BPR improves costs, controls & customer satisfaction
Business problems - High costs, poor controls, stock losses & customer dissatisfaction
The company traded agricultural products and acted as broker for hundreds of customer farmers and cooperatives. It needed to upgrade its merchandising, auction, stock, sales, purchase and nominal ledgers and introduce better management information to support rapid business growth.
Stock losses and accounting inaccuracies were a severe embarrassment and caused acute customer dissatisfaction. Also the accounting operation was costly and labour intensive - employing over 40 staff who could not cope with further business growth.
Our solution - a novel, tailored, accounting computer system & processes
We analysed the business processes and controls and concluded that nearly all the stock losses were caused by inaccuracies in the shipping manifestos and not from theft within the company. We advised the company to stop using shipping manifestos as the basis for stocktaking and instead perform an accurate stock take when products were unloaded at ports. Each item would be counted individually, barcoded and tracked electronically. The business was using a standard accounting package but it was ineffective at managing the operation and preparing accounts quickly.
The board agreed to change procedures and introduce a new tailored accounting system because packaged software was unsuitable. They informed their customers, who accepted that discrepancies between the accurate company stock list and the shipping manifesto would be referred to shippers and their insurers.
Another clever feature of the accounting system was to control all “untracked products” - products whose ownership tags have become accidentally detached. Ownership could be accurately reestablished because agricultural products from each customer farmer were of a consistent grade and type. The untracked products were put into a “pool” which a computer program would sort, compare shortfalls and allocate back to the rightful owner.
Winning results - happy customers and faster growth
For the first time, all products were tracked individually and traded or sold at auction with computers recording every transaction. The accounts were accurate to the penny and prepared within 3 hours instead of 3 weeks as previously. Overnight an e-commerce module transmitted income statements to individual customer farmers and cooperatives in each country. Customer satisfaction soared.
The accounts section was reduced from 40 to four people. Overheads, stock losses and insurance costs fell. In time, the discrepancies between the company’s accurate stock list and the shipping manifesto disappeared too.
Sales and profit grew rapidly as the company expanded into new lines of commodities.