A Quick Case Study

I have a client who distributes merchandise to local businesses. They buy wholesale from manufacturers and larger distributors.  They warehouse these products so they are available to their customers. Unfortunately the product lines are too large to warehouse everything and, therefore, they find themselves having to buy just one or two parts at a time in order to satisfy a customer’s immediate need. This can happen several times per day. The result is a monthly statement from a vendor that includes hundreds of invoices. Once a month, one of my client’s employees entered these invoices into QuickBooks. This process usually took 8 to 10 hours. Based on the employee’s fully loaded cost of about $18 per hour we calculated the cost of this process to be between $144 and $180 per month.

After examining the process, I was able to develop a very simple program that reduced the process from 8 to 10 hours to less than 5 minutes. My consultation time and the software development cost to my client was less than $500. Divided by the more conservative savings of $144 per month, the break-even on this project was less than 3 and half months. During my engagement with this client, we continued to find and automate several similar situations. The result has been thousands per month in savings, improved productivity and other benefits.

What to Look For

Of course not all tasks will get the same return from custom automation. I’ve seen a situation where a task that took 4 hours once per month would have required significant investment in new hardware and custom software to automate. It set the break-even point several years into the future and, therefore, was simply not a good candidate. In order to get the biggest bang for the buck when it comes to IT investment you have to start by “cherry-picking” for the best opportunities. There are a number of things to look for when doing this.

Uniformity of Task

Tasks that are repetitive are prime candidates for automation. Tasks that involve the same series of steps are more easily automated than those that require a large amount of special handling or subjective decision making. Entering hundreds of invoices into QuickBooks is an excellent example a task that is ripe for automation. Any situation where you are printing data from one system so that you can manually enter it into another is an excellent opportunity for automation.

Available Data Feeds

If the data you need to get into your systems is coming from a digital source then building an automated solution will be easier and less costly. This makes for a quicker break-even point. In the case of my client, it turned out that the vendor was providing their statement in a text file that was being emailed once per month. The line items in the file – each representing a single invoice – were all structured in the same way. The availability of this “data feed” meant that automation was feasible. The program I wrote simply translated the data from this format into the IIF format required by QuickBooks. Now the employee downloads the file, runs the custom script that I wrote and imports the resulting IIF file into Quickbooks … in less than 5 minutes.

Tip – If you are dealing with a similar situation, but your vendor or other business partner is only providing you with a paper statement, ask them if you can get it in digital form. More than likely this will be possible because they are probably using software to create the paper invoice in the first place. If they are willing to produce the feed, see if you – with the help of your programmer – can specify its data format. You can further simplify the custom programming task if you specify a format that you already have tools for or your programmer is comfortable with. Excellent examples of suitable formats include CSV, TAB, PIPE, XLS and XML.

Significant Effort

The best candidates for automation will be those tasks that require regular, significant effort. That is, a large number of staff hours are being applied to the task on a periodic basis. Since these are the situations where the greatest savings can be gained they are the ones where a quicker break-even is possible. A task that only consumes 1 hour per year or a small, one-time data management project may not be worth automating. Look for tasks that take at least a couple of hours every week or month.

Added Benefits of Automation

In addition to the productivity increase gained by automation, well designed and deployed automation projects can provide other significant benefits as well.

1. Improved Data Integrity. When my client was entering the invoice data manually mistakes were being made. This resulted in overpayments in some cases – costing my client money – and underpayments in others – causing bad will with the vendor. It also led to additional time being consumed reconciling these mistakes. Automating these types of tasks virtually eliminates mistakes and the costs associated with them.
2. Better Customer Service. Because the task had been automated, my client’s staffer was no longer bogged down doing data entry. She was now able to focus on her primary function – dealing with and satisfying customers. The faster your staff can process data, the more time they will have to spend with customers and on other valuable tasks.
3. More Automation Opportunity. Once you create a solution to automate one task, the tools you’ve created can be used as a platform for automating other tasks. My client was also receiving small invoices from other vendors. By themselves the effort was not significant enough to justify automation. But once we had built the custom solution we were able to make quick and easy – and therefore less costly – modifications to accommodate statements from other vendors. In other words, the benefits of the first automation trickled down to other tasks.

As you can see custom software and technology solutions can have significant benefits when applied to the right situations. Use the information in this article to identify where your operation can maximize productivity, improve data integrity, enhance customer service and improve your bottom line.

Contact me for more information about how GARA Systems can help with your custom software and technology solutions.

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