Where your company is losing money

Context

In almost every company there is a place where information gets pulled together by hand. It might be a spreadsheet someone builds every Monday from ERP, bank and email data. It might be a person who copies orders from one PDF into another system. Nobody designed it that way. It grew because two systems do not talk to each other and somebody had to build the bridge.

That bridge almost never shows up on an org chart or in a budget. It shows up as hours of good people doing work they were not hired for. Because the cost is spread across twenty calendars, no director sees all of it.

The core idea

Money is lost at the seams, not at the center of each department. Every system works well on its own island. The problem is the trip from one island to the next, and a person with a keyboard makes that trip.

There are five signs that a process has a seam:

• Islands. Two systems store the same data and do not connect, like sales in one program and collections in another.
• Re-keying. Someone types again what already exists somewhere else.
• Reconciliation. Someone compares two lists to see whether they match, every week or every month.
• Waiting. A request stalls because someone has yet to send, approve or review something.
• Late errors. A wrongly entered figure is found at closing, in a complaint or in an audit, when fixing it already costs more.

Wherever you see one of these signs, there is a task that depends on a person moving information from one place to another. That task is a good candidate for an AI agent to prepare and for the person to review. But first you have to see it and measure it. What has not been measured cannot be prioritized.

How it is done

The method fits on one sheet of paper. It has five steps.

1. Walk through the departments with the list of signs. Ask each leader to name processes where their people move data from one place to another. Write down everything that comes up and keep five.
2. Rate frequency from 1 to 5. A 1 happens once a quarter. A 5 happens every day.
3. Rate time from 1 to 5. Think of the person-hours each run consumes. A 1 is a few minutes. A 5 is a full day or more.
4. Rate the cost of an error from 1 to 5. A 1 is fixed in minutes and nobody notices. A 5 is a wrong payment, an angry customer or a fine.
5. Multiply the three ratings and sort. You multiply instead of adding for a reason. A daily process that takes one minute and harms no one should not climb the list.

The result is a hypothesis, not a firm fact. Before you decide anything, ask the people who do the work to log how long it really takes for one week. The real figure almost always surprises, in one direction or the other.

To fill in the list you need your team. Ask them calmly and make clear that the goal is to broaden their role, not to evaluate them. These phrases work well:

• Tell me which task you repeat every week and feel a computer should do on its own.
• Tell me where you copy data from and where you paste it.
• Show me the Excel file that cannot go missing and who maintains it.
• Walk me through the last error that was found late and how long it took to surface.

An illustrative case

Imagine a building materials distributor. It is not a real client, and the numbers that follow are invented for the example. The owner applies the method and lists five processes:

• Entering orders that arrive by WhatsApp: frequency 5, time 3, error 4. Total 60.
• Calculating commissions at month end: frequency 2, time 5, error 5. Total 50.
• Bank reconciliation: frequency 5, time 3, error 3. Total 45.
• Following up on overdue invoices: frequency 4, time 2, error 3. Total 24.
• Registering new suppliers: frequency 2, time 2, error 2. Total 8.

Order entry lands in first place. A person at the counter reads messages, sometimes with photos of handwritten lists, and types them into the inventory system. A wrong quantity is discovered when the truck reaches the job site.

With that result the owner asks for a diagnosis before buying anything. The proposal is that an agent reads the messages and prepares each order as a draft. The person at the counter reviews it, corrects what the agent misread and confirms. She is still the one who knows the customers, but now she serves more of them and spends her time on the unusual orders and the calls that matter.

The agent will make mistakes at times. It will misread a letter or confuse a measurement. That is why human review is part of the design from day one. And the list promises no savings. It only says where it makes sense to start looking.

Takeaways

• Losses live at the seams between systems, where a person moves information by hand.
• Look for five signs: islands, re-keying, reconciliations, waiting and late errors.
• List five processes, rate frequency, time and cost of an error from 1 to 5, multiply and sort.
• Ask your team with curiosity, not as an audit. They know the shortcuts and the patches.
• This week, ask each leader for one process from the list and measure it for five days before deciding.