17. Internal Supply Chain
Environmental Facts
This is an excerpt from a Perspective Software white paper:(1) “Paper—it’s used and wasted every day. Hundreds, thousands, millions of sheets are printed, written on, exchanged between hands and then discarded to help an organization operate. In the United States, an average office worker uses 10,000 sheets of copy paper each year, and a total of 4 million tons of copy paper are used annually across the country.”(2)
The Environmental Paper Network points out, “Paper production causes a wide range of environmental impacts, so by using less of it you can press many environmental buttons at once: you can reduce your pressure on forests, cut energy use and climate change emissions, limit water, air and other pollution, and produce less waste.”(3)
Printing paper also means an increased use of ink and toner that are toxic for the environment. More than 350 million ink and toner cartridges are thrown out annually in the United States. Toxic ink and toner aren’t free. Companies spend a small fortune on printer ink and toner every year.(4)
Designing a Paperless Environment with Software
The current environment is a poor use of the supply chain system by allowing paper to travel the entire value chain. Today, people make copies of their paperwork and store it for later use. First of all, it takes time and motion to go to the copy machine and make the copies. Time is wasted when people stand at the copy machine and talk. Add into the consideration the time and expense involved in hand-delivering mail to each employee in the company. The combination of time, space, and wasted printing supplies adds up to a key area for improvement along the supply chain. Approximately 10% of office space could be saved by using digital data from the Enterprise Content System, and every choice made in the office affects other areas along the supply chain, such as the post office.
A proactive green policy is a sign of good governance. It gives a favorable brand association and a positive image for staff. It gives the management a chance to reduce waste and to electronically capture the paper-flow process. This is called workflow and it’s used for creating a measurable environmental impact that cannot be overstated. The manager can see the entire set of workflow daily because it is sent to his computer electronically. He can see the overload areas and inefficient processes and see how long each person is taking to perform the task at hand.
For companies with an incentive plan, this really helps in maintaining lean goals. With quantifiable, documented evidence of how each person is doing in the company, employee reviews and progress tracking during training programs is simplified. The goal here is to create a paperless office and measure its performance with a series of metrics to create a world company with a world-class environment.
These waste issues can be resolved through the use of document management systems that provide storage, versioning, metadata, and security, and boast indexing and retrieval capabilities. Document Management (DM) is an electronic system or software that stores and tracks documents, images, and scanned paper documents. Enterprise Content Management (ECM) is the parent of Document Management. Document Management is a subset of Enterprise Document Management Systems. ECM covers document management, Web content, and collaboration with other companies’ data, workflow management, and scanning. All of these systems are controlled through Digital Asset Management (DAM), which performs the following functions:
• Storage—This stores documents in places where they will be easily accessible. It will also mark when the item was saved. This speeds up file retrieval through date searches. Some of the ECM uses cloud computing to either store or back up the data.
• Retrieval—This allows for abbreviation of the filename that will represent what the file is. For instance, the monthly billing for April reads: “Monthly Billing April 2011.” This makes it easier to find. Complicated queries with Boolean expressions of AND, NOT, and OR can be performed.
• Distribution—This allows for sending as an e-mail attachment, or a protected document, and allows for sending to all or a select few. There are many other options that can be used for the distribution for internal and external collaboration.
• Security—There is a secured firewall with all the password combinations and protection.
• Work Flow—This can help management detail how each worker is performing the tasks. They will be able to see the problems and queries in each of the work centers. In some of the software, a simulation teaches how to expand and maximize the workers’ performance by setting up the parameters of a shorter work time and asking the system to simulate the scenario and see whether this is possible within the current work-flow environment. If the system comes up with a better solution, it will show the new network and new chain of responsibility.
• Collaboration—This will enable the ECM to communicate to trading partners on scheduled or timely bases. The option exists to allow outside partners to view files and data and vice versa.
• Versioning—This saves older versions and updates documents into newer version formats. This process can be automated or kept as an on-permission basis.
• Publishing—This version allows for the creation of a Web page using available data. It can be published by being sent as an HTML document.
• Content Virtualization—This is an important part of the productivity improvement initiative of the work-flow analysis. The system uses graphics to represent data to enhance the analysis.
• Searching—This is all about indexing the products so that it is easier and faster to retrieve the data. Are keywords an option? How many keywords are linked to the item? Herein lays the ultimate paradox: If an item has too many keywords linked to it, the search process is slowed. However, having the item indexed properly maintains specific records. There must be a happy medium. Searching uses a few key concepts in its quest to represent all types of queries:
• Normalization—This is the process used to expand the abbreviations and acronyms to full, uniform, and correct terminology. For instance, one supplier may list black ballpoint pens using the abbreviations “Black,” BLK,” “Pen Black.” Another supplier may refer to the same pen as “Ballpoint, BK.” Through normalization, both abbreviations are expanded to the uniform description “black ballpoint pen.”
• Rationalization—This incorporates only the data that every supplier provides. The common standard is to expand to include all content categories.
• Categorization—Items are categorized so that the computer can sort all categories of the item depending on how specific the search is. For instance, in searching for drills, all power and cordless drills in the category from all vendors are listed. A more specific search of cordless 3.8″ drill will result in a list of all the suppliers for this size of cordless drill. This is an excellent technique for using category management in a marketing scheme. An entire category can be sorted and its performance measured in comparison to others over a specified period. Available categories include the United Nations Standard Product and Service Classification (UNSPSC) agency, which attempts to classify all products or the National Hardware Retail Association (NHRA), which attempts to break up all the items into departments like Sporting Goods, Toys, Tools, Building Products, Electrical, Plumbing, and so on.
Mobius Software: A Division of ASG Software
Mobius software allows for a significant reduction in the number of copies used in the company and also forces proactive decision making. The system digitizes printed documents off the mainframe computer. To access a report, click the Mobius icon, which opens a screen separated by departments. Click the department of choice, and document retrieval by name or document number is permitted. The software allows for scanning and printing any section or all of each document.
The ability to become more proactive in the use of the software becomes more apparent as the software options are explored. In many companies, data is listed only in a printed document and not on file. This system performs data mining on the electronic documents. For instance, if a document lists all the sales of the entire country, it can be separated out by division and then by sales representative. The data can be filtered by most logical operators. For instance, to download all sales above $300,000 for the months of January through March in the Northeast region, the digital information is passed to an Excel spreadsheet, Access database, or SQL database. The analytics needed to show better presentations to a management group or employees is easily accessible. After the data is downloaded, it can be presented in a graph, it can be sorted, or all kinds of analytical analysis can be performed on the information to add to the knowledge base.
System Advantages
Saving in paper use becomes apparent. When six 50-pound boxes of green screen paper are used daily for miscellaneous reports, Mobius cuts the paperwork by 50%. This is a savings of six 50-pound boxes of landscape paper per day. This represents 6 × 50 × 360 = 108,000 pounds of paper saved per year. The letterhead paper has a savings of two boxes per week. The savings here are 2 × 50 × 52 = 5,200 pounds of paper saved per year. The total for all the forms is 113,200 pounds of paper saved per year.
Lean Savings
• The 113,200 pounds of paper saved at $0.50 per pound(5) is $56,600 saved per year.
• The programming change backlog time is a soft issue. With Mobius programming change options, six months of time can be saved by permanently changing how to view forms, group documents, or sort data. The data can come from existing reports that may be the only depository of the data. Two of 25 programmers can be taken out of the program change stream. Each programmer typically makes $55,000 per year with salary and fringe benefits. This is an $110,000 savings per year on personnel costs. The purchasing and marketing group also becomes more productive, but it is hard to put a direct measurement on this.
Total Lean is $110,000 + $56,600 = $166,600.
Green Savings
• From Tables 4-3 and 4-6 in Chapter 4, “Transportation Management System (TMS),” a tree produces roughly 800 pounds of paper. Dividing 113,200 by the 800 equals a savings of 142 trees per year.
• As documented in Table 4-7 in Chapter 4, a healthy tree stores about 13 pounds of carbon annually.(6)
• Savings in CO2 is 13 pounds.
• It may take up to 10 years before the tree can start producing at the ultimate level. So for every tree cut, it will take up to ten years to hit this maximum 13 pounds of CO2 out of the atmosphere. With an average of five years to represent the loss of carbon dioxide absorption, there are five years of loss for each tree cut and replanted.
• The amount of extra CO2 taken out of the atmosphere is 13 × 5 × 142 = 9,230 pounds of CO2 per year.
The Lean and Green summary of the Mobius system is $166,600 saved in paper and 142 fewer tress cut, enabling the environment to extract 9,230 extra pounds of CO2 per year.
Oracle Content Management
Oracle Content Management adds further credence to the Lean and Green Savings of document management. The paper brings into perspective the internal savings which is considered internal supply chain savings. Now it is necessary to deal with the external supply chain events in a more expeditious fashion in order to lower the cost of operations.
By permission from Oracle, included here is the actual white paper that demonstrates the Lean and Green Savings that can be gained through the use of Content Management.
Go Green with Oracle Content Management(6)
An Oracle White Paper
November 2009
Introduction
Organizations are constantly looking for ways to cut costs, but don’t realize that those cost cutting measures may also have positive environmental effects that can increase goodwill and shareholder value. Oracle Fusion Middleware solutions provide tremendous return on investment, but also make your organization more environmentally conscious or “green” by cutting the consumption of electricity, paper, fossil fuels, and the emission of greenhouse gases. Many organizations around the world are utilizing information technology solutions to realize their green initiatives. To quantify these efforts, Oracle has created the Oracle Document Management Green Calculator. This online tool, and the accompanying spreadsheet, will enable you to see how your organization can effect environmental change by moving printed information online. This document will help explain the tool and provide background information on how these figures were arrived at.
There are many government-sponsored green initiatives currently underway already. For instance, in 2003, the United Nations Economic Commission for Europe enacted a strategy to form a “Roadmap for Paperless Trade.1” This sought to eliminate the paper bottlenecks created by customs during the trading process. The commission discovered that by moving from paper document processes to electronic technologies, they increased security and transparency in supply chains and provided both government and private sector with higher revenues and costs savings of billions of dollars a year.1
Several local governments within the European Union have also adopted similar green initiatives. In 2005, Styria, Austria, launched its green initiative for reducing paper in favor of managing content electronically. Styria reduced the time consuming and expensive generation and circulation of paper used during the parliamentarian process. Additionally, this enhanced the transparency of parliamentarian processes and public access to documentation. It was the first workflow program in Europe which allowed parliamentarian work without the use of any paper. Parliamentarians use this program from the first day of a new idea or legislative initiative until the final decision and voting of the parliament. This program saves up to € 200.000 per year and hastens the legislative process by reducing the average amount of time for producing new laws from two months to two weeks.
Another effective example of government green initiatives can be found in Germany, which has established an eGovernment-system for the handling of the “Ordinance on Records of Proper Waste Management,” now mandated by German law. Using this green paperless system, a formerly very complex administrative procedure containing a number of forms and handwritten signatures was replaced by a more manageable electronic method. This method contains a qualified electronic signature methodology as well as the mandatory archiving of digital certificates, thereby improving workflow. The rationalization and simplification caused by the project benefits both the public and private sector. A nation-wide deployment could lead to savings of approximately 50 M.€ ($63.6 Million US) per year, 80% of this sum being saved in the private sector.
Oracle Content Management
Oracle Content Management enables organizations to control the creation, routing, approval, and publishing of documents. Many organizations use documents in paper format such as invoices, patient records, insurance forms, and corporate policies. These documents are typically copied and dispersed to wherever they are needed—often to too many disparate locations. By converting these paper based documents and processes to electronic procedures, a single copy can be accessed electronically from any location without it being printed, shipped and then later archived or discarded.
Calculating Return on Investment
With content management, return on investment is typically calculated based upon processing speed. By processing invoices faster, an organization requires fewer people to process those invoices, which makes up the largest savings. Often there are additional savings due to cash flow or discounts. An accounts receivable group will show how cash inflows or days sales outstanding have improved. An accounts payable group will demonstrate how invoices are paid faster, taking advantage of discounts for early payment. A large real estate company reduced invoice processing from $33 per invoice to $2.75 per invoice using Oracle Content Management. Most of this gain was due to processing invoices faster by having them electronically available in the transaction processing screens. By processing invoices faster, they were able to reduce their invoice processing team from 25 people to 5 people. Another company reduced A/P cycles by 20+ days, reduced their billing cycle by months, and is saving at least $100,000 annually, and has been able to provide substantial ROI within months.
Call centers will show how customer call times have dropped based upon faster answers to customer questions, and how leaner staffing can address the same call volume. A large telephone utility cut call center times by as much as 75% by implementing content management.
Beyond faster business processes, there are other ways to show return on investment as well—paper costs, shipping costs, and storage costs, while not necessarily the largest returns, can nonetheless contribute to the overall return on investment a company can realize from content management. These areas have direct correlation to an organization’s green initiatives by reducing the usage of trees and oil, and reducing the emissions of carbon.
Customer Profiles
Embry Riddle
Embry Riddle is an aeronautical university with 130 locations worldwide. Universities are highly information intensive—applications, financial aid forms, insurance documents, transcripts, housing information—admitting and tracking each student generates a tremendous amount of information. Embry Riddle typically kept a copy of each document at the campus where the student attended, and forwarded a copy to the central office. Often these documents would also have to be duplicated at other offices. By implementing Oracle Content Management, Embry Riddle was able to have a centralized server to store the information, where any location could access it. This made student, loan and payment processing faster, and also cut paper and shipping costs.
Embry Riddle also estimates a $100,000 annual savings in shipping costs.
Swedish Medical
Swedish Medical is a care provider collection of 4 hospital locations and 70 clinics located in Seattle, Washington. Content produced includes photocopies of insurance cards, consent forms, paper records, reports, patient health information and business information. At Swedish, paper documents were shipped and stored, faxed and couriered between clinics, hospitals, and offsite storage. With Oracle Content Management, electronic faxes are ingested into their content management system, resolving redundancy, image quality and access time issues.
While implementing Oracle Content Management, Swedish, along with their partner ImageSource, also integrated it with their Epic Electronic Medical Records System. Switching to Epic required a vast amount of retraining of their personnel.
Rather than printing, shipping, and storing training materials, they created a dynamic training system that enabled users to select the training they required.
Swedish also estimates that they save about $200,000 in shipping costs annually.
Standard Forwarding
Standard Forwarding Company was started in 1934 and has grown from a dedicated contract carrier for John Deere to a diversified Midwest regional LTL (Less Than Tuckload) carrier. Their fleet of 300 tractors and 790 trailers operated by 430 drivers allows them to provide a variety of effective transportation services. Standard Forwarding’s commitment to state-of-the-art information technology meant they wanted to provide a reliable and scalable content management solution to minimize the duplication of efforts in company processes and procedures. In order to meet these specific goals, Standard Forwarding, along with partner Midland Information Resources, integrated Oracle Universal Content Management with their Carrier Logistics software to automate invoice processing and enable secure e-mails. This saved the company more than $150,000 annually by automating the invoice process and eliminating associated manual processing and postage costs.
Emerson Process
Emerson Process is a diversified global technology company that provides products and services for a wide range of industries, commercial markets, and end-users, including consumers. Emerson wanted easy global search and retrieval capabilities for Engineering and Quality Documentation and hoped to eliminate millions of pages of documents that were being printed each year. Emerson’s implementation was done with the help of their Oracle implementation partner. “Emerson started out with one implementation of Oracle Content Management,” said John Klein, VP of Business Development for Redstone Content Solutions. “When they saw what it could do, it quickly expanded to many more projects.”
Based on a Forrester study2, just one application at Emerson will realize a total savings of $574,354 in printing costs and $158,074 in shipping costs including gas, tires, and vehicle maintenance in one year. Today, Emerson has over 200 applications using Oracle Content Management.
Missouri Division of Professional Registration
Missouri division of Processional Registration handles professional licensing for industries such as cosmetologists, barbers, and dieticians. They handle over 400,000 constituents in 240 professional trades, and 39 boards. This results in twelve million new documents every year. The Division, along with their implementation partner Tallgrass Technologies, had a goal of improving the processing of licenses. They reduced license issuing time from 3 weeks to 2 days, resulting in a tremendous return on investment. They reduced filing costs by 76%, and reduced copier costs by 62%. But they also reduced paper consumption by 50%, and eliminated 90% of mailing, shipping, and other delivery costs.
Green Calculator
Paper Savings
The savings realized by these companies can be translated into positive effects on the environment. The Oracle Document Management Green Calculator works on commonly accepted figures:
• 1 tree makes 16.67 reams of copy paper or 8,333.3 sheets
• 1 ream (500 sheets) uses 6% of a tree
http://www.conservatree.com/learn/EnviroIssues/TreeStats.shtml
Oil and Carbon Savings
The industry standard percentage for fuel as the cost of hauling is 43.5%.
http://www.mlive.com/businessreview/western/index.ssf/2008/06/shipping_costs_manufacturers.html
After removing 6% of Emerson’s shipping cost for profit, we take 43.5% of the remainder for our calculation (40.89% of the original number). We are not calculating the cost of oil and tires to run the trucks, but that is an additional area that could be calculated.
After accounting for how many barrels of oil have been used in shipping, you can calculate how many pounds of carbon were released into the atmosphere. There are 9 gallons of diesel fuel in each barrel of oil, and each gallon of fuel burned releases 22.2 pounds of carbon.
Overall Results
When we add the results for all of these customers, we see savings of thousands of trees and barrels of oil, and tons of carbon emissions avoided.
Other Benefits
Real Estate
Not storing paper has two benefits regarding real estate—paper storage space and office space. Swedish is targeting 60% cut in storage costs—a $600K annual savings—by not having to store documents in paper form. This is space that would require energy consumption for heating, lighting, and humidity control, providing an additional green benefit by avoiding those energy costs. Beyond that there is also the impact on the environment of using the physical space as a warehouse as opposed to, say, a wetland reserve.
Another example of the real estate impact of storing physical documents is the fact that a paper document is only available at a single location. By storing documents electronically, they can be accessed in multiple locations, even simultaneously. PG&E (Pacific Gas and Electric) is implementing electronic documents because employees can access them from home as they perform their business processing, further saving on real estate by reducing necessary office space.
Lifestyle Benefits
As well as reducing real estate requirements, putting documents online reduces the number of employees who are commuting to an office. An employee commuting to work has environmental impact in terms of fuel consumption, tire consumption, and carbon emissions. By enabling employees to work from home, these effects on the environment are removed. While this has tremendous impact on the environment, it also has an impact on employee lifestyle.
Some organizations are beginning to assign lifestyle scores to corporate initiatives. While analyzing return on investment and other facets of a project, organizations can assess the impact on employee lifestyle. These organizations use the lifestyle benefit factors in recruiting to demonstrate that they are a more attractive employer.
Culture Change
Making these kinds of changes in your organization can require a huge culture change. As Nancy Richards of Swedish Medical Centers put it, “In the healthcare industry, it’s not real if it’s not on paper.” Many organizations have had similar concerns and even hesitation to change their current standard operating procedures in favor of green initiatives. Beyond the clear ROI of improving business processes with electronic documents, presenting the clear ROI of adopting green initiatives to the Chief Compliance Officer or other executives, or arming your CEO to publicize these efforts with shareholders in earnings reports can have a positive impact. The key is to find paper-based processes that can benefit from electronic documents. Broadening those use cases to other business processes that can benefit from going to electronic documents compounds the gains. Furthermore, constituents, possibly in other departments, such as facilities or operations who would also find clear advantage in benefits such as lowered real estate and/or storage costs can further increase the green benefits. Going green always means good press, so you should take up the subject with your organization’s PR department to see how well such initiatives would resonate within your industry, potentially leading to a competitive advantage.
Conclusion
From various examples we have seen how companies can report to their shareholders, employees, and customers the impact they have had on the environment using Oracle Fusion Middleware solutions. Organizations which use Oracle Fusion middleware solutions are also well-positioned to meet their business challenges as they now have a scalable and manageable technology platform which is hot-pluggable—meaning it can be integrated with other standards-based applications and tools.
More and more, we are seeing materials written for executives of all ranks, industrial designers, and laypeople eager to learn more about eco-friendly products and business practices and the benefits gained from their implementation. Oracle Corporation proudly stands among organizations committed to bettering our environment through green initiatives—both as a provider of leading technology solutions to meet green initiatives at all levels around the globe, as well as an implementer of such initiatives throughout our own organization.
2 Further Topics: “Total Economic Impact of Oracle Universal Content Management,” Forrester Research, Dec 2007.
Oracle
Go Green with Oracle Content Management
November 2009
Authors: Brian Dirking
Oracle Corporation
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References
(1) “Going Green? Choose ECM,” Perspective Software, http://www.aiimhost.com/whitepapers/Perceptive_GoingGreen_ChooseECM.pdf.
(2) Environmental Protection Agency, Paper Recycling Frequent Questions, http://www.epa.gov/osw/conserve/materials/paper/faqs.htm.
(3) Environmental Paper Network January 2008, “Increasing Paper Efficiency” Fact Sheet, http://www.borealbirds.org/resources/factsheet-epn-paperefficiency.pdf.
(4) Environmental Protection Agency, www.epa.gov.
(5) http://eetd.lbl.gov/paper/ideas/html/copyfactsA.htm.
(6) “Go Green with Oracle Content Management: An Oracle White Paper,” November 2009, http://www.oracle.com/us/products/middleware/content-management/059500.pdf.