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“If you took TizbiTrax away from us, I would probably have to hire 20 more people to replace the system, and the result would still not be the same” -John Perry, Nomaco’s Shipping and Logistics manager. Below are a few Return on Investment (ROI) estimates for a sample company: Consider a company that receives 100 orders a day, has an error rate of only 2.5% and spends an average of $100 to resolve each error. Errors cost the company $250 per day. If the company has a five day work week and operates 52 weeks a year, the errors cost $65,000 annually. A 1.5% improvement in the error rate, from 2.5% to 1%, would save $39,000 error-related expenses annually. If the company has a profit margin of 5%, it needs to bring in $1.3 million in revenue just to offset the cost of errors if the error rate is 2.5% ($65,000 annual error cost divided by .05 profit is $1.3 million). TizbiTrax™ is likely to save even more than 1.5% of errors. Depending upon the error rates of your current processes, savings could be as much as 10%, yielding $650,000 annual savings. Eliminate labor expenses for annual physical inventories. For example, a company that needs a staff of nine people to count inventory for 16 hours at the end of each month and 32 hours in the end of the year spends 18,144 labor hours per year. TizbiTrax implementation can easily save 75% of this time, which is 13,608 labor hours per year. Thus, TizbiTrax will save the company $136,080 per year (hourly range is estimated at $10/hr.) in direct labor of physical counts alone. TizbiTrax gives companies the ability to receive accurate inventory information, which reduces the amount of inventory needed to compensate for inaccurate inventory by as much as 10%. With TizbiTrax, a sample company’s shelf inventory value that is estimated at $3,000,000 can be reduced to $270,000, which is a savings of $300,000. Using lower inventories will result in additional savings on labor, overhead costs, space utilization, etc. Companies that implement TizbiTrax will greatly reduce the amount of money spent on expediting items that run out of stock. This cost reduction can be calculated by the number of skews in your operation and the number for PO transactions created per day.
Tizbi, Inc. continues to help customers estimate return on investment and break-even points. If you need help estimating ROI for your business scenario, please contact us.
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