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Improve the Supply Chain? Learn From Home Refinance

Anything that slows down the supply chain is not good unless it is a planned delay to give the next link in the chain lead or preparation time to accommodate its own internal processes.

Most delays are unplanned and therefore the contingency planning for unhappy surprises is a key factor in supply-chain management.

Conversely, anything that speeds up the supply chain without incurring additional expediting fees is a good thing. Also, we all know if something is sped up too fast, it becomes error prone due to both human and equipment difficulties. So reaching an optimum performance for both speed and accuracy is essential for establishing and maintaining best-practices.

Recently, I refinanced my home and the entire process from application to closing took less than 21 days. At final signing, a notary, my wife, and I worked through about an hour of signing innumerous documents that, in total, comprised a stack of paperwork about five inches thick.

Lack of friction
Here's the kicker: I also refinanced about a year earlier, and the entire process lasted about three months, involved about three times as many people, and an unimaginable number of phone calls. The second round of refinancing I did completely online. I never met the broker; I never called him on the phone.

The most time-consuming effort within the entire process was the retrieval and scanning of all the essential documents required to process the transaction. I had to scan, convert to PDF, sign, and upload about 30 documents, including bank statements, proof of home insurance, savings and brokerage accounts, etc. Once I had the lot converted into PDF e-documents, the work was 90 percent complete. All that remained was to sign the documents the loan company sent to me. I did not have to scan these and upload. I was able to “e-sign” at my keyboard and that was as good as my written signature.

After all the documents requested were uploaded, I received real-time progress reports on each document's review and acceptance status. Every day, I received an email requesting me to log in and check the latest updates to my loan application's progress. The log-in took me directly to my update and I watched the progress of my loan's march towards approval via a real-time dashboard graphic.

Moving paperwork around while waiting for signatures and the proper authorizations is a very burdensome and time-consuming process. If a document or a single page is lost in the handling, recovery efforts have to be made to bring the paper logistics back to conformity.

The supply chain creates a massive amount of sensitive documents, including packing slips, invoices, contracts, manifests, and letters of intent… ad infinitum. Currently, the security and authenticity of many of these documents can be relatively assured via radio frequency identification tags pressed in-between layers in a single page. But the paper pages are not encrypted, and so unauthorized eyes can still read the contents of every page.

The best of both worlds is to have an encrypted e-signature capability for both “in the clear” and encrypted documents that can be read or printed with authorized access only. Imagine how much faster the administrative aspects of the supply chain would be if all paper-based transactions were digitized and archived for instant initial access and research retrieval.

Security and speed
Several companies are already offering these services with additional security levels for individual document access. One company has a real estate-centric product that could have been the engine behind my recent refinance transaction.

At any rate, I enjoyed a three-month process being reduced to 21 days because of the online, two-way access to the critical documents needed to reduce my personal cost of living. With enhancements in the transportation logistics supply chain alone, electronic documents and signatures for customs, duty, and freight processing would reduce or eliminate many delays in both domestic and international trade.

Lead-times, including queues, can be dramatically reduced. Expedited parts and assemblies will give rise to finished goods time-to-market improvements. This all adds up to a more efficient, secure, and cost-effective supply chain.

10 comments on “Improve the Supply Chain? Learn From Home Refinance

  1. Clairvoyant
    February 22, 2013

    Good points, Douglas. Digitized documents are the way of the future. Easy to access, store, transfer, and better for the environment. I've never been a fan of e-signing though. I've always felt it is easily forged and not as personal.

  2. dalexander
    February 22, 2013

    @Clairvoyant…Right after I wrote this article, my brother called me and asked for assistance with a purchase of property. He told me he had the cash and did not need a loan. I put him in touch with a real estate broker that uses DocuSign. To make a long story short, in the last 5 days, he has submitted the offer, received all the disclosures, removed the contingencies, retireved all the county and state paperwork, placed his escrow deposit, secured the land, and corresponded with the agents. He did all of this from his laptop. Did not leave his house. And used e-signature services in both directions. He now owns 25 acres in Romona, California. If it was any easier, it would have been illegal. I agree that electronic signatures will be the standard going forward. Did I mention the seller was in Italy?

  3. prabhakar_deosthali
    February 23, 2013

    I am in perfect agreement with Douglas. e-signing of the documnets is the way for paperless transactions where authentic documnets can be exchanged  between parties in seconds and they also stand in the courts of law.

     

    The reliabilty of digitally signed documents has been proven so much that in the devloping countries like India also major trade transactions, purchase orders and contracts are now digtally signed and relied upon .

    In the supply chain context the documnet flow can be synchronised with the material flow using the e-signed documents reaching their detination alongwith or before the physical material arrives at the point of delivery so that the clearnce of shipments can occur without waiting for the physical documnets to arrive by courier/post.

     

  4. dalexander
    February 23, 2013

    @Prabhakar…thank you for supplying a real world example. When someone orders from Digi-Key or Mouser, the shipment not only goes out the same day, but within minutes there is an order confirmation sent via email so the buyer can confirm part number, quantity, and cost immediately. Sometimes a distributor will send an NCNR (Non Cancel/Non Return) before accepting or placing the order. Have you seen these as e-sign documents yet? These forms would be ideal candidates for e-sign. I haven't seen an e-sign NCNR form yet.

  5. Brian Fuller
    February 23, 2013

    Wow! What gives here? This is not just a story of technological “lubrication” if you will, but something's giving in the North American lending world… and that has huge implications for the economy. 

     

  6. Nemos
    February 23, 2013

    “I enjoyed a three-month process being reduced to 21 days because of the online”
    From 3 months to 21 days only within one year, I am just wondering how many days will be after one year ….. (but still the 30 papers are too much)

  7. dalexander
    February 24, 2013

    @Clairvoyant… Electronic signatures seem “hack able” at first glance because of their apparent simplicity. But, as you might also infer, there are heavy encryption layers and unique hashing techniques to guarantee that Minimum Legal Requirements of an Electronic Signature are met. To qualify as an electronic signature under these legal frameworks, the signature must have the following attributes: 1. The signature is an electronic symbol, sound or mark unique to a person. The system must ensure that the symbol is unique and is owned by and under the sole control of a single person. 2. The signature is logically associated with, or affixed to a record. This means the system managing the signing must be capable of attaching the signature to the document in a manner that ensures the document remains attached to the signature and cannot be modified or removed. 3. The signature must be attributable to a person. An electronic record or signature is attributable to a person if it was the act of the person. The act of a person may be shown in any manner, including a showing of the efficacy of a security procedure applied to determine the identity of the person to which the electronic record or signature was attributed. 4. The signature must show the person had intent to sign the record. Intent includes the recording of actions taken by signers that demonstrate that they knew and agreed that they were signing, and that they intended to be bound by their signature. This can be determined from the context and surrounding circumstances at the time of its creation, execution or adoption, including the party’s agreement, if any, and otherwise as provided by law. The encryption is a 256 key that, as mentioned earlier, is also hashed and tied to additional data like IP numbers and passwords and PINs. Several certification agencies including e-trust have given this tech the green light. If it is ever compromised, it will be big news and we will hear about it. You can bet the hackers are already trying to defeat this. It is in their bad blood.

  8. FreeBird
    February 26, 2013

    I've grown to love electronic documents, and I'll opt for an online process over human-to-human almost any time. The ability to track things in process must be a time-saver for paper pushers as well. There will always be a risk when transmitting data, and maybe people should weigh the value of the transaction versus the risk. I just assume people can access just about anything they need anyway…although I can think of a number of instances where privacy is paramount.

  9. dalexander
    February 27, 2013

    @Freebird.. I am one person who is becoming increasingly skeptical about any promises concerning Internet security. The best security is insecurity. That is…you can't be too paranoid about the security of any document you want to keep from prying eyes. Even though hashing is an extra layer on top of encryption, the hash made from a password can be unhashed with the requisite amount of gear, savvy, and time. So, I go with the Seargent Schultz defence. “I see nuuhhhthing. I know nuuuthing.” As far as Col. Klink is concerned, I have nothing to hide and if I did, it is probably not worth knowing.

  10. FreeBird
    February 27, 2013

    I don't know a lot about encryption, but it sounds like a viable solution. The mega-document issue comes up all the time–doctors visits; anything financial or anything that involves insurance. At some point, humans should have the option of filling out a “master document” for healthcare, government issues/taxes; insurance claims etc. and carry those around on a drive or microchip. They can be updated as needed and provided to whoever needs them on-demand. As a newly minted freelancer, I've been asked to fill out dozens of w-9s; now I have one copy sitting in scanned documents appropraite for all occasions.

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