How is input and output calculated when using the approval system?
The primary benefits of digitalizing approval processes do not lie in saving provincial labor costs, but in reducing rework and shortening delivery lead times; these two factors constitute the bulk of the cost savings.
Common questions found in AIIs the approval process worth going through?
Approval is slow—where does the delay occur?
Whether a system is worthwhile in terms of approval processes should not be judged solely by the cost of the software. The true cost lies in three areas: labor hours, rework rate, and delivery lead time.
misread:The purpose of implementing the system is to reduce the number of employees hired.Actual circumstances:The time required for the approval process itself is not significant; what truly incurs cost is the rework and delays caused by unclear approval procedures.
There is also a common misconception:Once you log into the system, everything becomes standardized.In fact:System-standardized processes. If the process itself is chaotic, the system will only make that chaos even more pronounced.
Basis for Determination
Labor hours are the easiest to calculate: the number of person-times approved each time, the duration per approval, and the frequency per year; the rework rate is a hidden major cost factor—losses from scrapping an entire batch at once can exceed a full year's software expenses; delivery lead times affect sales opportunities; they are the most difficult to quantify, yet the most tangible factor.
- Man-hours
- Rework rate
- delivery time
- intangible cost
Compression order
When conducting a cost-benefit analysis, list all three items and then determine which one the system can improve. If there are only a dozen or so projects per year and only two or three people involved in approvals, the benefits brought by the system will be limited; in that case, streamlining the processes is more cost-effective.
- First calculate the costs associated with rework and delays, then calculate the system investment.
- Start with the most painful part; do not apply the entire layer at once.
- Verify using actual data from three months of operation, rather than relying on demonstrations.
- Use "number of reworks" as the first performance metric after launch.
Applicability: For enterprises with only two or three projects per year, system returns are limited, making standardized processes more practical.
On-site settings and practices we have observed
One company has calculated that the labor costs incurred during the approval process amount to approximately 80,000 yuan per year; however, rework, reprinting, and delays caused by approval oversights exceed 600,000 yuan annually. The system does not save merely those 80,000 yuan—it saves more than half of that 600,000 yuan.
INNOPACKING recommends that customers start by implementing the solution in a high-frequency scenario with a clearly defined pain point—for example, item-by-item verification after a multi-SKU revision. Once the process has become smooth, expand it to cover the entire workflow. The value of the system should be measured by the rework rate, not by the number of logins. During the first three months after launch, avoid pursuing full coverage; instead, first ensure that the line with the highest rework rate operates smoothly.
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Is the approval system worth implementing?
Focus on rework costs. Saving labor is not the priority; reducing rework and shortening delivery lead times are the true sources of benefit.
How do you calculate the return on investment?
First, calculate the costs associated with rework and delays over one year, then compare them with the system's investment and go-live costs. Typically, rework-related losses are greater.
Can a system replace a process?
No. If the system's processes are rigid and the workflows are unclear, it will only accelerate the existing chaos.
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