All told, the paperless system allows two employees to fill 24 orders (with a 99.9 percent accuracy rate) in the time it used to take one employee to fill one order. Later this year, after Daydots starts using hand-held scanners, even the pick list will disappear. Employees will call up orders on their hand-helds and scan the items as they're selected. The packing list will print out as part of a label that includes the customer's address and the necessary postage for shipping.

By losing paper, companies gain many advantages over and above the obvious savings in paper costs. Electronic inventory and order information can be analyzed for trends: Which items are ordered most often? Which items are combined most often? The warehouse can then be configured accordingly. Instead of wandering through the warehouse picking one widget here and another several rows away, the widgets can be stored next to each other.

This not only improves accuracy (warehouse experts say 99.9 percent is the norm in a system like this), but also saves time, in turn reducing costs. According to ClientLogic's Kenerson, three-quarters of the labor in a traditional warehouse is spent on travel time between items. Eliminate travel time and costs can decrease substantially.

National Semiconductor has increased volume significantly at its Singapore facility, yet it still cut costs by 10 percent. Office Depot all but eliminated paper delivery records, which were not only expensive to keep but cumbersome and inefficient to use in tracking deliveries.

In addition, because it's possible to update inventory quantity right from the call center almost as soon as the order is assembled, there's much less chance of selling something that's out of stock. At ClientLogic, that information is updated every 15 seconds, and clients can even dial in to watch their inventory levels change.