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The Hidden Costs of Poor ERP Utilization
Posted on: August 20, 2025 | By: Alexa Leitner | ERP Selection, QAD Business Process
For most organizations, the ERP system represents one of the largest technology investments ever made. It is designed to integrate processes, provide visibility, and serve as the backbone for financial, operational, and compliance activities. Yet, in many cases, ERP systems remain underutilized or poorly integrated with other business-critical systems.
The real danger is that the costs of poor ERP usage are often invisible. They don’t appear as a single line on a financial statement. Instead, they spread across departments in the form of wasted labor, inefficiency, compliance risk, and lost business opportunities.
Through our work across manufacturing and distribution organizations, Logan Consulting consistently uncovers hundreds of thousands, if not millions of dollars in recurring hidden costs stemming not from ERP system limitations, but from how the system is configured, integrated, and used. While not an exhaustive list, here are the areas we typically observe:
1. Manual Workarounds Drain Productivity
When ERP is not tightly integrated or sufficient controls built around business processes, , employees are forced to rely on workarounds. Engineers manually update BOMs, buyers rekey purchase orders, and finance staff reconcile data across multiple spreadsheets. The result is hundreds of hours per month spent on repetitive tasks that add no strategic value.
2. Traceability and Compliance Risks Add Exposure
In regulated industries, traceability of serialized parts and supplier lots is essential. Without proper ERP processes, that visibility is lost, forcing teams into manual tracking. The cost is twofold: wasted hours each week reconciling records, and the far greater risk of non-compliance or exposure during audits and recalls.
3. Financial Processes Slow Down and Errors Increase
Many finance teams wrestle with manual processes for deferred revenue, fixed asset management, or transfer pricing. These are core ERP capabilities that too often remain offline in spreadsheets. The consequence is slower period closes, higher error rates, and inaccurate forecasts—all of which undermine decision-making and increase compliance risk.
4. Warehouse and Production Teams Rely on Overtime to Cope
On the production floor, gaps in ERP usage show up as inefficient work order releases, lack of capacity planning, and challenges simulating product introductions. In the warehouse, the impact is even clearer: manual reconciliation of transfers, disconnected 3PL data, and poor visibility into inventory levels. These inefficiencies often result in significant overtime costs just to keep operations running.
5. Decision-Making Suffers Without Real-Time Data
When financial reporting, forecasting, and inventory planning live in disconnected spreadsheets, leadership is left making decisions on incomplete or outdated information. That lag is costly—it drives excess inventory, limits responsiveness to market changes, and ties up working capital.
Seeing the “Pain Behind the Pain”
Our experience in helping clients with issues like these and others has taught us that surface frustrations—manual processes, errors, inefficiencies typically mask a deeper business problem: lost dollars, lost opportunities, and increased risk. The true cost of a poorly used ERP system isn’t the frustration of an individual team; it’s the erosion of profit margin and competitive position with their customers
The Bottom Line
Well implemented ERP systems are capable of delivering significant efficiency and insight, but only if they are used to their full potential. When gaps persist, the hidden costs accumulate silently across the enterprise. If you believe these gaps might be adversely impacting your organization’s EBITDA, we encourage you to reach out to us for a conversation on how we might be able to help.
Next Steps
If you’re ready to elevate your team’s QAD expertise, we’re here to help. Logan Consulting specializes in QAD training tailored to your organization’s unique needs. Contact us today at info@loganconsulting.com or call (312) 345-8817 to learn more about how we can support your team’s growth and development.
