Seven Words That Kill Companies
As I mentioned, this example comes from an actual former client of mine. But I'm you'll recognize some of your own customers in this antiquated purchase order workflow:
Each day, companies die a little when their employees utter these seven fateful words: “We have always done it like that.” We are, it seems, victims of our own inefficient habits. Consider this real-world example of antiquated workflow, and its potential business impact.
As I mentioned, this example comes from an actual former client of mine. But I’m you’ll recognize some of your own customers in this antiquated purchase order workflow:
- A Customer submits a Purchase Order via fax. The fax is picked up by a Sales Assistant, who makes three photocopies of the Purchase Order. One copy is filed, one is given to the salesman and the last is submitted to the Credit Manager.
- The Credit Manager reviewed the Purchase Order and determined which customer account applied to the order. This former customer created separate accounts for the same customer based on payment terms. Still, no one could understand why customer sales reports were always filled with errors.
- Now the Credit Manager determined if the customer had sufficient credit to order based on the payment terms. The Credit Manager also submitted the order to the Accounts Receivable factoring company that provided credit insurance for all orders.
- If approved for credit and for insurance, the photocopied Purchase Order was then handed to the Logistics Manager. Please note, as of this moment, not one scrap of information has been entered into a computer. All requisite information has been hand written on the photocopied purchase order! The Logistics Manager now determines if the customer has any special shipping requirements or instructions and staples those instructions to the purchase order. If the order is supposed to ship within the next 30 days, the Logistics Manager submits it to the Operations Manager. Otherwise, the Logistics Manager files the paper purchase order in the appropriate shipping month.
- The Operations Manager now allocates inventory to fulfill the order. Using a pen he marks which products are available for shipment and which must be backordered. Also, because he doesn’t trust the Logistics Manager, he double-checks for special shipping instructions.
- Now that three different people have handled and written on the photocopied purchase order, it is finally submitted to the poor Data Entry Clerk who has to decipher everyone’s handwriting and input the order into the computer system. But wait, there’s more! The Data Entry Clerk prints out two Packing Tickets. She staples the original tattered Purchase Order to one and files the other. The stapled mess is then sent to the Warehouse Manager for fulfillment.
The most depressing aspect of the aforementioned process was how everyone simply accepted it.
From the moment I started consulting with this former client, I realized this was one of their major problems. When I recommended changes to streamline the order entry process, I encountered enormous resistance because “we’ve always done it that way.”
Meanwhile, the Data Entry Clerks were being penalized for “transcription errors,” no one could understand why so many orders went missing or why there was so much friction between departments. Worse yet, customers could never get a straight answer regarding their order status.
If you want your business — and your customers’ business — to succeed, you must abandon the “we’ve always done it that way” mindset. You must seek to improve and streamline every aspect of your business. You must do away with outdated processes and implement simple strategies to reduce errors and improve profitability.
Just because you have enjoyed success doing things “that way” doesn’t mean the good times will continue. Eventually the ever growing complexities will poison the process and that will be the end of your business. Be smart: simplify.
Contributing Blogger Louis Rosas-Guyon is a business technology expert with R-Squared Computing, Inc. His opinions do not necessarily reflect those of The VAR Guy.