Reducing Inventory Costs & Boosting Profitability with Solar ERP

A comprehensive ERP for solar industry will have modules for procurement, purchasing, manufacturing, forecasting, quality control, customer service & support, and shipping & logistics. Each module is key to the success of your solar company, and when used together, they can provide a complete solution, allowing companies to save money, time, and resources.

This article will guide you on how ERP systems can help solar companies reduce inventory costs and boost profitability.

• Automate and Optimize Purchasing Decisions

Solar ERP application gives visibility into inventory levels, demand trends, supplier contracts and pricing, and lead times, resulting in an automated and optimized purchasing process. This real-time information further helps make data-driven, informed decisions about what and when inventory is required.

With ERP, you can know the current stock levels of all solar units, components, and consumables and forecast inventory needs for upcoming days or months based on the solar panel manufacturing project’s status.

• Capitalize on Volume Discounts

Many suppliers offer lucrative discounts or better pricing when companies order inventory items in bulk. However, the procurement team finds it difficult to confidently order large volumes if they don’t have clear visibility across the project’s current and future BOM installations.

The solar ERP software provides team access to live inventory, procurement dashboards, and reports on inventory stock levels. Moreover, the system’s demand and supply planning functionality will help solar companies analyze their inventory requirements and provide a consolidated view of suggested purchases depending on historical trends, seasonality, and marketing campaign promotions.

With inventory and materials constituting a huge portion of solar manufacturing project costs, even modest discounts to your inventory costs can significantly increase project profitability.

• Admin Automation

For most solar installation projects, companies prefer sourcing inventory from several suppliers. In addition to this, many purchases are project-specific, making the administration of creating purchase orders and tracking order status a manual and time-consuming task.

A solar ERP system can help project managers reduce or eliminate the manual nature of such tasks by leveraging workflows and automation to manage to create and route purchase orders and approvals. Automation of manual processes will help save valuable time for your team, enabling employees to focus on higher-value tasks, including managing vendor and supplier relationships and researching alternative high-quality and lower-cost products and components.

• Reduced Risk of Obsolescence

Like all technology-driven industries, the solar industry also witnesses new products and technologies leading to market evolution. With continuous research and many manufacturers, the risk of the availability of newer, better, and cheaper technology while old inventory sits on the company’s shelf is real.

Now that the solar installation industry is competitive, new entrants are entering the market daily. Customers always assess solar technology’s costs and efficiency before installing it in their homes and buildings. Solar panel and battery storage technology can be easily measured in terms of energy production and storage capacity. Therefore, customers can easily see when companies offer outdated technology.

Modern ERP technology helps solar panel manufacturing companies minimize the inventory on hand and ensure they always remain competitive enough to offer their customers the latest and updated technology configurations.

• Lower Inventory Turnover Times

With solar ERP technology, you can reduce the inventory stored in your warehouse. It can significantly impact your business’s overall profitability. Stocking higher inventory not only costs money in the form of overhead allocations but also many indirect costs.

With minimized total value of on-hand inventory, solar companies can reduce the cost of insurance and the cost associated with storing inventory. Moreover, solar companies can reduce hidden costs by focusing on inventory turnover efficiency.

• Improved Cash Flow by Minimizing on-hand Inventory

One of the most significant yet overlooked perks of reducing inventory levels is its positive impact on your solar business cash flow. Every company needs to finance its inventory in some way, like bank loans or factoring arrangements. The lower your inventory level, the less you need to finance or pay upfront, improving your overall cash flow.

Summing it up all!

The above-discussed considerations are critical for any business, but especially for solar manufacturing businesses since they often come across situations where they try to grow fast and overextend themselves financially. With construction ERP software, solar power plants and manufacturing units can leverage reduced inventory costs and improved operational efficiency.