Off-The-Shelf Document Management

With more than $700 million in revenue and nearly 6,000 employees, Krispy Kreme Doughnuts isn’t what most people consider an SMB. However, the doughnut empire is actually composed of independently owned and operated franchises. These franchises manage their own profits and losses, maintain their own organizational structures, and face many of the same challenges when it comes to technology adoption (i.e. budget and personnel limitations) that other SMBs face.

One of these franchises, Westward Dough, operates 26 Krispy Kreme stores in eight states and employs more than 1,000 people. The franchise had several document management issues that it wanted to get a better handle on. For example, Westward Dough kept all of its signed wholesale invoices as proof of delivery of doughnut shipments to grocery stores and other vendors. These invoices were manually filed by month and customer name and stored in file cabinets. The company was able to store three years’ worth of invoices on-site at its franchise office, but used an off-site storage facility to store older documents. Westward Dough’s wholesale clients often requested to view copies of these invoices to verify that a shipment was received. Accounts receivable/accounts payable (AR/AP) personnel also regularly referenced these invoices to collect overdue payments. Retrieving one of these documents took an average of 5 minutes per request because the four-member AR/AP staff had to manually search through file cabinets to locate the invoice in question. This process was often prolonged due to the misfiling that occurs with paper documents or if the invoice in question was stored at the off-site facility. Once found, the documents were generally faxed to the customer to verify that delivery occurred or that payment was due.

HR documentation was also giving Westward Dough headaches. All personnel files for the company were managed from the franchise office to maintain better record security. However, centrally locating HR documents also caused accessibility issues. For example, if a store manager needed information from the employee file, such as an I-9 or W-2 form, he had to call the franchise office and request to have the information faxed. Waiting for employee information was frustrating for store managers, and the search, retrieval, and fax process added labor to the HR staff’s workload.

The time it took to access documents was only one part of the problem. Physical storage space was also becoming a serious concern. “We were growing at an accelerated rate in 2004 and 2005 and so was the volume of paper we had to handle,” says Michael Kane, CTO for Westward Dough. “We already had 10 four-door file cabinets and would have had to purchase another 30 just to store three-years’ worth of invoices and records on-site. Our storage room was located on the second floor, and we realized that the floor wouldn’t be able to handle the added weight of all those file cabinets and paper. We determined that we would either have to reinforce the floor or begin evaluating options to digitize paper and store it electronically.”

EXPLORE YOUR SCANNING OPTIONS
When Westward Dough began its search for an electronic document management solution, it knew it had choices. First of all, the company could develop an infrastructure to image paper in-house or outsource document scanning to a third party service provider. Both methods have their pros and cons. For example, establishing an in-house imaging system provides you with the value of the equipment and a trained staff to support ongoing project needs. An in-house system also allows you control the treatment and movement of your documents. However, building an imaging infrastructure also requires a sometimes significant up-front capital expenditure. For example, document scanning hardware will need to be purchased. If your document volumes are large enough (i.e. several thousand pages a day), you may be required to purchase production scanning equipment. These devices scan between 40 and 80 pages per minute and typically range in price from $5,000 to $45,000 per unit. Dedicated and specially trained personnel are also often required to operate production scanning equipment, which can add human resource and training costs.

Outsourcing your scanning needs allows you to avoid these capital expenses, but also forces you to relinquish control of your documents, which may create security concerns if your documents contain sensitive information. Also, simply because capital costs can be avoided doesn’t mean outsourcing will be less expensive. Third party service providers typically charge for scanning on a per-page basis. Depending on your document volumes, outsourcing could end up costing more over time. Several other factors, including budget structure and turnaround times, need to be weighed to determine whether to pursue an in-house or outsourced imaging approach.

After considering all of these elements, Westward Dough decided the outsourced approach was the best fit for its business. “We had large document volumes, but not large enough to hire a full-time employee just to do scanning,” says Kane. “A lot of the scanning work would initially be the large backlog of documents we had stored for the past several years. Once those were imaged, the daily volumes might take a few hours a day to scan. It didn’t seem cost-effective for us to train two individuals — primary and backup scanning operators — to handle this limited workload. Also, as an SMB, capital expenditures are always highly scrutinized. It was easier for us to justify the recurring service expense of a third party scanning provider.”

ADDRESS NEW AND BACKLOGGED DOCUMENTS SIMULTANEOUSLY
Although it decided to outsource scanning, Westward Dough knew it still needed an in-house electronic document management system to store, search, and retrieve the document images that were generated. The company sought to satisfy both requirements through a turnkey solution from a single provider and found an appropriate candidate for the job in Transform Data Corp. Transform Data is a full-service provider of document scanning services that also delivers the hardware, software, and installation expertise necessary to build internal electronic document management solutions. Transform Data offered a few electronic document management software options, but Westward Dough felt DocuWare was the best fit for its business due to the software’s user interface (see sidebar page 22).

Once the decision was made to go with Transform Data and DocuWare, Westward Dough installed the software in its franchise office and all of its stores in less than one month. It also began developing an indexing structure for its different document types so that Transform Data could begin scanning Westward Dough’s document backlog. The company decided to use the invoice number, invoice date, customer name, and customer number to index wholesale invoices, while HR documents are indexed by last name, first name, Social Security number, and document type (e.g. I-9, W-2).

Westward Dough’s new document management solution is set up to maximize outsourced labor by addressing backlogged documents and ongoing document processing simultaneously. Once a week, Transform Data picks up a box of AR/AP and HR documents for scanning and delivers three or four CDs that contain the previous week’s documents as well as a portion of the information backlog. Each CD contains approximately 4,000 document images as well as a text file that contains all the index information for each image. This index information (e.g. invoice number, date, customer/employee name) is automatically extracted by Transform Data during the scanning process using OCR (optical character recognition) software. These CDs are delivered to a designated employee in Westward Dough’s franchise office who imports the information into the DocuWare content repository. Each CD takes approximately 30 minutes to import into the system.

Once in the system, document images can be simultaneously accessed from any desktop in the Westward Dough franchise office and any of its 26 stores. User names and passwords determine which document types employees are allowed to access, and document searches can be initiated using keywords, numbers, or several predefined fields.

IMAGE ACCESSIBILITY ENHANCES PRODUCTIVITY
The accelerated availability of documents in digital form has had a profound impact on employee productivity. “Electronic document management has helped our AR/AP team reduce its search time from an average of 5 minutes to seconds per invoice,” says Kane. “This increased productivity allows employees to follow up on more invoices each day, which in turn, has improved collection rates and cash flow.”

Moving to electronic document management has saved 66 hours of AR/AP staff productivity per month (based on four employees each spending 50 minutes a day searching for documents) that can be redirected to other profit-generating activities. Other features of DocuWare, such as allowing users to fax or e-mail a signed invoice to a customer directly from the desktop, contribute to increased productivity and also improve customer service. The HR department has also benefited from the system because it is no longer burdened with having to forward HR documents to store managers. Managers can now access these documents electronically via their desktops, and security is maintained through password-based user permissions. Lastly, since Transform Data shreds most of Westward Dough’s paper documents after scanning, the need for physical storage space has been reduced. Westward Dough has eliminated all off-site storage costs and has turned its on-site records room into additional office space.

Westward Dough’s electronic document management solution doesn’t make unique use of innovative new technologies or integrate disparate applications to fully automate business processes. However, it exemplifies how many SMBs are being introduced to ECM (enterprise content management) and the substantial business benefits even the most basic solutions can deliver. Solutions like the one Westward Dough implemented provide a solid platform on which other ECM technologies and techniques can be added to further streamline processes, increase productivity, reduce costs, and gain competitive advantage.