What an operations audit finds at a 200-person distributor
Example scenario. The company is illustrative and the figures are built from typical rates, not a client result.
A 200-person distributor is losing about $97,000 a year to three quiet problems. Fixing them costs about $40,000 once, which pays for itself in about five months.
The company
A regional distributor with 200 people, an order system, a separate accounting system, and a spreadsheet for everything in between.
What the audit finds
| Problem | How it adds up | Cost per year |
|---|---|---|
| Orders re-keyed from the order system into accounting | 3 coordinators x 6 hours a week x $38 an hour x 50 weeks | $34,200 |
| Software seats nobody uses | 40 unused seats x $65 a month x 12 months | $31,200 |
| Month-end reconciliation done by hand | 2 accountants x 24 hours a month x $55 an hour x 12 months | $31,680 |
| Total | $97,080 |
The fix, priced step by step
- Cancel the unused seats: close to free, done in the first week.
- Connect the order system to accounting so orders flow through on their own: about $25,000, one time.
- Automate the reconciliation: about $15,000, one time.
The payback
About $40,000 spent once against $97,080 recovered every year. That is roughly $8,100 a month, so the fix pays for itself in about five months.
Run this math on your own business
Hours per week x people x hourly cost x 50 weeks, for every task someone does by hand that a system could do. Then add the software you pay for and do not use. The number is usually larger than anyone expects.
Keep reading
Next guide: choosing software independently at a 600-person services firm
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