In an industry where margins are often razor thin, manufacturers must maximize efficiency and reduce costs without sacrificing quality. Dynamics 365 ERP automates routine tasks, consolidates data across departments, and standardizes workflows, helping to deliver productivity gains. Additionally, Dynamics 365 ERP’s real-time insights can enhance inventory management and ensure better control over stock levels, minimizing waste and downtime. By consolidating legacy systems onto Dynamics 365 ERP, manufacturers can position themselves to respond faster to market demands and maintain a clear edge in a hypercompetitive landscape.

Microsoft commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study to examine the potential return on investment (ROI) large enterprises (over $1 billion in annual revenue) may realize by deploying Dynamics 365 ERP.¹ Forrester also conducted a TEI study to examine the potential ROI midsized organizations (less than $1 billion in annual revenue) may see with Dynamics 365 ERP. This abstract will focus on manufacturers’ use of Dynamics 365 ERP and its value to their organizations.

In the full TEI study, Forrester found that a large composite enterprise would see a three-year, risk-adjusted net present value (NPV) of $12.9 million with an ROI of 101%. Meanwhile, a midsized composite organization would see an NPV of $3.3 million and an ROI of 105% over three years.

As part of the broader TEI studies, Forrester interviewed representatives from eight organizations and conducted a survey of 212 respondents, all of whom had experience using Dynamics 365 ERP. Four of the interviewees came from organizations with a strong manufacturing presence. These interviewees included: 

• An IT executive at an industrial manufacturer with 30,000 employees.

• A global IT manager and a CIO at a consumer goods manufacturer with 2,000 employees.

• A CIO at a hardware manufacturer with 200 employees.

• An IT director at an equipment rental company with 3,700 employees.

In addition to these four interviewees, 54 of the 212 survey respondents came from manufacturing organizations.

Investment Drivers For Manufacturers

The interviewees and survey respondents’ organizations adopted Microsoft Dynamics 365 ERP to consolidate multiple legacy systems into a single platform to streamline warehouse operations, finance and accounting, auditing, and reporting. With their legacy set of ERP tools, these organizations struggled with the following challenges:

• Disparate systems that created data quality issues. Many manufacturing interviewees and survey respondents reported operating with multiple disconnected tools for finance, supply chain, and production management, which led to inconsistent data across plants and regions. Manual reconciliations were common and reporting lacked accuracy and timeliness, making it difficult to maintain a single source of truth for critical metrics like inventory levels and production costs. The IT executive at an industrial manufacturing firm described their legacy ecosystem, noting: “In one group, we had a system for financials and then we had a separate system for operations. There were data quality issues between the systems, so they didn’t always agree what our inventory levels were, what the cost of our inventory was, and so forth. By bringing everything into Dynamics 365 ERP, we are able to reduce the data issues and get more visibility into our systems.” For manufacturers, this visibility is essential to optimize production schedules, reduce waste, and improve profitability in a margin-sensitive industry.

• Reliance on manual workflows. Interviewees and survey respondents in the manufacturing space shared that prior to implementing Dynamics 365 ERP, they relied on manual, paper-driven processes for critical tasks such as work orders, maintenance scheduling, and inventory tracking — processes that were not only inefficient but also prone to human error. As the IT director at the equipment rental company explained: “Before Dynamics 365 ERP, we relied heavily on paper processes, even under [our legacy ERP system]. The construction industry is behind on tech, so digitizing workflows was a major driver for change.”

• Cloud-based infrastructure requirements for broader digital transformation. Legacy on-premises systems limited the ability of some of the manufacturing interviewees’ and survey respondents’ organizations to adopt modern capabilities such as predictive analytics, IoT integration, and automated workflows. Interviewees noted that these on-premises systems lacked scalability, were prone to downtime, and could not easily connect with newer technologies on the shop floor. Among the 54 survey respondents in the manufacturing space, 56% reported that transitioning to a cloud-based infrastructure was one of their organization’s main investment priorities with Dynamics 365 ERP. For manufacturers, this shift enables real-time data sharing across plants, supports advanced planning tools, and lays the foundation for smart factory initiatives — critical steps toward staying competitive in an increasingly digital marketplace.

Key Results For Manufacturers

The results of the investment for the interviewees’ organizations include:

Reduced inventory costs from supply chain optimization. Interviewees and survey respondents emphasized that Dynamics 365 ERP helped their manufacturers cut inventory waste and scrap costs. By consolidating data into one system, their companies could forecast demand more accurately, enforce compliance with approved suppliers, and optimize stock levels. These capabilities reduced excess inventory, minimized material variability, and sped up movement through the supply chain, which lowered costs and improved efficiency for the interviewees’ and survey respondents’ organizations. Specific improvements include the following:

• Manufacturers used integrated workflows and real-time data to boost order accuracy, reducing scrap from incorrect or duplicate orders. The IT executive at an industrial manufacturing firm shared: “We used to have issues [with order accuracy], especially with engineer-to-order products tailored to specific customer requirements. Sometimes the wrong specs like color or length would go down the line, and we’d end up scrapping the finished product. … If we look at the number of such instances, we’ve reduced them by roughly 50% [with Dynamics 365 ERP]. That improvement in order accuracy saves us $3 million to $4 million per year in scrap costs.”

• Other interviewees noted that better inventory visibility improved warehouse layouts and minimized excess inventory. The CIO at a manufacturing firm said: “Inventory accuracy is up, and we do much better with our slotting warehouse arrangements, so we know where things are and if things are arranged more efficiently. The speed at which we can go get things and move them out the door is improved.”

• Interviewees shared that Dynamics 365 ERP delivered major cost savings through centralized sourcing, which eliminated unauthorized purchases, ensured that buyers adhered to prenegotiated vendor contracts, and reduced variability in materials. The IT director at an equipment rental organization explained, “By using Dynamics 365 ERP workflows to enforce approved suppliers for spare parts, we’ve saved a couple of million pounds per year through better compliance with negotiated contracts.”

Productivity lift for warehouse employees. Interviewees and survey respondents noted significant time savings in warehouse operations after implementing Dynamics 365 ERP. Automation replaced many manual tasks, such as inventory checks, picking, and shipment scheduling, through features like barcode scanning and automated replenishment. Supervisors also benefited from real-time dashboards and streamlined approval workflows, reducing time spent on monitoring and handling exceptions. Interviewees shared several examples of these efficiency gains, including the following:

• The global IT manager at a consumer goods manufacturer reported that their organization used Dynamics 365 ERP to access real-time inventory data and procurement workflows to fully automate their materials requirements planning (MRP) processes: “Moving from our legacy system to Dynamics 365 ERP cut our MRP scheduling time from four to six hours to under 10 minutes. … With Dynamics 365 ERP, MRP runs daily and is fully automated, so we no longer need employee involvement.”

• The same interviewee went on to say that Dynamics 365 ERP Supply Chain Management automated critical steps in receiving, picking, packing, and shipping, which boosted order flow efficiency. The interviewee estimated the improvement, stating, “We’ve gone from 30% efficiency in order flow to 95% or more with touchless transactions.”

• The CIO at a manufacturing organization agreed that Dynamics 365 ERP’s inventory management features made picking and packing more efficient, saving warehouse operations staff time: “The system will suggest, based on the velocity of certain items, that you rearrange the warehouse — group these items together, move others closer to the floor. If you’re always picking the same items in the same order, it will recommend putting them in that order in the warehouse to make picking more efficient. All that’s handled by Dynamics.”

• Interviewees provided a range of estimates on the time savings Dynamics 365 ERP — specifically the Supply Chain Management module — enabled for their production team and warehouse supervisors. The IT executive at the industrial manufacturing firm stated: “Our 150 warehouse supervisors spend less time working with the [ERP] system and more time making products. It’s a 20% to 30% time savings.”

Time savings for finance and accounting teams. Interviewees and survey respondents reported major efficiency gains for finance teams after moving from fragmented legacy systems to Dynamics 365 ERP and its Finance module. By consolidating processes on a single platform, manufacturers eliminated time-consuming manual reconciliations and data extractions required to bridge disconnected systems. Respondents highlighted several areas where these improvements delivered significant time savings:

• Across the board, interviewees reported significant time savings on financial report generation from using the Finance module. The CIO at a hardware manufacturer described the changes: “Our analysts and team members are far more efficient now because they’re not individually pulling data like before. With the move to Dynamics 365 ERP, we’ve focused on reducing push reports, increasing dashboarding, and eliminating repetitive reporting tasks.”
  The same interviewee went on to say: “By integrating our warehouse system and running on Microsoft’s fabric, our data is real-time, live, and robust. That gives us an incredibly powerful reporting foundation.”

• In addition to pulling data for reports, interviewees noted that Dynamics 365 ERP’s Finance module allowed their organizations to expedite month-end closing processes. The IT executive at an industrial manufacturing firm noted the improvement: “Our month-end closing process used to be highly manual. It typically took about seven days to complete everything, from closing the books and reconciling accounts to ensuring receivables were recorded and invoices were paid. Now, we’ve reduced that to about four days. So, while it still takes a few days, it’s a noticeable improvement over our previous process.”

• Interviewees also reported that Dynamics 365 ERP’s automated data management and centralized recordkeeping allowed their finance teams to meet compliance requirements more accurately and efficiently. An IT executive at a manufacturing firm described how Dynamics 365 ERP boosted their audit and tax teams’ productivity: “Tax accuracy is significantly improved. We have both internal and external audits, and suddenly with the reporting that we have there is a time savings there. It’s definitely more accurate and saves time in the auditing process.”

Invoicing and order management time savings. Interviewees and survey respondents said that Dynamics 365 ERP streamlined key order management workflows, such as order entry, invoicing, and payment tracking. Integrated workflows eliminated redundant steps, allowing manufacturers to convert quotes to orders much faster. Interviewees described how these capabilities both shortened their order-to-cash cycles and improved order accuracy:

• The CIO at a hardware manufacturing firm explained that automating the order release process with Dynamics 365 ERP significantly improved efficiency and accuracy. Manual steps that previously slowed operations and introduced errors were eliminated, ensuring customers received timely documentation. The CIO noted, “Once an item ships out the backdoor, the shipping clerk closes the shipment, and Dynamics 365 ERP sends the ship notification, packing slips, and invoices electronically to the customer.”

• The same interviewee noted that they anticipated future gains from AI-driven automation, which was critical for manufacturers looking to scale without adding headcount: “We’re piloting AI agents for automation in areas like order management, all geared toward growing without adding labor. The goal is to automate routine tasks and free up resources for higher-value work.”

• Manufacturers also reported that automating invoice capture reduced manual processing and ensures compliance, saving time for accounts payable (AP) and accounts receivable (AR) teams. The IT executive at an industrial manufacturing firm reported: “The invoice capture module has been really helpful to automate invoices that previously were manually processed. Now, the bill comes in, and it gets entered into Dynamics 365 ERP. There are still certain invoices that get stuck and need to be manually processed, but overall, it’s roughly 30% time savings.”

• The same interviewee projected even greater order management time savings as they deployed AI features to further streamline the order entry process: “We have a sales order automation project underway where AI is used to convert purchase orders into sales orders. For example, if a PO includes a customer part number, the system needs to intelligently match it to our internal part number to create the correct sales order. We’re expecting a 50% efficiency gain from this initiative. It’s very promising.”

• The global IT manager at a consumer goods manufacturing firm shared even greater time savings, allowing their organizations to reallocate five employees: “About 65% to 70% of our big-box accounts now auto-invoice, eliminating manual checks and improving accuracy. … We’ve also rebalanced five FTEs on the accounts receivable side by automating deductions and collections. That’s a big improvement for a team that used to spend hours manually reviewing every order.”

Improved demand forecasting. Interviewees and survey respondents shared that Dynamics 365 ERP significantly accelerated demand planning and forecasting for manufacturers. By combining detailed production and inventory reporting with AI-driven insights and integrated MRP, the platform helped these manufacturers anticipate demand more accurately, align material requirements, and reduce planning cycles.

• Interviewees reported that Dynamics 365’s AI features expedited the demand planning process by automatically generating predictive models. The global IT manager at a consumer goods manufacturer estimated that this alone helped their organization reallocate two employees: “Demand planning with AI in Dynamics 365 ERP has saved about two FTEs so far on scheduling and forecasting. It’s a great example of how automation is helping us scale without adding headcount.”

• Other interviewees in the manufacturing space shared that Dynamics 365 ERP’s MRP capabilities made production scheduling and procurement planning more accurate and less labor-intensive. The IT executive at an industrial manufacturer stated: “Planning has definitely improved. Previously, a lot of it was done in [a spreadsheet]. Now, with MRP, we can create planned orders and follow through on them, saving a significant amount of time. More importantly, the process is much more accurate than doing it manually. So, it’s not just about saving time; it’s about the quality and accuracy of the information we’re getting.”

Cost savings from retiring legacy systems and infrastructure consolidation. Interviewees and survey respondents in the manufacturing space stated that moving to Dynamics 365 ERP’s cloud platform allowed their organizations to retire legacy on-premises systems, cutting costs and reducing IT workload. They reported savings from eliminating servers, hardware, and physical data centers, along with the associated overhead costs. Built-in capabilities also removed the need for third-party tools and custom connectors, simplifying operations and lowering expenses.

• The CIO at a consumer goods manufacturer emphasized the financial impact of consolidating systems under Dynamics 365 ERP. By retiring multiple legacy ISVs and EDI platforms, their organization eliminated substantial costs tied to licensing and maintenance. The interviewee noted: “We retired legacy ISVs and EDI systems when moving to Dynamics, eliminating multi-six-figure costs. Consolidating everything under one platform has been a huge cost advantage.”

• Similarly, the IT executive at an industrial manufacturing firm highlighted savings from moving away from physical infrastructure. Legacy servers and hardware required ongoing maintenance, backups, and troubleshooting — all issues that cloud deployment resolved. This interviewee said: “With Dynamics 365 ERP, we no longer need to maintain physical servers, as it’s a cloud-based solution. When you factor in everything — downtime, backup and restore issues, reliability concerns — the overall cost is likely comparable, if not better.”

• The CIO at a hardware manufacturing company shared that retiring multiple legacy systems was a major benefit, with Dynamics 365 ERP replacing warehouse management and other platforms, stating: “We were able to eliminate our legacy warehouse management system, as well as one or two other platforms. Cost-wise, it’s about a wash because I was able to retire two or three legacy systems that now have functionality inside of Dynamics 365 ERP and I’m looking at retiring two or three more in the next few years.”

• For some interviewees’ organizations, the savings were even more substantial. The IT director at an equipment rental organization reported ongoing cost reductions as more systems were consolidated: “We’ve retired five or six legacy systems since moving to Dynamics, saving about £250,000 annually and expecting to reach £500,000 as more systems are consolidated.”

• Survey data reinforced these findings: 70% of manufacturing respondents said migrating to Dynamics 365 ERP reduced legacy maintenance costs. Interviewees agreed, noting that the platform’s ease of management allowed their organizations to shrink IT overhead without layoffs. The CIO at a hardware manufacturer stated: “Headcount required to run technology is down about 10%, even as the company grows. In IT, we’re down 10%, without any layoffs. We’ve simply leveraged technology to do more with less.”

Stronger customer loyalty from improvements in fulfillment times and order accuracy. Interviewees in the manufacturing space reported that customer expectations for order fulfillment times and fill rates became more stringent in recent years. The interviewees also stated that Dynamics 365 ERP was crucial in helping their organizations meet these aggressive timelines and ultimately retain customers.

• An IT executive at an industrial manufacturing emphasized the importance of fast and accurate orders in retaining customers: “If our customers are building a warehouse, for example, our product needs to be there on a certain date. If you don’t have the right product shipped to them on that date, the entire project gets delayed and there’s cost to it for them. It’s a 5% to 10% improvement in retention with [Dynamics 365 ERP].”

• The global IT manager at a consumer goods manufacturer agreed that Dynamics 365 ERP accelerated order accuracy while simultaneously boosting fulfillment times: “Before Dynamics 365 ERP, we could only process orders from 9 to 5. Now, we can push orders 24/7, reserve product continuously, and meet tight deadlines for big-box customers. That change alone has transformed our ability to serve customers.”

Reduced unplanned downtime through Preventive Maintenance. Manufacturing interviewees emphasized how Dynamics 365 ERP’s Preventive Maintenance capabilities helped their organizations avoid costly unplanned outages. Within the Supply Chain Management module, AI-driven analytics continuously monitored equipment health and flagged anomalies that could indicate potential failures. Maintenance teams used these insights to schedule repairs proactively, extending asset life and preventing production disruptions that could cost millions. The IT executive at an industrial manufacturer quantified the improvement, stating: “Preventive Maintenance is incredibly helpful for maintaining our assets. We can create various work orders based on different criteria, such as time intervals, number of pieces produced, and other factors. … It’s a process improvement that reduces downtime, which usually costs in the range of millions of dollars. It’s roughly a 25% reduction in downtime.”

Greater agility to respond to tariffs and global events. Interviewees from manufacturing organizations highlighted how Dynamics 365 ERP’s flexible configuration helped their organizations adapt quickly to external disruptions, such as sudden tariff changes, supplier shutdowns, or spikes in transportation costs. Real-time visibility into inventory, purchase orders, and cost-to-serve data enabled their teams to reroute demand to alternate suppliers, update cost models, and push new pricing to sales channels within hours. The CIO at a hardware manufacturing organization shared: “[We’re] leveraging the system to ensure that we are able to respond daily [or] hourly to the changing phase of cost of doing business. … We’ve been able to manage through tariffs, but it would have been much harder if we didn’t have access to the reporting we get through Dynamics 365 ERP.”