Conquering Data Everest
Scale the paper mountain and learn how Costco Wholesale implemented a new, automated document capture solution that integrates with its existing AS/400 system.
Next year, Costco Wholesale will celebrate its 25th anniversary and the birth of the warehouse club industry. The company's first location, opened in 1976 under the Price Club name, was in a converted airplane hangar in San Diego. Today, the company has grown to 334 worldwide warehouses, 72,000 employees, over 13 million members and revenues of $31.62 billion in 2000.
As with any modern company, Costco was inundated with paperwork: An average of 30,000 pieces of paper a day had to be entered into their system. Over the next year, Costco estimates they will have a 15-20 percent increase in volume, based on pure growth of the business, as well as adding new applications.
Costco currently has 14 applications being processed; the three highest-volume applications represent about 95 percent of the total documents. Costco scans everything from HR documents, corporate purchase orders and POs for constructing new buildings - which are currently not on their AS/400 system. Costco even scans some general liability claims, which can be anything from a shopping cart hitting a car to someone slipping on a wet floor. They also have "Warehouse Receivings," which are invoices that are left in the warehouses. The warehouses forward a copy of those invoices to the document control center, where they are scanned and entered into the system. And since Costco is in the merchandising and retailing business, the majority of the scanning is related to Accounts Payable.
The Old Way
The previous method of handling applications involved routing all documents to Costco's document control center, where they are sorted by type, then sent to the indexing workstations for data entry into the AS/400. After data entry is performed, the indexing operator fills out a header page that contains a date, keyer ID and document ID. The header page and the documents are then scanned.
Depending on the type of application, the indexing operator would sign on to the AS/400, where the documents would appear in the same order in which they were keyed. If the document ID matches the invoice number, the indexing operator files the document information into the document management system.
Some documents had bar codes printed on them. For these documents, once the initial batch index was keyed by the scanner operator, each time a bar code was read, the scanning software would increment by one. The total number of documents scanned, or number of bar codes read, would then be checked against how many documents were actually keyed in. Need for a New Solution
Because the old document capture system used a very loose integration to the AS/400, it required a file uploading and downloading process to update systems for document verification purposes. The indexing operators would experience severe delays, which worsened as the workload increased. Furthermore, there was a lot of time-consuming manual data entry being done at scan time.
Costco's corporate office in Issaquah, Wash. decided it was time to replace the entire front-end document capture solution. Their old capture system was not designed to handle the increasingly large volume of documents that was being processed on a daily basis, which ultimately would result in increased labor costs. Costco needed a solution that could automate the manual data entry process, and also be easily customized to integrate with their AS/400 system.
Terry Butler, president of the Systems Solutions Group at F.Y.I. Image says, "One of the issues with Costco's old 16-bit process was the amount of manual data entry. We were looking at a way to virtually eliminate any data entry at the scanning station. By putting bar codes at certain places, a new system could interact directly with the AS/400 to validate the information and automatically store the data."
Butler suggested that Costco implement Captovation's eCapture 4 solution. eCapture 4 would allow Costco to have a more stable and efficient capture solution for scanning and indexing purposes. One reason Costco selected eCapture was the implementation of the new system with their current Optika FPmultisystem.
By mid-June, Costco plans to upgrade to Optika's Acorde solutions. "Captovation's eCapture was built for Acorde - that's one of the reasons we selected them. Hopefully, it will be like the flip of a switch to upgrade," comments Rob Berg, Manager of Optical Imaging Operations at Costco.
eCapture is expected to adapt to the new Acorde system by simply replacing some Visual Basic Application (VBA) scripts, according to Ken Peterka, president and CEO of Captovation.
The new system will also reduce costs associated with manual data entry, integrate with their current system and offer an upgrade path for future needs. Another benefit of eCapture 4 is that the application is VBA-compatible, which meant Costco could customize any of the tools.
ecAutoFile Server reads the bar code values and immediately updates the AS/400, giving the data entry staff immediate feedback about the process. This prevents redundant documents from going into the imaging system. If a document is scanned twice, ecAutoFile Server will recognize the bar code value, and the scan operator will delete the document image. After scanning, ecAutoFile Server updates the AS/400 and notifies any user signed on to the AS/400 that the documents are available in the imaging system. This entire process is done in realtime, which means the users experience no delay and overall system management has been simplified. Costco is using the following components of eCapture:
- ecScan - A production-level scanning program.
- ecAutoFile Server - A bar code recognition server that automatically files images directly into a document management or workflow system.
- ecIndex - A production-level document indexing program
On the desktop, Costco is running Windows 95 and Windows NT 4.0 on the back end. They plan to upgrade to Windows 2000 shortly after the Acorde upgrade, which is expected to be complete in June.
Costco uses AS/400s (model #530; a four-way RISC box) for their mainframe Account Payable system in their buying, warehouse operations, merchandising and accounting departments.
The eCapture installation was started in mid-June 2000 and completed around mid-August 2000. Peterka notes that the testing phase lasted from June to July, which resulted in some minor VBA changes to the application. Costco has scanned over five million pages since the production date.
Berg comments that the integration took slightly longer than he had anticipated. The main reason, he felt, was poor project management. "At the time, the West Coast division of our integrators, F.Y.I. Image, was fairly new, and there wasn't enough planning up front to make them completely understand what we wanted," he explains. "Now, they have a staff that better understands our requirements, we've got a thorough project plan in place and we're planning to use F.Y.I. as our integrator when we upgrade to Acorde."
Another roadblock with the integration was that Costco was running concurrently with the old and new systems. It took about 60 days to merge the two applications and move off the old platform. "Since the Captovation product was written for the new Optika Acorde product, we had to customize some macros so it would work with the older process," says Butler. "However, Costco was in such a hurry to begin using the system that they wanted us to get the front-end scanning taken care of as a first priority. We felt that the old scanning process was creating an unstable system. When we removed the cause, it straightened out a lot of problems."
Berg says the configuration and the integration with their AS/400 mainframe and their current platform at the time cost $50,000, which did not include licenses. Butler notes that the entire conversion was less than $100,000.
As the manager of the operations side, Berg gave a lot of input for the system needs and requirements. "On the scan side, this process directly affected all my operations. I was heavily involved in the testing, planning [and] development," he says. "The role of Captovation was to determine how we were going to automate all this. The project coordination and project management was the duty of F.Y.I. Image."
Bumps in the Road
Of course, no implementation is without problems, and Costco was no exception. "Later on, we had some problems with the macros that Captovation built," comments Berg. "Part of the reason was because we have so much customization - and that it was new to them. It was just testing, testing and more testing to get it the way we wanted."
Another problem arose out of communication, or the lack of it. "Some of our systems were new to F.Y.I. Image, and we did require some assistance from Captovation to solve that," Berg explains. "However, Captovation was right on it, and most of the problems we had [were] resolved ... quickly."
Currently, Berg comments that the Captovation product has been very stable. "As is sometimes typical, we've had network problems and some optical problems; but nothing on the Captovation side," he says.
"At F.Y.I. Image, we have a standard policy - at the end of an install, we keep a technician on board for several weeks afterward to make sure everything is running properly," says Butler. "Once the Captovation implementation was completed, there was very little for us to do, really. It went smoothly."
Costco has about 10 staff members, who primarily work 40 hours per week at each station in the scanning department. The department consists of several index stations and eight scan stations.
Currently, Costco has increased their volume of processed documents about 20 percent during the past year, without adding new staff members because of the automation. Berg estimates that without the new system, Costco would have added another two people in the scanning department, at a total cost of about $80,000 to $90,000 per year, including wages and benefits. "The end users are very positive, and the supervisors are happy with the new system," says Butler. "A lot of the manual tasks they had to do[previously] have been eliminated."
Also, the speed of processing the images through the system has dramatically increased. Before, the actual processing used to run several hours into the night; now, the process is complete by about 4:30 or 5:00 in the afternoon. As soon as staff members finish scanning, the entire operation is done about 30 minutes later.
Costco is currently discussing plans to add the Captovation product to other departments, such as Travel and Expenses. They also have a non-foods Quality Assurance process, which is very paper-intensive; they are exploring the possibility of implementing workflow, along with the Captovation product. Because eCapture can support both centralized, production-level document capture, in addition to distributed document capture via a Web browser and the Internet, Costco may consider implementing a distributed document capture for their warehouses. In the future, Costco may also add the Membership Division and their Legal department to the system.
Julie Miller is a freelance writer based in Santa Cruz, Calif. She has been writing technical articles for the past 10 years. She can be reached at firstname.lastname@example.org.