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6 Ways Solar ERP Helps in Reducing Inventory Costs and Increasing Profitability

6 ways SolarSuccess Solar ERP Helps in Reducing Inventory Costs and Increasing Profitability

How Solar ERP Streamlines Inventory Management & Saves You Money

Solar Enterprise Resource Planning Software (ERP) is a solution that has been designed to manage the warehouse & inventory management requirements of solar panel manufacturers, installers, and distributors.

A comprehensive Solar ERP Software like SolarSuccess by Blu Banyan will have modules for forecasting, purchasing, manufacturing, quality control, shipping & logistics, and customer service & support.

Each of these modules is integral to the success of your solar business and when used together they provide a complete solution that can save you time and money.

In this article, we will focus on how Solar ERP can help you reduce inventory costs.

1. Automate & Optimize Purchasing Decisions

Solar ERP software can automate and optimize the purchasing process by giving you visibility into your inventory levels, supplier contracts and pricing, lead times, and demand trends. This information can be used to make data-driven decisions about what inventory is required and at what time based on project demands. 

These types of software applications help solar companies to better manage their inventory and orders, from demand and supply planning, procurement and purchase order creation, through to receiving goods, managing put-away processes and finally, sending the required items to a customers site. It provides visibility into current stock levels of all solar units and components and consumables as well as forecasting inventory needs for the next few weeks or months based on the current status of your projects.

In this article we will explore many of the ways Solar ERP positively impacts inventory management, and the bottomline effects of operational efficiency in your warehouse.

 2. Capitalize on Volume Discounts

Most of our clients are completing thousands of projects per year, often with the same solar units, consumables and components. Many suppliers offer better pricing or higher discounts when orders for inventory items are over a certain volume or amount. However, without clear visibility across your project BOM requirements, with regards to both current installations as well as future installations being tracked in the sales pipeline, it can be difficult for your procurement team to order large volumes with confidence.

A Solar ERP, like SolarSuccess by Blu Banyan gives your team live inventory and procurement dashboards, and up to the minute reports on all inventory stock levels. Our demand and supply planning functionality will also analyze inventory requirements across all open, and upcoming projects, and provide them with a consolidated view of suggested purchases based on real system information, seasonality, historical trends and even current marketing campaign promotions.

With a huge portion of your project costs sitting in the inventory and materials that go into the project, even modest discounts (5%) to your inventory costs can have huge impacts on project profitability.

3. Administration Automation 

For most solar installation projects, procurement and project managers are sourcing inventory from a number of different suppliers. This, compounded with the fact many purchases are project specific means managing the administration of creating purchase orders, gaining approvals and tracking order status can be very manual and time consuming.

A good Solar ERP, like SolarSuccess helps to reduce and even eliminate the manual nature of these roles, by using workflows and automations to manage creation and routing of purchase orders and approvals, as well as provide clear visibility into the current status of each purchase order.

By using technology to automate manual processes your team will have more time to work on higher value tasks, such as vendor and supplier relationship management and researching alternative products and components that may be of higher quality or lower costs. This helps to ensure the equipment, materials and consumables that you are purchasing are the best possible product for the project and client.

 4. Lower Inventory Turnover Times 

Embracing Solar ERP technology can help to reduce the amount of time inventory is sitting on your warehouse shelves. This has huge impacts on overall business profitability. Not only does it cost money to store inventory items by way of overhead allocations to your inventory value, there are many indirect costs that most solar businesses don’t consider. An example of this is the cost of insurance for your inventory, which is usually calculated based on the average inventory value.

Solar companies who are able to minimize the total value of their on hand inventory see a lower cost of insurance as well as associated costs of shelving that inventory while it waits to be allocated to a project.

By focusing on inventory turnover efficiency, Solar installation companies are able to reduce the hidden costs that go into making sure that inventory is available and not stalling projects.

5. Reduced Risk of Obsolescence

Like most technology driven industries, the rate at which new products come to market continues to hasten. With so much research being done, and so many manufacturers, the risk of newer, better, cheaper technology becoming available while your inventory sits on your shelf is very real.

The solar installation industry is competitive, with new entrants coming to the market every day. One of your customer’s key purchasing drivers is the costs and efficiency of the technology you are installing on their homes and buildings. With solar panel and battery storage technology being easily measurable in terms of energy production and storage capacity, it is quite easy for consumers to see when you are offering technology that has become dated.

By minimizing the inventory you have on hand, through the use of modern ERP technology, you can ensure you always remain competitive by being able to offer the most modern and update technology configurations to your customers.

6. Improved Cash Flow by Minimizing On Hand Inventory

One of the most important, yet often overlooked benefits of reducing inventory levels is the impact it can have on your business cash flow. Most businesses need to finance their inventory in some way, whether it be through lines of credit or factoring arrangements.

The lower your inventory levels, the less you need to finance or pay for upfront, and the better your overall cash flow position.

This is a critical consideration for any business, but especially for solar installation businesses who often find themselves in a situation where they are trying to grow fast and end up overextending themselves financially.

In Summary 

Solar ERP systems are designed to help businesses in the solar installation industry reduce costs, improve inventory turnover times, minimize the risk of obsolescence, and improve their overall cash flow position. By embracing technology and automating manual processes you can free up your team to focus on higher value tasks and ensure that you are always offering your customers the most up-to-date technology products.

Looking for a comprehensive Solar ERP solution? SolarSuccess by Blu Banyan offers a complete suite of tools to help you run your business more efficiently and cost-effectively. 

Contact our sales team today today to book a demonstration.

Illustration: Community with energy efficient buildings, solar panel array, wind turbines, trees, flowers, and people riding bicycles.