Master Your Market Cost Using Surcharges in Odyssey ERP
By Wendy Renbarger, Project Consultant
Metalcasters are feeling the impact of fluctuating raw material and energy costs. Many are adapting to fluctuations by applying metal and energy surcharges. Managing these fees can be complex, but the right enterprise resource planning (ERP) system can take surcharges from a burden to a competitive advantage.
Odyssey ERP is specifically built for metalcasting. It delivers four critical advantages that help you navigate the market and ensure your business and customer relationships thrive:
- Purpose Built: Industry-Specific Power
- Eliminate Manual Risk: Accuracy and Automation
- Dynamic Pricing: Flexibility and Precision
- Transparent Billing: Build Customer Trust
What are Metal and Energy Surcharges?
Metal and energy surcharges are additional fees added to base prices of goods to account for the rising costs of raw materials (e.g., steel, aluminum, copper) and energy (e.g., electricity, natural gas, oil).
Surcharges are typically calculated based on market indices. They are adjusted regularly to reflect the current market conditions and costs in the manufacturing process. Instead of frequently changing base prices, surcharges allow for more transparent and flexible pricing, helping businesses to respond quickly to global cost fluctuations and recover costs.
Four Advantages of Surcharge Management in Odyssey ERP
1. Purpose Built: Industry-Specific Power
With tools built specifically for die casters, investment casters, foundries, and other related metalcasting operations, the software mirrors real-world metalcasting operations. Surcharge and energy features are included in the base Odyssey ERP software and are tied to customers’ orders and invoices.
Since the tables and information are built in, this:
- Lowers implementation time
- Reduces the need for outside spreadsheets
- Better reflects how your metalcasting business really operates
2. Eliminate Manual Risk: Accuracy and Automation
Odyssey ERP automatically applies surcharges or other cost-adjustments to quotes, service contracts, and related reports at the line level. This reduces the risks of accidentally forgetting to apply surcharges. It also ensures consistency across all customer quotes and contracts.
Automation is fully supported for applying surcharges and invoicing, virtually eliminating error-prone manual processes. This central system saves labor time, drastically reduces human errors, cuts down on disputes, and allows for faster turnaround for billing. The centralized data and automation significantly lower error risk, ensuring consistency and accuracy far superior to manual processes.
Additionally, standardization and documented processes in the system make onboarding and training new team members more streamlined.
3. Dynamic Pricing: Flexibility and Precision
Surcharges can be configured by customer, jobs, invoice, or products. You can tie in thresholds, quantity, or other criteria. Since the system already handles metal usage versus metal recipe cost, physical-chemical properties, and more, you will have excellent data inputs.
This enables you to make surcharges fair and precise rather than arbitrary. You also have the ability to create customer-to-customer variation, avoiding overcharging or under-recovering costs.
The end-of-month reconciliation process is also simplified. Surcharges are managed in the same system as production cost, inventory, metal usage, and general ledger. The integration gives you a more accurate financial picture. This allows for easier tracking of cost changes in the metal and energy market, better decision making, and more confidence in financial forecasts.
Odyssey ERP is capable of quickly adjusting surcharge formulas and thresholds when metal and energy prices change. This pricing agility helps you respond to cost changes, manage cash flow, maintain competitive pricing, and avoid lags in cost recovery.
4. Transparent Billing: Build Customer Trust
The Odyssey ERP software can generate separate invoices for any time span apart from regular invoices. Alternatively, the system can create a separate line item for surcharges on the product invoice.
This increases transparency with customers; they will be able to see the base product cost related to the surcharge. When customers choose to see the surcharge separately, this can help with accounting and auditing, making sure surcharges are not “hidden” or confused in pricing. This clarity helps customers understand charges and simplifies accounting and auditing.
Conclusion
While surcharges can be a source of confusion and frustration, they are a necessary tool for navigating today’s economic landscape. Because Odyssey ERP is industry-specific, it is designed to manage surcharges within the system. It standardizes them across functionalities from quotes to invoices, reducing time, labor, and risks.
Odyssey ERP is your early-warning system and profit protector. It empowers you to stop reacting to cost shifts and start leading with confidence.
Want to learn more about Odyssey ERP? Reach out to us!