfalls by making a plan to address your inefficient business practices. Be sure to communicate your business processes and goals for them with your ERP consultant or partner for the best results. They are ultimately the ones that need to build out your configurations to align with those processes. 2W Tech is an Epicor Gold partner and would be happy to help discuss your business processes and how your ERP software can be configured to help you best achieve them.