In 2022, the country experienced the highest inflation rate in the last 40 years. 2023 will not escape this either. If we’re not talking about inflation, we’re talking about recession… Financial managers everywhere are reeling under the pressure of a slowing economy.
Companies that survived the pandemic are not safe. Supply chains, already weakened by the challenges of Covid-19, are now reeling from the war in Ukraine.
Add to this turmoil a labor shortage. We find ourselves in an environment where recruiting and retaining top talent is much more expensive.
While many economists are predicting a recession in 2023, others are talking about a mere slowdown. One thing is undeniable: the cocktail of inflation, rising interest rates and a possible recession could cause bankruptcies to explode.
Trustees are already seeing this…
“A recession could result in many small businesses closing. That’s why trustees are advising individuals to cut back on expenses, revise budgets and make preemptive payment arrangements.” – Le Soleil
This is where ERP comes in. A powerful technology that allows for projections and scenario planning. Advanced technology is a major lever for creating value across an enterprise. At least, that’s what 73% of small and medium-sized business CFOs say.
ERP software is becoming a must-have to navigate this uncertain economy. It provides real-time access to organizational data and business intelligence tools. It is a necessary element for strategic and rapid decision making since it takes into account the evolving business context.
Without it, managers are left with unreliable and complex data to analyze. Any decision-making process based on this data will be slow and involve significant risks.
To cope, companies will have to adapt.
Find out how an enterprise resource planning (ERP) system helps companies thrive despite inflation.
To counter inflation, companies are forced to review their pricing strategies. But how do you determine the right price? What is the maximum increase you can achieve without losing customer interest?
An ERP system can help you evaluate the impact of your price changes.
For example, ERP gives you access to your historical data. In addition to being able to consult this data, you can explore it. You can compare price increases. This way, you will have an overview of the possible increase threshold according to your sales volume.
These are features of the Bluebee distribution module that you cannot do without.
If you are forced to raise your prices, it is probably because those in the supply chain are doing the same. Most likely, your suppliers have increased their prices as well. But, there is nothing to stop you from negotiating with them.
ERP software allows you to analyze the cost effectiveness of your different procurement scenarios. By exploring your databases, you can identify the factors responsible for the increase in your production costs (e.g.: labor, transportation, raw materials, etc.).
The accuracy of the data you have access to allows you to identify the priority factors in your supply chain. You can then review your strategy, make informed decisions and propose several negotiation paths to your supplier.
As your prices and those of your suppliers increase, another challenge arises: working capital management.
How do you determine how much inventory to have when warehouse costs are rising? When should we pay our suppliers if the supply chain is so fragile? Should we take the risk of paying suppliers later?
And the question of the hour, should we increase our inventory as a safety measure, despite a possible recession?
The answer to these questions lies in the analysis of your data. To have access to this data, the implementation of an ERP software is necessary. You will be able to forecast different scenarios based on historical data and other variables. Your ERP software is the best tool to perform this analysis beforehand.
It is difficult to move forward with large investments in a time of recession. However, we must keep in mind that a digital shift is necessary to get through this period. A concept that even the government supports.
Indeed, in order to support Quebec SMEs, the government offers 2 grants that could help you. The PCAN program helps you access a digital transformation consultant. The ESSOR program helps you finance the implementation of your ERP solution.
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