Where the order-to-cash flow is bleeding.

Subject

Baseline rates used throughout — admin/warehouse blended $22/hr (loaded); owner/principal opportunity cost $75/hr. Every waste figure = these constants × an observed volume.

Value-Stream Map — Order-to-Cash

The core flow is lead-to-cash: an order arrives, gets entered, cleared, picked, delivered, invoiced, collected. Value-add touch time for a clean order is ≈ 22 minutes. Elapsed time to delivery ≈ 1.5 days; to cash, ≈ 48 days. Decision latency (non-value-add waiting for a human decision) is called out at every handoff.

                 ORDER-TO-CASH VALUE STREAM  (Client A)
                 VA touch ≈ 22 min | order→cash ≈ 48 days

[1] ORDER INTAKE           phone / email / SMS, no single inbox
      |  ▸ latency: 0–3 hr  (orders sit until batched 2–4×/day)
      v
[2] ORDER ENTRY            re-keyed by hand into spreadsheet, then QuickBooks
      |  ▸ latency: 0 hr, but +3 min rework/order (double entry)
      v
[3] CREDIT / HOLD          ★ FOUNDER BOTTLENECK — owner clears every hold
      |  ▸ latency: 40 min avg, up to 4 hr when owner is on the road
      v
[4] PICK-LIST RELEASE      printed in batches 2×/day
      |  ▸ latency: 0–4 hr  (waits for next print batch)
      v
[5] WAREHOUSE PICK/PACK    paper pick sheet, no scan confirmation
      |  ▸ latency: ~0 hr | 4% of orders leave with a pick error
      v
[6] DISPATCH / ROUTE       manual route assignment by dispatch lead
      |  ▸ latency: batched to route cutoff, 0–2 hr
      v
[7] DELIVERY + POD         paper proof-of-delivery, returned next day
      |  ▸ latency: POD re-enters office +1 day
      v
[8] INVOICING             invoice cut only after POD returns
      |  ▸ latency: 1–2 day lag between delivery and invoice
      v
[9] AR / CASH APPLICATION  manual matching of deposits to invoices
         ▸ latency: DSO ≈ 48 days vs 30-day terms → 18-day slip

Latency summary

Operational Waste Inventory

Each waste is a specific, observed leak with an annualized cost. Costs are gross (full annual bleed); §05 shows the conservative Year-1 capturable subset. Nothing is double-counted.

Types — rework (W1–W3) · manual reconciliation (W4) · waiting/spoilage (W5) · tribal knowledge (W6) · manual reporting (W7) · founder bottleneck (W8). Textbook operations-heavy SME: not a sales problem, a flow problem.

Decision-Routing / Decision-Rights Map

One structural defect shows up everywhere: decisions route up, not down. The owner is a single point of failure on three loops that should never reach them.

Founder-bottleneck loops — the three to cut

• Credit-hold loop — every order pauses for owner approval (W8, $18,750/yr). ~85% are inside the customer's limit and current: pure noise. Delegate to an auto-clear rule; route only true exceptions.
• Pricing loop — special terms live in one head (W6, $18,000/yr leakage), so the owner is pulled in to confirm quotes. Delegate to a governed price list so any clerk quotes correctly.
• Reporting loop — the owner is the only one who can assemble the weekly picture (W7, $15,000/yr). Delegate to an automated dashboard so the number builds itself.

Process Heatmap

Eight core processes rated on maturity (ad-hoc → optimized) and operational risk (impact × likelihood of a costly failure).

Maturity — ○ Ad-hoc · ◐ Repeatable-but-manual · ● Defined/optimized  |  Risk — Low / Med / High

Immediate Savings Opportunity

Why this number is defensible, not hand-waved

• Every line traces to a §02 waste with a stated volume and labor rate.
• Capture rates are haircut, not full — none assumes a perfect fix.
• The largest line (W1) is the most mechanical to automate, so it is the safest.
• Not counted: the $18,750 credit-hold owner-time (W8) — real, but it returns capacity, not cash. Also excluded: the ~$296K working-capital unlock from cutting the DSO slip — a one-time balance-sheet event, reported separately, not added to the $58K.

Proposed First-30-Days Plan

This diagnostic is Week 0. The following is the 30-day validation-and-blueprint sprint that converts findings into a staged, priced build roadmap — cheap validation before any system is built.

Assumptions to Sanity-Check

1. 60 orders/day × 250 days × $400 AOV = $6.0M — volume, day-count and AOV are back-solved to be mutually consistent with revenue. Confirm the real day-count (some distributors run 260–300).
2. 4% error rate and $18 cost-to-fix — plausible for manual double entry; validate against 90 days of credit memos in Week 1.
3. Refrigerated shrink (W5) is the softest figure — "reducible" spoilage bounded to $14K but depends on SKU perishability mix; validate against a physical count.
4. Owner opportunity cost at $75/hr drives W7 and W8 — if the owner's marginal hour is worth more, those figures are conservative.
5. Capture rates in §05 (40–90%) are judgment calls, deliberately haircut. The $58K headline holds even if two lines come in 10 points low.
6. Working-capital unlock (~$296K) is a one-time liquidity event, not a recurring saving — kept out of the $58K headline on purpose.