Sage 50 Integration – Knowledge Hub

What’s the Real Cost of Human Error?

People makes mistakes, we’re only human! How many times have you heard that? Often enough to believe you just need to accept it?

But have you ever actually stopped to tally up the true cost of human error in your business?

I’m sure, like me you simply don’t have the time or inclination to keep track of every single little mistake that any of your staff make in the normal course of their duties… but…

What if we just explore the real cost of one typical human error when it comes to processing an order for Office Furniture?

Let’s say your top sales rep, Diane nails on a great deal with an exciting new customer… the sales bell is ringing, everyone in the office is buzzing… this could be the first of many deals as Diane’s just got you in with ABC Solicitors, one of the top law firms in the country, who have offices in just about every major city across the UK and they’re planning to give them all a makeover in the next 12 months.

The customer’s finance dept emails their PO over, formally authorising the deal. Perfect! To save time at their end, their PO simply refers to your winning quote by its unique reference number… so all the detailed furniture specifications and pricing, that have been painstakingly negotiated over a series of meetings and iterations is ready to go. The quote just needs to be distilled into a handful of Purchase Orders for your Suppliers and a Sales Order Acknowledgement for your prize new customer, and within a few weeks they’ll have a beautifully furnished office space and you’ll have the cash in the bank. Happy Days!

This is where the opportunity for human error becomes real… Diane has skilfully laid her quote out by room, to align her pitch with the site drawings, so the customer can easily follow what she has quoted them… great!

Trouble is, Jack who’s been given the task of processing the order, now has to be really diligent with the task of pulling each batch of products out of the quote into the relevant purchase orders to send to the respective suppliers. Jack is good at his job and is meticulous with his efforts checking and rechecking his work to make sure he has ordered everything exactly as quoted.

A few days go by… Jack has received all the Order Acknowledgements back from each of the suppliers on this job… and despite a few pricing queries, which Jack quickly remedies, everything appears to be in order…the delivery dates all line up with the delivery schedule Diane agreed with ABC Solicitors… perfect! All John, your project manager needs to do is make sure your installation team are onsite ready to assemble the furniture and distribute it around the various rooms on the delivery day!

Next thing you know, you’re getting a phone call from John… “Hi boss, bit of an issue with this job for ’ABC Solicitors’, just loading the van up to go to site and we’re 6 desks short! We’ve been through the PO’s and found that there were two rooms with 6 of these desks on and it would appear Jack has only added one of them on the PO, I’ve just come off the phone with the supplier and the best they can do is 3 weeks to get the 6 missing desks made and sent out to us”. You respond… “Oh joy!… right we’ll need to find something we can give them on loan until then, let Diane know and she can break the bad news to her contact at ABC”.

John manages to conjure up 6 desks of various shapes and sizes from bits and pieces that are sitting around the warehouse, and Diane explains the situation to her customer… who sounds understanding on the phone… “ah these things happens… we all make mistakes… etc etc” but now THE HONEYMOON IS OVER!

Everything else goes without a hitch… and the unwelcome temporary desks are duly replaced in a few weeks with the shiny new ones they wanted in the first place. And you finally get paid!

No big drama right? Wrong! Diane is sending emails and leaving voice messages for her contact, but she’s now getting radio silence… Diane persists with gentle nudges for several months before giving up. The End!

So what was the real cost of Jack’s little human error?

Well let’s put some numbers against it… let’s say the order value for the first office was £40,000 and Diane sold it at a 30% margin…

That means the first job was worth £12,000 to your business in gross profit…

Now let’s imagine your company had been in the frame to deliver a similar package to their other 10 offices spread across the country…

Suddenly Jack’s little bit of human error is starting to look like it just cost your business £120,000! Not including the time Diane spent trying to patch up the relationship!

But that’s not the full extent of the damage… people in the legal profession talk to each other, frequently and had you wowed your new customer with a fantastic service when you had the chance, there is every possibility that one of the partners would have recommended you to one or more of their peers, when the word got out about how amazing their new office is. But that doesn’t happen, because you messed up!

In such a competitive, commoditised market the customer experience is the only thing you can truly beat your competition at, without getting involved in a race to the bottom on price! Would it be fair to estimate the real cost of that single human error could end up being as much as £1/2 million?

So this begs the question… if you are willing to concede that people make mistakes, why have you not put systems and processes in place to protect your business and prevent Jack from damaging your reputation and costing you £500,000?

You can’t blame Jack for being human! So the hard truth is… this one’s on you!

When you invest in the right business automation software, you can massively reduce the risk of human error in the order processing phase of your business.

If only there was a system that could protect your Office Furniture business from human error…

Well, there is…