One of the fun things I get to do each year is serve on the GAWDA Management Information Committee. Every time we meet, there's a brainstorming session about how technology can be used to reduce labor costs, increase profits or improve work flow processes for the welding supply distributor and vendor. The process of discussing different technologies and which ones offer the most benefit for the industry reminds me of a quote I once heard. It goes something like this: "The future is not a result of choices among alternative paths offered by the present, but a place that is created—created first in the mind and will, created next in activity. The future is not some place we are going to, but one we are creating.” That kind of sums of what we do at the meetings. We do our best as a committee to generate ideas, turn them into activity and ultimately develop a new process that hopefully benefits the industry.
Looking for Efficiencies
The last time the Management Information Committee met, one of the topics discussed was the headache of getting vendor invoices into the system. If you're a member of a buying group, then you might have experienced getting a huge stack of invoices in from the buying group that all have to be entered. Why? Because that is the way it has always been done. Just because we have always done it that way, do we have to continue to do it that way? The answer is a resounding NO!
As part of a three-way conversation between people representing distributors, vendors and technology companies, we discussed sending invoices electronically from vendors to the distributors. No one would have to manually enter stacks of invoices from the vendor or vendors, thereby reducing labor costs for the distributor. Time that had been spent entering invoices could be used in more productive areas. In addition, because technology is great at automating repetitive tasks, fewer mistakes would be made.
Let’s look at a current example. Take an incoming invoice or a stack of invoices from your largest vendor. You probably open the mail, put the invoices in a stack, throw away the envelope, bring up the invoice entry program, enter each invoice into the accounts payable system, double check for data entry errors and then compare the invoice to inventory receipts to make sure everything was received that is being billed for, and that the price being charged is correct.
Now let’s look into the future. The vendor sends the invoices to the distributor electronically. The distributor has no envelopes to open and throw away (think paperless, think green, think protecting the environment), and no paper invoice to file in a big bulky filing cabinet. It's all in the system. In the blink of an eye, quantities and prices are compared to purchase orders, and when everything matches up perfectly (which it should), the invoice is posted to the distributor’s accounts payable system. It's faster, it's easier, and errors are virtually eliminated.
The vendor has no paper invoices to print out, so there is less wear and tear on printers and fewer laser ink cartridges to buy and throw away. There's no envelopes or paper to buy, no postage and no labor costs associated with putting the invoices in the envelopes. The invoices go out faster because they are electronic. This means vendors can get paid sooner.
When we think of all the invoices flying from vendors to distributors and all of the associated costs that are involved, it's not hard to see that the industry is spending millions of dollars each year on this process. Unnecessary time and money is being spent on a task that is very repetitive and could be highly automated.
The challenges to developing an electronic invoicing project are many. Multiple technologies, multiple computer systems and multiple businesses trying to talk to each other electronically. Variables and goals have to be clearly defined, and the technologies have to be available to all distributors from small mom-and-pop companies to Fortune 500 companies. It has to be simple enough for someone to operate without an IT department and economical enough for all to afford while still offering the benefit of labor savings. And that is exactly why the brain power at GAWDA had the foresight to put together the Management Information Committee. Distributors, vendors and technology companies are all coming together with the singular goal of helping the industry improve operational efficiencies.
Jim Broughton, a member of GAWDA’s Management Information Committee, is the president of DataWeld, located in Bossier City, Louisiana and on the Web at www.dataweld.com.
This article originally appeared in the First Quarter, Winter 2011 issue of Welding & Gases Today Copyright ©Data Key Communications, Inc. All rights reserved.