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A
Case Study
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I was called
in some years ago by a financial controller
to investigate the claims of one of his
staff that the company had unnecessarily
expended £470,000 in importing units which
were a stop gap to supplement its own
production. The initial survey revealed that
the project manager had accepted a landed
price and had been overcharged for carriage
freight and handling. |
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Further
analysis revealed that the duty had been
overstated and that the accounting systems
provided no check whatsoever on true cost.
Other surveys have revealed that this is
overwhelmingly the case with accounting
systems in the UK. |
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A
military-style appraisal by one of my
colleagues differed in only one respect from
those of the financial controller and
myself. Not unnaturally the colleague listed
in-house managers under ‘friendly forces’
and HM Revenue & Customs under ‘enemy
forces’. On the other hand, the financial
controller and I listed managers as enemy
and HM Revenue & Customs as friendly. And
so it was to prove. |
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We had
inordinate help and assistance from HM R&C.
After several frustrating weeks were forced
to obtain an edict from the top that all
imports (and later exports) would be put
under a single control in the UK. Within
weeks, this had saved tens of thousands of
pounds. Within six months, the computer
system was up and running (the pilot run
paid for the development cost). Within a
year, we were able to net direct savings in
excess of £1.25 million, and were well on
our way to the next million straight into
profit. Cash flow, inventory, rapid turn
round, reduced handling and other
unquantifiable benefits were immense. This
was to be the first step not the end. |
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The client was
far from being exceptional, some of its
divisions were ahead of other companies,
none were too far behind, yet opportunities
in plentv existed. They differed only in the
high value, rapidity of transactions and the
degree to which excessive pipeline costs
comparable to year end profits were expended
in the name of divisional autonomy. |
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