Manufacturers are no strangers to tight margins, but in 2025, those margins are under more pressure than ever. Raw material prices remain volatile, energy costs are climbing, and transportation expenses show little sign of stabilizing. Combine these with increased wage expectations and growing customer demand for competitive pricing, and it’s clear: maintaining profitability in this environment requires smarter operations, not just harder work.
Let’s take a closer look at the root causes of this margin squeeze—and more importantly, how manufacturers can respond.
The Margin Squeeze Is Real
Rising costs are coming from every direction. Material prices have become increasingly unpredictable, especially for items like metal, plastic, and electronic components. Labor is another growing expense. With skilled workers in short supply, wages are rising as companies compete for talent. On top of that, energy and logistics costs continue to climb, particularly for manufacturers who rely on international suppliers or complex distribution networks.
All of this puts pressure on margins—and for many manufacturers, it’s forcing tough decisions about pricing, production, and profitability.
Why Visibility Matters More Than Ever
One of the biggest challenges manufacturers face is a lack of real-time visibility into their operations. Without current data on costs, performance, or profitability, decision-makers are often left relying on outdated reports or gut instinct.
That’s where modern ERP systems come in. These platforms centralize data from purchasing, production, and finance, giving leaders a real-time view of where money is being made—or lost. With better visibility, manufacturers can act faster, whether it’s adjusting pricing, shifting production, or finding cost-saving opportunities across the business.
Running Lean with Smart Technology
Reducing costs doesn’t always mean cutting corners. In many cases, it means reducing inefficiencies that are hiding in plain sight. Tasks like manual order entry, disjointed inventory tracking, and paper-based invoicing add unnecessary labor and delay.
Modern systems automate these processes, streamlining operations and freeing up time for more strategic work. When production planning is tied directly to demand forecasts and real-time inventory levels, manufacturers can operate with more precision and less waste.
This kind of automation also minimizes costly errors, like over-ordering materials or underestimating production timelines—common culprits when margins start to slip.
Making Better Decisions with Smarter Cost Tracking
Profitability isn’t just about increasing revenue. It’s about understanding where you’re losing money and adjusting before it’s too late. With tools that offer job-level or product-level cost tracking, manufacturers can see which products are profitable, where costs are creeping up, and how each customer relationship impacts the bottom line.
This level of insight empowers better pricing strategies, more effective negotiations with suppliers, and tighter control over margins.
The Path Forward
The manufacturers who will succeed in 2025 are the ones who can adapt quickly and operate efficiently. While the cost pressures are real, they’re not insurmountable. With the right technology in place, it’s possible to increase visibility, reduce inefficiencies, and protect your margins without sacrificing quality or service.
Acumatica Manufacturing Edition, implemented by a partner who understands the industry, gives manufacturers the tools they need to make smarter, faster, and more cost-effective decisions.
Want to learn how your manufacturing business can weather today’s cost pressures?
Let’s talk about building a more resilient, tech-enabled operation – feel free to contact Aktion today.
Christina Birmingham, Vice President of the Multi-Industry Division, leads the team responsible for delivering Acumatica software, support, and services to companies in the Construction, Distribution, and Manufacturing Industries.
