Case Study

Homebuilding Subcontractor Switches to Digital Processes to Handle Growth and Cut Costs

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Client Situation

A homebuilding subcontractor experienced steep growth coming out of the housing collapse of 2009 that reached a critical point in 2014 when the percentage increases in revenue were well into the double digits and the base to which they were adding was becoming sizable. The required transaction processing capacity of the accounting department had surged past the previous high point by about 30 percent and the company’s paper-based workflows became unsustainable without adding significant staff costs. 

Solution

The company hired an appropriately experienced consultant, now a E78 team member, to root out the problems and implement solutions. The first thing he did was to notice the visual clues, like cardboard boxes full of invoices stacked up in the hallways and similar red flags of analog processes that needed to be reformed and converted to digital. 

The consultant conducted a series of meetings with teams from accounting and operations and presented standard continuous improvement tools to begin the process of designing more efficient processes. The basic steps included:

  1. Reviewing current processes,
  2. Describing all required steps as understood by the team, (to get to the true “why” prior to redesigning the processes)
  3. Categorizing each of the requirements into:
    1. not real requirements, just misunderstandings,
    2. requirements due to a flaw in the process,
    3. requirements based on poor data structure or poor use of technology, and
    4. actual requirements to provide good records for the accounting department and auditors. 

A great many processes involving paper duplication were found to be unnecessary. This allowed for digital routing and filing of documents that the team had spent many man hours copying and filing prior to the redesign.

Results

The team that had been overloaded and strained to the breaking point was able to redirect two resources to the Billing department that was struggling to keep up with the increased activity levels as well as eliminate one full-time clerical position in under three months. Overall, an annual savings of over $200 thousand, no more boxes piling up in the hallways, and a stress level in accounting and accounts payable that dropped from a red-lined 10 to a sustainable 5.

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