Core Operations – Documents Flow

Documents flow In to and Out from a business – Core Operations.

 W. Edwards Deming

“If you can’t describe what you are doing as a process, you don’t know what you’re doing.”

Documents carry the data across the boundaries of a business. This edition of the newsletter focusses on five documents that flow between a business and its customers. Each is considered in terms of the potential for automation either in its generation or its handling by the recipient.

Other document flows between a business and its employees, suppliers, regulators, advisors, etc. will occur but are not covered in this article.

Automation can be more than a great business case with an attractive ROI, it can transform the approach to work, and the activities people are required to undertake.

1. TLDR
2. How to select a Process for Automation!
3. Inbound – Request for Quotation (RFQ)
4. Inbound – Purchase Orders
5. Outbound – Quotes
6. Inbound – Delivery Notes / Proof of Delivery
7. Inbound – Invoices
8. Document handling Capability

1. TL;DR

The 5 types of documents that cross the business boundary contain lots of data. The routine nature of many of these documents creates the opportunity for automation.

Using automation to extract data from documents or to generate documents can save a lot of manual effort for the routine activity, this enables the manual effort to be focussed on the unusual, the complex and the exceptions.

The big 5 document types will not apply to every business and there will be other document flows across the business boundary.

The core automation technology for Intelligent Document Processing can be applied to any of the document movement processes.

2. How to select a Process for Automation

The topic of “How to select a Process for Automation” has been covered in a blog article on the Ether Solutions website.

Of course, there is always the danger of “A solution looking for a problem”, but once an investment has been made in Automation, it is often a situation where there is potential to implement the technology in many scenarios. The challenge becomes one of determining priorities.

For automation to be effective it requires routine / consistent activity and reasonable volume.

Every business has customers with documents exchanged, which creates the potential for automation to deliver benefits.

To discover automation opportunities, examine the documents that flow “In” and “Out” of the business.

3. Inbound – Request for Quotation (RFQ)

RFQ in some sectors are the mechanism to do business. 

Can RFQs be classified into “Routine” and “Non Standard”?

For a Routine RFQ, the process to assemble a quote will follow activities that have been undertaken many times. The challenge should be “Why” does a person need to be involved?

The RFQ documents come in a variety of formats and are not consistent across prospective customers. The variation provides challenges. However, most business will send their RFQs in a consistent way and with consistent structure for the content.

The Routine RFQs will be consistent. Many Intelligent Document Processing (IDP) solutions utilise AI functionality to deliver very accurate extractions.

Automation for the production of Routine Quotes in response to the RFQ, should keep costs low and speed of response high. Both of these factors could help the success of the process.

Keeping a Human In the Loop (HITL) can verify the extractions and deal with the exceptions for minimal effort.

4. Inbound – Purchase Orders

Orders are the most important Input to a business.

Do orders occur as inbound PO documents?

Can the orders be categorised into “Routine” and “Other”?

For a Routine Order, the business process that flow from the Order will have all been performed before. The challenge should be “Why” does a person need to be involved?

If a person’s role is called an Order Processing Agent, they are acting on behalf of the company to handle orders. The job will be more interesting if repetitive nature of routine order handling is removed.

It would be great if businesses used a standard order format, the reality is a lot of variation. IDP can ensure accurate extraction of the data from the Routine orders.

Using a HITL approach provides a review check for the Routine order.

In a few sectors, the routine nature of the orders has created integrated supply chains with EDI (Electronic data Interchange) which fully automates the process.

5. Outbound – Quotes

Many businesses have well defined processes to create a Quote. Details will vary but the structure of the quote will be consistent.

As Quotes relate to the deliveries a business makes, there is usually a significant number of Routine Quotes. Many of those Quotes will be to existing customers with the production of the Quote document being the means to deliver repeat business.

The consistency in the process and the consistency of the content makes the activity suitable for automation.

Of course, not all Quotes are suitable for automation.

The number of Quotes being produced will be a big factor in determining if there are benefits

6. Inbound – Delivery Notes / Proof of Delivery

Delivery Notes have traditionally been despatched with the goods to list the items contained in the shipment and in some circumstances provide the mechanism to capture a signature on delivery.

The signed delivery note used to be the Proof of Delivery. In most situations the Proof of Delivery (PoD) has become a photo taken on a mobile phone or tablet.

The evidence of the delivery is used to justify invoices and at the recipient’s organisation can be the “Receipt of Goods” document to support the payment of an invoice.

Where there are shipments of goods that involve multiple logistics companies performing the actual delivery, there can be a challenge for a business to collect the PoD documents / photographs from the logistic company portals.

Automation can be used to perform the collection of the PoDs from the various logistic portals to create the internal storage of the evidence to support the invoice activities. Ensuring the complete assembly of such documents can enable any queries to be rapidly resolved as well as establish the evidence that auditors can use for their verification. 

7. Inbound – Invoices

Invoices are one document where the details are often required to be extracted for verification. An accounts payable process will usually need to reconcile each invoice to an originating PO issued by the business. In some cases, reconciliation to Goods Received will be required as well.

Invoices related to “Routine” activities with established suppliers often require little manual checking and just need to be posted into the finance system. This scenario is the easiest to automate.

Where invoices do not match exactly with an original PO require more human review before any payment. There may still be benefit to automating the extraction of the invoice detail and posting the data into the financial ledgers to avoid the manual effort but the decision on acceptance or rejection is made by a person.

Invoices with negative totals, usually called credit notes, are usually low in volume terms. The documents often require complex posting into financial ledgers in order that the details can be associated with the correct invoices already in the financial systems. The complexity of the process and its low volume generally mean that is performed by people and not suitable for automation.

8. Document Handling Capability

The technology to handle documents is generic. The ability to accurately extract data from documents is not specific to particularly types of document.

The use of AI with LLMs has significantly increased the accuracy of extraction processes in recent years and is applicable to all types of documents. That does mean the accuracy is always the same. There will still be variations.

Accurate extraction of data can save on effort to “Reconcile” and “Re-keying” of data into systems. Whether automation of the extraction is going to be cost effect is largely determined by processing volume. The higher the number of documents being handled, the better the business case for automation.

The technology to achieve the automation is known as Intelligent Document Processing (IDP).