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"The Future is Automation"
by Jim Vandevere
printed in the September 2004 issue of American Funeral Director.

In today’s fast moving environment, businesses are moving towards automation in the business process area. This automation enables the business owner to get real-time information, communicate with customers, work closely with vendors, find new resources and trim expenses. With the development of the internet and technology, businesses are able to operate in an automated, secure and fluid manner. As we all know, operating technology changes slowly in the death care industry. Though funeral directors recognize market shifts, most are too busy with the day to day needs of serving families, not allowing them to change. Automation can provide the firm owner opportunity and advantages while removing the complexity of innovation. Web-based software solutions are designed to provide customized, value-adding service while eliminating capital investment and cumbersome processes. Streamlining the overall operations is the premium reason for automating ones environment, reducing costs and gaining lost profits. In this article we will go through the death care industry to see how the migration to today’s business practices will benefit the business owner.

The death care industry is known for customer service, more importantly personalized service to the family. It is by far the most hands-on customer service oriented business of any industry and the sole reason for continued success. In the current environment, the firm owner and/or funeral director will manage the entire process from start to finish, manually. No one can underestimate the value created by the level of customer service that is given to the family. With this in mind, the rate of profitability in the industry over the past years has been declining with the average cost of an adult funeral going from $5,200 to $5,020. The number of deaths has increased in the last twenty years from 1,463,000 in 1980 to 2,404,000 in 2000 at a death rate per 1000 population of 8.54. In a different light, the projected number of deaths will increase by 18% in 2020 to around 2,840,000 and by 2050 the death rate is projected at 9.8 per thousand of population and the annual number of deaths to 3,952,000. The estimated revenue for this industry in 2002 was $10,987 million, with an estimated 26,738 operators which employed 112,262 people and paid wages totaling $2,967 million.

The industry is moving towards the outsourcing model. Firms are shifting to central facilities for storage of the deceased and preparation, while also having a number of “shop front” or funeral homes with chapels to service particular areas. The sharing of automobiles and facilities to lessen overhead costs is on the rise, also another benefit of outsourcing. Events are planned by daily meetings and management staying hands-on with all activities. Employee wages and purchases for materials account for the largest consumption of operating capital. The trend for these costs will only increase as time goes on. With the death rate increasing in numbers, this will create an operations and financial crunch in the death care industry. The tools available for the death care industry today are many years behind the current systems available in other business sectors. Lack of automation and incomplete and/or complicated systems creates additional work and reduces the value of automation. This dynamic creates demand for new solutions and tools. For these reasons the death care industry needs to move into the new millennium.

How do we move forward? Evaluate the entire process, beginning with contract entry and ending with the completion of services, while providing a feedback mechanism on services rendered. The firm owner and/or manager should be able to review the information flow throughout the process. The key element is getting the information to the right people in real time results in better service and more revenue opportunities. The short timeline, number of details and constant changes associated with at-need funeral services requires quick thinking in order to pull off the service without a hitch. Tools that alleviate manual errors and risk in today’s environment require employee intervention, duplication of entry, manipulation of information or manual consolidation of data. This process, as it stands today, increases the chance of error, handcuffs accounting and management processes with manual effort resulting in adjustments. The future will demand better business execution, while maintaining accountability of data and process. In order to step into the next generation, an overall automated approach is needed. Let’s understand the forecast. As stated earlier, the death rate is projected to increase to 9.8 per thousand in 2050 to an annual number of deaths of 3,952,000 by 2050. This increase will add a growing number of deaths annually, capping around 1,548,000 by 2050. Revenue for this new growth phase should increase profitability. However, historical data is showing an increase in cremations versus traditional burials which will reduce the dollar per call rate significantly. A firm with these metrics will have to process the increased throughput in order to maintain the profit quota. Without tools to automate, store and process information the risk associated with service delivery increases as volume increases. A single automated platform will give the firm owner and current employees the ability to handle the increased volume without sacrificing the level of service.

The death care service industry needs to move toward a total outsourced service provider. This solution allows for a single point of contact for the firm owner providing the following services/activities: accounting services, information technology (network assist and equipment leasing), human resources (payroll and benefits), contract entry (pre-need and at-need), resource planning, inventory management, customer communication (web-sites and email), customer service (lead generation, aftercare forms, literature creation and family follow-up surveys) and financial reporting. Although many of these services are available from individual providers, the business owner must piece together the various vendors and solutions. The resulting solution is often incomplete and most systems do not share data, causing extra manual effort and reduced access to information. The technology now exists for one provider to offer a comprehensive, integrated set of services. With these advancements in technology, the death care industry can expect to utilize this kind of service that has been available to other industries for some time. Managers’ concerns about adopting this kind of automated technology are a real challenge. Service providers must be equipped to handle inputs from firm owners and implement the technology with little or no interruption to the business. The major contributing factor will be accomplishing this level of services at a reduced cost and enabling the firm owner to capture previously consumed profit. Migration to the next generation of operating technology will benefit the death care industry in various areas; process integrity, identification and accountability, functional reporting and secure means to control the firm’s operations. Automation of business practices utilizing technology will provide the foundation for success. In the future, acceptance of technology should be met with optimism, owners and managers should embrace change, if not, they will be unable to adapt to the demanding market ahead, diminishing the level of service to the family.

For an industry dedicated to unparalleled personalized service to the families, the future is automation.

James Vandevere
President and CEO
Ionic Services, Inc.