the case for automated data collection a guide to calculating your potential return on investment

The Case for Automated Data

CollectionA Guide to

Calculating Your PotentialReturn on Investment

www.eaglecondev.com

© Copyright 2011 Eagle Consulting & Development.

Making the CaseOrganizations face tough choices in optimizing the use of their IT dollars.

This document is intended for the use of a Manufacturing Manager, IT Manager or internal group to help you: Gather the data you need and

Evaluate the case for Automated Data Collection (ADC)

So that you can make the case to your management.

This document also provides the supporting data you need to assess Eagle’s solution and potential ROI. solution and potential ROI.


Gathering the DataThis section will ask you to articulate your

business objectives, constraints and criteria.

This is simply a template for your organization to use as you make the case for ADC.


Gathering the Data

Objective Criteria Constraints Notes/Comments


Business Challenges

What are the specific business challenges you hope to eliminate or remediate by implementing the Eagle ADC solution?


Business Challenges

Challenge Project Constraint Budget Constraint Contingencies


Risk AssessmentFailure to meet customer requirements for

accurate and timely information can have very serious consequences

Too much inventory means unnecessary carrying cost and over-ordering. Too little has potential for disappointing customers

Lack of real-time information affects ability to plan at every level.


IT Initiative ExperienceWhat do you know about software

implementation projects from past history?– Were resources available?– Was management committed?– Did you get the results you anticipated?

How does ADC fit into your overall short-and long-term IT strategy?

Who/What will be Impacted – and how?

Who Is Impacted? Describe the Impact

Customers

Employees

What Is Impacted? Describe the Impact

Business Processes

Technology Infrastructure

Existing hardware

Existing software, databases

Integration with existing systemsCompetitive Position

Revenue

Security


Assessing the Eagle SolutionThis section will look at:

– Tangible Savings Receiving/PutAway Picking Machine Shop Sales Order Picking Cycle Count/General Inventory

– Intangible savings– ROI data from QAD customers


Tangible Savings Summary

Cost Reduction– Packaging costs– Raw materials costs– Inventory carrying costs (interest

expense, etc.)– Overtime costs– Expediting charges– Scrap / rework

Inventory Savings– Too much – or too little – inventory– Inventory warehouse space reduction– Increased inventory value accuracy– Inventory value reduction

Labor Savings– Clerical / administrative– Warehouse– Data Entry– Increased production time– Fewer management meetings

Data Accuracy = Error Reduction Decreased clerical/accounting errors Decreased shipping errors Decreased manufacturing errors


Receiving / PutAway Areas Overall Number of man-hours per day processing receipts. Number of man-hours per day counting product on PO receipts. Number of man-hours per day typing lot/serial#/qty information on PO

receipts into Eagle/QAD. Number of man-hours per day putting away material. Number of man-hours per day looking for empty locations. Number of man-hours per day spent writing down put away

information. Number of man-hours per day keypunching put away transactions. Number of man-hours per day recording and processing returns

(RTV).


Picking Area Overall Number of man-hours per day spent replenishing shop floor. Number of man-hours per day spent manually recording material

move information. Number of man-hours per day spent keypunching material move

information. Number of man-hours per day spent managing vendor re-order

process. Number of lost man-hours per day looking for material.


Machine Shop Area Overall Number of man-hours per day spent manually recording labor

hours. Number of man-hours per day spent manually recording material

issues to jobs. Number of man-hours per day spent manually recording WO

completions/WIP updates Number of man-hours per day spent keypunching the above

transactions.


Sales Order Picking Area Number of man-hours per day spent manually recording serial

number information. Number of man-hours per day spent keypunching sales order

information. Number of man-hours per day spent generating packing slips. Number of lost man-hours per day looking for proper serial number

machine.


Cycle Count / General Inventory Number of man-hours per day spent on cycle counts. Cost of all forms related to Cycle count Number of man-hours per day keypunching all of the above (separate

job function?). Inventory value at last physical Number of material turns per year. Total of Last fiscal year positive inventory adjustments. Total of Last fiscal year negative inventory adjustments.


Soft / Intangible Benefits Company image with customers: a

trusted, accurate supplier– Improved customer service and

satisfaction Better decision making: based on

accurate and timely data– Improved ability to schedule– More accurate and real-time

management reporting– Improved cost data for bidding purposes

Greater efficiency– Improved factory utilization, productivity

and employee morale– Improved ability to schedule– Reduced machine maintenance costs

Not easily quantifiable in hard dollar terms, soft benefits are important because they quantify other factors that may be important when evaluating whether to proceed.

Improved communication– Customers are more “connected”– Improved communication within

the company More Accurate Payroll Costs


ROI Data From Eagle CustomersEagle solicits ROI data from all of its installed base customers. This data usually falls into one of the following categories: Data accuracy Order accuracy Cost of inventory Delivery and execution

Some examples follow…


Customer ROI: A.J. Antunes Prior to the Eagle implementation, the company

used an in-house system for data collection which was estimated at 10% real time. Now they operate at 100% real time.

Real-time Eagle RF transactions on the floor replaced many transactions that were previously written down and keyed into QAD later in the day.

98% on time delivery – 200 line items a day shipping


Customer ROI: Ace Controls Real time access to information replaced transactions

that once took hours. Data accuracy improved to 99%. Other departments and planners were no longer

impacted by lengthy delays. 50% improvement in receiving area transactions yielded

an annual cost savings of over $12,000. Replacing handwritten labels/tags in receiving, inventory

control and shop floor with automatically printed labels translated to a saving of over $12,000 annually.


Customer ROI: Remy Remy saved over $20,000 in reprogramming costs

because Eagle was able to modify location-based picking to work with multiple primary locations across multiple sites.

Remy's Problem Reporting and Resolution costs dropped by over $50,000 following implementation of Eagle's Advanced Containerized Shipping module..

Eagle integrated handheld picking and containerization routines with the Remy Shipping module, creating a single seamless picking routine that reduced manpower costs at one distribution center by approximately $90,000.


Customer ROI: Remy (continued)

Utilizing the Eagle RF Purchase Order Receipt and Transfer functions, Remy created a virtual cross-dock between OE and Reman manufacturing and the Laredo distribution center.

Materials transferred between these facilities are 100% controlled, which has made it possible to reduce material transit times and the corresponding inventory.

Remy expects over $600,000 in annual savings from the distribution center consolidation, with no small part attributed to Eagle.


Customer ROI: Cascade Engineering

The company estimated an annual saving of $500,000 in productivity and efficiency improvements following the implementation of the Eagle and QAD solution.

Improvements in inventory tracking allowed Cascade to purge $3 million worth of on-hand inventory without sacrificing customer service.

Month-end reporting time decreased dramatically from 15 days to 2-3 days.

Inventory turns increased 47 percent, from 22.6 percent to 49.5 percent.

Inventory accuracy increased by 25 percent.


Gathering Your Numbers: What is… The average hourly rate for personnel performing functions listed in

the previous slides. The number of working days in your fiscal year. The number of work hours per day. The average number of overtime hours accrued in warehouse area

last week, month, year (whatever is easiest). Your average overtime rate. Your management’s growth plan for next fiscal year (%). The number of material handlers being added to workforce next year. Your carrying cost for warehouse materials. The extra cost(s) which is likely to be addressed through bar coding

and ADC.


Return on Investment

When you have your numbers and would like to talk to Eagle, we will be happy to help you calculate projected ROI, revenue impact and project cost.

Contact Eagle for information about our ROI Calculator.


Top Benefits of Adding Eagle ADCList benefits for your organization

– Prioritize by business impact

List major new features and benefits


Alternatives and OptionsEagle Solution Other Solution No ADC System

Real-Time Information Yes No NoData Accuracy Validated by QAD Not known Subject to human error

Requires separate database/PC

No Yes Not applicable

Global sales/support locations

Yes No Subject to internal process consistency

Exclusive to QAD Yes No Not applicable

Chosen by 800+ QAD customers worldwide

Yes No Not applicable


Recommendation

Recommend one or more of the strategiesSummarize the results if things go as

proposedWhat to do next Identify action items Identify key success drivers


Contact Eagle

Corporate / The AmericasBill Paone, Executive VP, Sales and Marketing+1.973. 838. 5006 Ext 119

[email protected]

Europe & AfricaRobert Freeman: Director, Eagle-Europe+44(0) 1451 812266

[email protected]

Asia PacificIan Watts: Director, Eagle Asia Pacific+65-6827-9091

[email protected]

mailto:[email protected]



the case for automated data collection a guide to calculating your potential return on investment

Documents

area number of manhours

number of lost manhours

eagle consulting development

day keypunching

serial number information

eagle solution

day processing receipts

eagle adc solution