M&D Migrates to RPA Implementation
- Sep 24, 2019
The majority of companies across the M&D industry are focusing their efforts on robotics process automation (RPA) and, as a result, executives expect their organizations to increase their use of RPA in as little as one-to-two years. For those organizations who are early adopters, benefits go far beyond cost savings, revenue growth and productivity; such as better quality, employee satisfaction due to less repetitive mundane tasks, scalability and speed to market, all while exceeding customer expectations. The demand for M&D professionals has never been stronger, and the costs of attracting, training and retaining these highly sought-after individuals continues to increase. The manufacturing profession continues to evolve with much more emphasis on process efficiencies, internal controls and data analytics—and this is where energy should be focused. Yet, so many organizations employ these workers to perform mundane, repetitive tasks that can be easily performed with robotics. The digital transformation of accounting and operations, which allows staff to work on higher-value activities, continues to evolve as new technologies are introduced, tested and deployed by organizations. If you have not yet begun your digital transformation, you may want to ask yourself – Why not?!
If you could save valuable time and resources by automating 70-100% of a business process, wouldn’t you? Many organizations seek a single solution that can automate finance activities and help streamline organizational processes—while offering standardization, control and transparency. Many organizations have made significant investments in standardizing operations as part of a lift-and-shift outsourcing strategy, in which data processes are relocated or outsourced to a less expensive location. But in this scenario, the way these processes are handled does not necessarily change. Excess staff is still involved in the execution of repetitive manual tasks thereby lessening the ability to scale. Furthermore, any cost-related benefits of this strategy have diminished in recent years, due to rising labor costs in markets including India, Brazil and the Philippines. In addition, there is now strong global demand for these skill sets, resulting in high turnover rates and, consequently, organizations spending a great deal of time and money recruiting and training new workers.
Rather than outsourcing the manual, repetitive, and mundane tasks that make up a process, robotics is employed to automate them. Depending on the solution, software “robots or bots” can integrate directly with a company’s enterprise resource planning (ERP) solution (SAP, Oracle, etc.) and execute the tasks a human would normally perform. Non-ERP functions such as running Excel® macros, managing email notifications and performing data extract-and-load functions are all part of the processing chain of events that can be automated. The major benefit of automating a full “end-to-end” business process is that companies often realize a significant Return on Investment (ROI) within a relatively short period of time. Case studies have shown that as much as 70-100% of an entire procedural or ‘step-by-step’ process can be automated, often translating to a 50% or greater effort reduction.
The primary focus of RPA has been on the elimination of manual tasks and streamlining of existing processes. This is true for many teams, including finance and operations; however, an even more compelling reason to seriously consider robotics is the immediate impact such a solution might have on the organization’s internal control framework. Detective controls, such as reconciliations and materiality threshold checks, can be automated with notifications sent immediately to alert financial and risk managers. The implementation of better internal controls is an important mandate for many organizations but it is absolutely critical that companies can monitor the process and provide detailed audit evidence to the regulators.
Good governance is important and more companies are now considering setting up robotics centers of excellence (RCoE) to centrally manage process automation and performance improvement initiatives across the enterprise. Effective RCoE programs benefit from a centralized RCoE team that consists of representatives from legal, business process improvement, applications technology and risk management/controls. When starting an RPA project, clients often look for the low-hanging fruit—manual activities that may be a nuisance but are a relatively small part of a process. The problem is that the result is minimal from a cost/benefit analysis perspective. The focus should be on where the people are, and the types of functions they are performing daily. Are the tasks considered to be “value-added” activities or just a means to an end? For example, a client may have several people focused on extracting data from various source systems in an effort to collect, consolidate and then rationalize the data set. In this example, the collection and consolidation of data is merely a means to generate the data; the rationalization of the data is the true value-add function where a finance professional should be leveraged.
From an accounting, finance and operations perspective, there are countless activities that involve manual processing tasks. Having reviewed data collected from dozens of client process assessments, one can draw conclusions regarding where teams actually spend most of their time -- in most cases, not in the right areas. In addition to reviewing where time is spent (or wasted), other considerations need to factor into the decisions regarding which process to start with. For example, beyond the obvious benefit of cutting costs, it is also important to ensure that you understand what you ultimately want to achieve. Ask yourself, do we want to:
- Improve controls?
- Standardize processes currently performed by different groups and locations?
- Increase scale?
- Repurpose human capital?
Each of these questions factors into the decision on what processes to start automating. You also need to think about the roadmap and how quickly you are looking to roll out robotics into the production environment. In conclusion, there really is no right or wrong approach, but it is important to ensure you are asking the right questions and at a minimum you should be working with a partner who understands both the questions you want to ask and where you ultimately want to go.
M&D Intelligence - Q3 2019
- M&D Migrates to RPA Implementation
- A Manufacturing & Distribution Owner’s Dilemma: Do I Sell or Do I Grow?
- Preparing for Sale – Financial Due Diligence
- EisnerAmper Q&A with Michael Corridon, CFO, Strato, Inc.
- FASB Proposes One-Year Delay of ASC 842, Leases, (ASC 842) for Private Companies
- State Tax Changes Impact M&D
If you have any questions, we'd like to hear from you.
Explore More Insights
IRS Enforcement of Digital Assets is on the Rise | Tax Guidance and ExpectationsRead More
Receive the latest business insights, analysis, and perspectives from EisnerAmper professionals.