Design Tec Inc: Operational efficiencies help interior design firm cope with the economic downturn
"If it weren’t for the all the improved processes we received through WennSoft, I’m not sure we would have been able to weather the economic downturn. We’re able to get more work accomplished with fewer people because our processes are more efficient."
Lee Ann Engel
Operations Coordinator, Design Tec.
About Design Tec
Design Tec is an award winning interior design and merchandising firm based in
Newport Beach, California. Comprised of highly experienced professionals with diverse backgrounds in design and marketing, they have earned a reputation of excellence and attention to detail throughout the building industry.
The company was founded in 1978 by Chris Johnson with a simple goal: provide clients with new concepts and innovative designs, while maintaining consistency,integrity and the highest levels of client service. Design Tec creates unique spaces that illustrate livability and functions of architecture. Its memorable environments touch the buyer’s emotions.
An outdated, ineffective computer system
For many years, Design Tec used an old MS-DOS® based system to manage its financials. The system was inefficient, difficult to use, only a few people in the company had access to it and the software lacked support.
“We only knew of one person in Orange County, California who had any knowledge of the system and could provide technical support,” said Lee Ann Engel, Operations Coordinator for Design Tec. Engel leads the company’s IT efforts.
The old software system couldn’t track purchases to a job, which caused a lot of extra work for Design Tec. The company had to manually track every purchase in a paper file, then re-enter that information into a spreadsheet. Copies of the printed purchase orders had to be hand delivered to staff throughout the office. Then accounting had to
manually match the POs with the invoice that needed to be paid.
“Doing work using our old computer system was the most time-intensive, laborintensive,
paper-intensive process I’ve ever seen. I knew there was a better way to do things,” said Engel.
A Complete Solution
Design Tec was looking for a way to modernize its computer software so it worked with International Software Systems to find the The ability to track merchandise is an essential component of Design Tec’s software needs. The company purchases all of the goods – furniture, accents, décor, artwork, flooring, fixtures, etc. – before construction of the home begins. It may be as long as two years before the home is completed and ready for interior decorating. Therefore it is imperative for Design Tec is able to keep track of the items they are buying for each home.
“We’re juggling multiple jobs at a time, so we need a way to track what we’ve purchased for each house as well as what each item costs,” said Engel.
International Software System recommended WennSoft Job Cost software solution. Job Cost integrates a complete project management solution with the superior financial management capabilities of Microsoft Dynamics® GP to give companies the ability to utilize job data and proactively manage labor, materials, and other user-defined categories.
“The purchasing function and job cost of WennSoft is ideal for us because we can track everything very easily,” said Engel.
Automating manual processes
When Design Tec used their old computer system, they did everything manually, including creating a client inventory, which was a rigorous and time-consuming process. First the expeditors manually created purchase orders for each project, then they manually re-entered that information into an excel spreadsheet, which was used as the client inventory report. Any change in the inventory – if new chairs had to be purchased or different flooring was selected – meant that another PO had to be created and changes had to be made to the
“The expeditors would take the spreadsheets home at night and on weekends to just to try and keep up,” said Engel.
After the client inventories were complete, costs had to be assigned to each individual item. This meant manually determining the true cost of each item – the item’s purchase price plus shipping and storage – and calculating the mark up. With all this work, the inventories weren’t usually finished until months after the installation was completed.
Now that they are using WennSoft, the process has been automated. Design Tec’s cost codes are entered into the system, so the cost codes appear when the user assigns a project number to the PO. WennSoft Job Cost is able to track the shipping and storage costs and can automatically calculate the mark up on the goods, which simplifies creating the invoice. Since the financial information is integrated, creating the inventory report is as easy as pushing a few keys.
“It used to take a lot of time and hard work to create the client inventory report. Now it takes minutes,” said Engel.
The inventory reports list the value of every piece of merchandise purchased for the project, so they can be used by the owners for insurance purposes.
“The system helps us keep track everything that was purchased for each house, right down to the kitchen towels,” said Engel.
Greater Productivity – Less Overhead
Before using WennSoft, Design Tec had three full-time people responsible handling account payables, one full-time person overseeing human resources, and five expediters coordinating purchasing. Because WennSoft has integrated their job cost, inventory and financials, the company completes those processes with just three people.
“Our company has slowed down considerably because of the economic downturn, but if we hadn’t switched to WennSoft, there is no way three people could have absorbed the work of nine people. That’s the impact WennSoft has had on our productivity,” said Engel.
Improved Forecasting
Like any business that involves multiple partners and people, interior design work has its share of surprises, which can ultimately affect the profitability of a job. Labor costs can spike. Designers may have to travel to the site more times than expected. The builder may not like the way the furniture looks after the install and the company ends up absorbing the cost of replacement. Before implementing WennSoft, they used to do a lot of guessing as to the profitability of an individual job because their software wasn’t set up to determine project profitability. Instead, they applied a profit margin across the board to all the work they were doing.
“We were operating blind on many projects before we got WennSoft,” said Engel. “With Job Cost’s job status window we can look at the project during at any given time to see how it is progressing. If we see that we’re over budget, we meet with the designers and take corrective action.”
Being able to monitor the indirect costs of the jobs – labor, freight and storage – has made the company more effective. They have a better understanding which jobs have the highest amount of profitability and which jobs have the greatest indirect costs. This gives them the ability to create different mark ups for different types of jobs. It also helps them create more accurate estimates.
“It’s given us a better insight into costs, which helps us plan and execute our business,” said Engel.
Reducing Costs
Since their old system didn’t help them with financials, they needed their CPA to come in to help them with the month-end closings. The CPA would spend two or three days every month creating a Percent of
Completion report. Even with the CPA’s help, their month-end closings were consistently behind.
Now with WennSoft, Design Tec is able to complete the month end reports without the assistance of the CPA. And since the reports can be run quickly, the company is no longer behind on running these reports.
“WennSoft has saved us approximately $30,000 a year because we no longer need the CPA to manage all the work necessary to complete our month end closings,” said Engel.