Digital Technology in Operations: Feasibility Study for Coco & Co Ltd

This report, presented as a feasibility study for Coco & Co Ltd, a novelty toy distributor, investigates the implementation of digital technology in accounts payable processes. It compares the efficiency and cost-effectiveness of manual versus automated systems, specifically utilizing Optical Character Recognition (OCR) and Robotic Process Automation (RPA). The report details the costs associated with both manual and automated systems, including staff salaries, OCR hardware and software, and RPA software. The analysis demonstrates significant time savings and cost reductions through automation, leading to recommendations for adopting the proposed digital solutions. The study also addresses potential risks, such as initial investment costs and the need for staff adjustments, offering recommendations to mitigate these challenges and maximize the benefits of technological advancements.

DIGITAL TECHNOLOGY IN
OPERATIONS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
ESSAY.............................................................................................................................................1
RECOMMENDATIONS ................................................................................................................3
CONCLUSION ...............................................................................................................................3
REFERENCES................................................................................................................................5

INTRODUCTION
The digital technology is helping the business organisations for making the business steps
faster and more accurate. Excellence is never an accident but is a result of sincere efforts,
intentions, insights and better choices of the alternatives. They help the company in effectively
performing the business operations. It is helping the business organisations to achieve success
and growth of business. The present report is based on importance of digital technology in
business operations. projects cover two alternatives one is the manual process where the other is
the automated process (Sweeney and et.al., 2019). The project of automated machines is faster
than other the manual process. Report involves analysis of both the alternative that are available
to the business enterprise. The analysis will also be involving the costs and investments involved
in both the alternatives of business. The investment that is most beneficial for the company will
be chosen.
ESSAY
Coco & Co ltd is a business of selling novelty toys to the retailers across UK and Ireland.
It imports raw materials, products and products components from large number of global
suppliers. Company is proposing to establish strong relationship with the suppliers for cost
cutting and for negotiating for lower rate. The company is also aiming to encourage a culture in
organisation that is technology driven so that it could help in using technology for the
competitive advantage. Company is having high range of transaction of accounts payable which
are processed every month. Company is receiving on average 400 invoices per month and total
of around 4800 invoices in a year. To maintain the relations around 90% of the invoices will be
paid on time.
Company is paying its staff even in under-utilised months at standard rate where paying for
overtime at standard plus 50%.
There should be three ways process match involving Invoices received, purchase order
and the goods received notes. The AP manager is assessing updates for implementig the hree
way matching process. Company is aiming to implement more automated solution based around
the Optical Character Recognition (OCR) & the Robotic Process Automation technology (RPA).
In the OCR software will be scanning the hard copy of the invoices and will be automatically
recognising the details (Schaart and et.al., 2016). The RPA will be running once in a day for
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checking automatically the three way match of the invoices. Electronic payment will be made on
due dates and exceptions for invoices not matching will be checked by the financial analyst.
The manual process takes more time than the automated process. This is explained in the given
table.
Manual Process Automated process
ACTIVITY
AP Admin 10 min per invoice 5 min per invoice
AP Processing 30 min per invoice No time
Finance 20 min per invoice 2 min per invoice
This shows that the process which takes and hour in the manual process can be completed
within just 7 minutes. There is significant difference between the timings. Business is concerned
with employing the automated for saving the time of AP managers. This time could be better
utilised by company elsewhere (Lopes and et.al., 2017). Before of the manual process company
is required to pay overtime wages to the employees on half of the standard rates. It is essential
for the business to utilise its resources most effectively and productively.
Capital costs of the project.
The capital cost requirements for the project are as follows. OCR hardware is of 6000
whose monthly cost will be 100 on amortisation and software will be amortised at 500 per
month. Implementation of OCR is costing 60000 with amortisation of 1000.
RPA Software will be implemented at cost of 180000 with monthly amortisation of 3000.
The software will be amortised at 2000. The total cost of amortisation aggregating will amount to
6600 per month. So it is the total cost which company will be required to bear per month on
installing the automated project per month replacing the manual method of checking invoices.
The cost per employee in assessing the invoices.
AP Admin = €2500 per month
AP Processing = €3500 per month
Finance = €4500
The total cost in processing the invoices per month amounts to €10500.
Analysis of the project.
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The above project will make the work much easier and faster for company and its
employees and also the time will be better utilised in other activities. On the basis of costs it
could be analysed that project of implementing OCR and RPA in the business for processing the
accounts payable. This is better explained as below
Monthly cost of project = €6600
Monthly costs of per employees = €10500.
It could be analysed that the cost of staff is higher for processing the invoices, as
compared with the new project. This will be saving time and cost of company. Staff who will be
replaced by the new project will be deployed in other activities for increasing the productivity of
company. It is assumed that the invoices will be same during the period of 5 years, this means
that the employees costs will be remaining even for the entire period of 5 years. Applying the
project will increase the costs of company by the amortisation costs. This costs will be recovered
by the overtime wages saved by the project. As the employment of this will not involve the staff
hours company will generate higher profits.
RECOMMENDATIONS
The project will involve investments of huge costs for hardware and software and than of
its implementation. It will not be required to pay overtime for assessing the invoices or accounts
payable. Only 10 % of the invoices which are defective are required to be assessed by the
enterprise. Therefore only finance manager will be checking the invoices and clearing payment
on clearing the defaults. Along with the machine company should employ a person who will be
checking and processing through machines but cost of such an employee will not be high. It
should also ensure that the business enterprise will be having the amortisation costs in January.
Till that time cost will be born by born by company of implementing the project. The overtime
wages should adjusted by the time during which they were under utilised in the given period.
This will balance the time in seasonal and off season activities (Lu and et.al., 2020). However it
may be required to be paid in some seasons where the works is high and at peak point. Adoption
pf technological advancement will be bringing new profits to company. The utilisation of the
labour hours over productive areas will improve the operations and processes.
CONCLUSION
From the above report conclusions can be drawn that technology is growing very fast and
its is important for the business enterprise to adopt to these technologies. The growth and success
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of the business enterprise also depends the technology it is using for making the process faster
and easier. This is essential for the business enterprise to implement the digital technology in
business operations. Company should adopt the project of automated assessment for utilising the
time of managers in more productive manner. The time invested in the business can be more
accurately invested in other productive activities of business.
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REFERENCES
Books and Journals
Lopes, W.N. and et.al., 2017. Digital signal processing of acoustic emission signals using power
spectral density and counts statistic applied to single-point dressing operation. IET
Science, Measurement & Technology.11(5).pp.631-636.
Lu, Q. and et.al., 2020. Moving from Building Information Models to Digital Twins for
Operation and Maintenance. Proceedings of the Institution of Civil Engineers-Smart
Infrastructure and Construction. pp.1-9.
Schaart, D.R. and et.al., 2016. Advances in digital SiPMs and their application in biomedical
imaging. Nuclear Instruments and Methods in Physics Research Section A: Accelerators,
Spectrometers, Detectors and Associated Equipment.809. pp.31-52.
Sweeney, P. and et.al., 2019. System and method for performing a semantic operation on a
digital social network. U.S. Patent 10,198,503.
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