Hear That Sound?
(It’s Your $14,000 Paper Productivity Drain)
According to LEAN experts, manufacturing and distribution organizations can experience a $14,000 loss of productivity per staff member per year due to the inefficiencies of paper-based filing systems. Here’s a quick primer on the price tag of a paper-based system, based on a number of independent studies. (Interestingly, the numbers align with savings reported by Dash customers.) It doesn’t need to be that way. According to the Workflow Management Coalition, it’s not uncommon to experience a 30% productivity bump simply by implementing workflow-enabled document management.
Bottom line? If you’re looking for fast, effective ways to boost efficiency and save cost, document management software can be one of the best investments you can make.
$122 Lost Doc Price Tag
A study by PricewaterhouseCoopers estimates that finding a lost document will cost a company $122 on average, and around $220 to reproduce. 7.6% to 10% of all company documents are lost or so completely misfiled that they might as well be lost. The study also indicates that an average office employee will spend some 400 hours every year searching for documents. (Meh! Imagine what better things you could be doing.)
If your company works with 10,000 documents a year—a pretty average figure—750 of your documents are doomed to be lost, and will ultimately cost your company up to $91,000 a year to find.
In contrast, document management software improves productivity by instantly archiving, categorizing and organizing your documents (even linking them), so they can always be found in one common, central place. You can search for your documents using keywords, tags, and Boolean logic, all easily customized to your business and process.
The 25-hour Paper Chase
Look at it another way. It sounds crazy, but in a study by the Gartner Group, it’s estimated that it takes as much as 16 hours to find a lost document, and up to another 25 hours to recreate one (if its even possible). So that lost P.O. or the missing data sheet you need to update isn’t just an annoyance, it comes with a very real price tag.
Add multiple facilities and locations, business travel or international time zones, and you multiply the effects. Little wonder staff time is one of the major efficiencies gained by document management software.
The Un-fiscally Fit Fax
Many companies still use the fax, a technology dear to manufacturing and distribution. It’s estimated a single fax machine costs $6,200 per year to operate; and the average time to manually fax a document is 8 minutes (anticipating no jams, outages or waiting). Then, there’s times the fax is not appropriate. For paper that needs overnighting or courier service, expect to pay between $20 to more than $100, depending on zone and priority.
Many of our customers have eliminated the fax entirely with DDX software: finding that they can send drawings, purchase orders, images, pretty much any document, electronically. Not to mention facilitate and track routing.
The Cash Trickle Factor
Time is money, especially in the accounting department. There’s gold in them-thar hills when you move from plodding paper-based invoicing to “just hit send” electronic documents.
With electronic document flow, you eliminate the “hang time” of preparing, printing and snail-mailing purchase orders, invoices and statements. Plus, an electronic document can be easily routed and shared for approvals or found when A.W.O.L—no more lurking in someone’s inbox. This can take days off your receivables, especially when you offer 1% or 2%/10 Net 30 terms.
The reverse is true with payables. Your company can reap the same discounts in exchange for prompt payment. On a $10,000 invoice from a materials supplier, you’d save $200, with a 2%/10 Net 30 discount.
In fact, so many of Dash’s customers are experiencing cash flow benefits from using document management software in their accounting functions, it’s led us to develop a stand-alone AP& AR software bundles for selected ERP systems.
Real-time Savings Examples
Ok, you’re thinking: show me the money. In the real world, our customers are experiencing hard ROI moving from paper-based systems. Here are a few examples of the results real Dash users report:
- An industrial coating manufacturer saved more than $1,000 in printer maintenance costs over just 3 months. The company also cut its paper imprints by 2/3.
- A manufacturer of screening and sizing material has accelerated cash flow by at least a week by moving to electronic invoicing: customers both receive their invoices faster and pay faster.
- A snowplow manufacturer reports they are saving almost $14,000 in postage costs annually.
- A railroad equipment manufacturer cut production lead times by 3-4 days across the board by using their document management software to speed response from OEM vendors. Purchase orders and drawings are received by vendors the same day they are created, which, in turn, speeds response time (and total cycle time).
- A manufacturer of movable wall systems has nearly eliminated the manual faxing of their purchase orders and has reduced purchasing personnel’s labor by 85%.
The Cost of Waiting
In our conversations, companies typically put off the decision to invest in document management software due to cost (and a fear that the return can’t be quantified).
Yet actual payback can be quantified: ask us to estimate potential payback and ROI modeled on your paper volume and processes. Most companies report payback in as little as three months to one year (savings multiply as they become familiar with, and use, the software’s full features).
This brings us to a pointed question about your paper-based processes: Is it time to stop circling the drain?
This article was written by Dash Development Group, and originally appeared on the Dash blog site.