Reducing Operating Costs through the Use of Technology

While many of the reasons that organizations implement electronic tracking systems are driven by the needs of their customers, it needs to be recognized that these same systems can pay for themselves in under a year by improvements in internal operational efficiencies.

Some of the ways our clients have cut their operating costs by implementing electronic tracking systems are:

1. By tracking customer orders in real-time. This enables our clients to ensure that their customer orders get out on-time without a last-minute rush. This avoids the payment of expensive overtime. It also avoids the payment of late-shipment penalty fees imposed by many large customers or the need to pay for expedited shipping charges to avoid these penalties. In many cases, savings from these sources alone has more than paid for the cost of the tracking system in under 12 months.

2. By preventing employee mistakes, such as picking the wrong material for a job or a customer order. Electronic tracking systems can warn an employee when they are about to make a mistake. This can result in major savings due to reduction in scrap and wasted resources processing defective materials. It also avoids having to ship replacement parts to customers to replace defective parts.

3. Elimination of the need for expensive expediting and wasted time by customer service people when handling customer order status inquiries. With an electronic tracking system, customer service people can immediately see the status of customer orders without the need to call an expediter who will then spend a lot of time searching the facility until they find the customer order. This greatly improves customer satisfaction and eliminates the cost of expediting orders.

4. Elimination of wasted time spent trying to find inventory. Without an electronic tracking system it is easy for inventory to be placed in the wrong place (such as an overflow location) or incremental inventory inaccuracies to creep in, resulting in lost labor time searching for the missing inventory. With an electronic tracking system, all the locations in which items are placed are tracked, in real-time, enabling rapid location and retrieval of the inventory without any wasted time.

5. Elimination of wasted inventory due to spoilage. In many industries, such as food processing, materials have a limited shelf life. If materials are not used by their expiration dates then they must be scrapped. With an electronic tracking system, the materials can be used in an age-first order, thus avoiding this problem.

6. Avoiding stock-outs and purchasing too much raw material or making too many intermediate materials. Without an electronic tracking system to keep accurate real-time track of physical and allocated inventory as well as materials being made and on-order, it is easy to make or order too little or too much material, each of which can have major cost consequences.

7. Prevention of employee theft or misappropriation by accurately tracking assets and materials in real-time. Often it is not clear, with manual tracking methods, whether lost inventory is the result of carelessness or malfeasance. With an electronic tracking systems, the causes can quickly be determined and appropriate management action taken.

8. Elimination of the time taken by employees writing information down on paper forms and then having someone else key this data into a computer. With a barcode tracking system, data entry can be performed directly by material handlers and factory-floor workers, eliminating the labor cost of keying-in the data. Even more importantly, the electronic tracking system prevents most of the data entry mistakes which can take many hours of expensive supervisor and IT department labor to track down and fix.

In addition to the above tangible savings, there are also big intangible savings in using an electronic tracking system. Some of the foremost are:

1. Avoiding losing customers by shipping defective or wrong materials to a customer or by shipping critical materials late. It is very expensive to acquire customers, but it only takes one mistake to lose a big customer.

2. Preventing lawsuits due to shipping defective materials that cause harm. Also electronic tracking systems can minimize the scope and cost of recalls by limiting recalls to just the effected materials.

3. Enabling managers and supervisors to function much more efficiently by giving them the information they need to effectively manage their operations in real-time . With "Lean Manufacturing" practices, the velocity of materials goes up and so does the opportunity for mistakes. Electronic tracking systems can provide managers and supervisors with the information they need to avoid making bad decisions.

In summary, electronic tracking systems can enable organizations to increase sales by competing more effectively in global markets and also quickly pay for themselves in increased efficiencies and cost savings.  Most Tier 1 organizations have already implemented these systems often at a cost of millions of dollars. Please click here to learn how BellHawk Systems enables its mid-sized industrial clients to implement their own tracking solutions for an order of magnitude less cost.

Download a PDF file of a white paper "How to Increase Sales and Cut Costs".

For a free consultation on how to use technology to reduce your operating costs, please call (508)-865-8070 and dial “1” for client services or send an Email to ClientServices@BellHawk.com.