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Last month, Tailwind Consulting saved one of our clients some money. Actually, we saved them a lot of money, over $18,000 in the first year. How? By writing a custom application to automate a portion of their order entry process. And it was quick, simple and inexpensive to do.
Technology is an Investment, not an Expense
Most small businesses use their computers for a few basic functions. They check email, create documents or spreadsheets, run a few back office applications, like an accounting program or contact management software, and browse the internet. They hire a computer consultant to install their network; configure their desktops, laptops, and printers; and to install the more complicated software, like operating systems and corporate anti-virus packages. In other words, computers are an expense. Like office supplies. And every dollar spent on technology is one dollar less towards the bottom line.
Other companies treat technology like an investment. They buy computers to save money. They install software to add value and boost sales. If packaged applications don’t do what they need, they develop custom solutions. Every technology expenditure should do at least one of three things:
- lower expenses
- increase sales and value
- reduce risk.
And although it may sound expensive, it doesn’t have to be. The system that we wrote to save this client over $18,000 per year paid for itself in less than 2 months.
What We Did and How
Our client would receive orders from several customers by email. They would read the email, key the relevant information into their order processing system and then type up a document in Microsoft Word which would get faxed to the warehouse where the order was filled. They processed about 10 orders per week this way. Simple, right? Yes. But there were also three areas for improvement.
First, it took 10 minutes to key an order into the order processing system. At 10 orders a week, that was 100 minutes of work a week. Reducing the time spent copying the orders from an email into the order processing system could save almost 2 hours a week.
Second, the orders were fairly complicated and invariably, errors were made when keying in the orders. Our client spend about 5 hours a week investigating and correcting orders with errors. Usually, these errors were discovered after the customer had received an incorrect shipment and called to complain. Reducing the errors would save 5 hours or time per week and would result in fewer orders shipped with errors and happier customers.
Third, the warehouse charged our client $12.50 per order that came in by fax. Orders sent to them electronically were $0.50 per order. At 10 orders a week, that meant saving $120.
The solution was very straight forward. We developed a system that would parse the emails received by their customers, extract the required order data, upload the data to the order processing system and transmit the information electronically to the warehouse. Because our client still wanted to touch each order and verify that it was processed correctly, a report was generated with each order for the client to review. The time to process and order was reduced from 10 minutes to a matter of seconds. The manual effort or keying the data into the order processing system was completely eliminated and with it, the number of data entry errors that occasionally accompanied an order were reduced to zero.
Weekly, our client saved the hour and a half it took to enter the orders and the 5 hours it took to investigate order errors. At $35 per hour (a figure given to us by the client), that was a weekly savings of $235. The warehouse charge went from $12.50 to $0.50 per order, saving them another $120 per weekly. That’s a yearly savings of $18,460. With the added benefit of fewer orders being ship ped with errors and more satisfied clients.
The project was developed, tested and implemented in 2 weeks and cost our client less than $2000.
How You Can Save Too
There were a few factors that helped Tailwind and our client identify the opportunity. The Tailwind consultant knew the client’s business and the client’s workflow. He worked at the client’s office one day a week supporting their systems and developing solutions like this one. He worked closely with the owner and the people involved in the day-to-day operations. The client understood technology and wasn’t afraid of it. He would think of pie-in-the-sky solutions, no matter how crazy they might sound and would leave it to the technologists to tell him if they were feasible. Together, they would determine the cost and the return on the investment that the client would see. Even simple processes like the one I just described could contribute significantly to the bottom line.
But what you really want to know is how can you find savings like this. First, look for manual processes that involve taking information from one system (email, fax, phone, etc.) and keying it into another system. These are easy candidates for automation. The cost savings can be significant and fewer errors mean more satisfied customers. Think pie-in-the-sky dreams about your systems and tell your computer consultant about it. Start each conversation with the words “It would be great if we could do this...”
Most importantly, establish a relationship with a computer services consulting company that will work with you on a regular basis. They should provide you with a consultant that will be at your office at least once a week, supporting your technology, developing solutions and learning your business and your processes. Make the consultant an extension of your company. Contract with a company, not an individual. Make sure the consultant has the resources of his company to support you when he or she is unavailable or needs assistance. You get the advantage of the experience and support of a full Computer Systems department for a fraction of the cost.
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