Case Study 24 – Designed and Documented Procedures

How To Organize The Work Of An Interior Design Company Warehouse

An interior design company that maintained a warehouse of inventory for projects billing approximately $6.2 million a month, was allowing project expenses to come in long after a project was completed and billed. Since the projects were billed and completed, it was difficult to come back to clients for late expenses.  This resulted in a loss of about 30% of their project gross margin.

Recovered over 30% of lost gross margin from late and missed billing of project expenses on each interior design project.

Even after deadlines were set and an attempt was made to enforce them for expenses, vendors frequently delayed their invoicing beyond deadlines. These expenses were usually passed through to the client, sometimes with a small margin attached.  Attempts were made to delay final billing to clients until all incoming invoices were collected; however, the problem persisted.  In addition, there was furniture and accessories that were never used and never returned for refunds or reused due to a poor inventory tracking system. Items received would sit in the receiving area for weeks before being added to inventory and stored appropriately.  Inventory going out to projects would often be incomplete as a result.  Pieces would be reordered and sent directly to the client site to complete the project before the original item was received into the warehouse inventory. Contract labor used on projects would often fail to turn in time sheets, travel, and project expenses until after project deadlines.  To resolve the problem, we implemented the design and documentation of procedures from start to finish for the management of each project in the warehouse, along with the bookkeeping and billing.  Improving the accounting of incoming and outgoing inventory, along with the management of contract labor using documented procedures and daily reporting, warehouse operations were kept current and inventories accurate. Project costs were collected on a timely basis, and each employee understood what was expected and held accountable. Managers were aware of project details daily. Projects were billed on a timely basis, improving cash flow as well.