Hello Folks, hope you guys enjoyed my lastpost on the Go Green stamps and the initiatives of USPS, hope some of you even got your hands on one of those collector stamps that indicate the way we need to treat mother earth, starting with some simple tips from home.
This times post is more Procurement specific and will talk around the areas of carbon footprint that are impacted by Purchase Orders and Contracts.
If we weigh the odds, procurement transactions lean mainly towards these 2 business objects that drive most of the enterprise supply chain processes
When I talk about Purchase Order, keep in perspective that am also referring to all types of orders like STO, Scheduling agreement, Distribution order, Sales Order. Note some companies have automated the entire ordering and receiving processes and some still follow the traditional techniques.
Most of you already know what am covering in today’s Blog, you would have already got a glimpse of where the discussion is heading.
In today’s Blog, we will specifically address only the Business Object: Purchase Order
In the next Blog, we will discuss the Carbon Footprint reduction with best practices in the Contract Management space addressing the Business Object: Contracts (this will cover all categories of contracts, Purchase, Sales, Real-estate: all enterprise wide related contracts)
What are some of the worst practices that enterprises end-up doing that impacts Carbon Footprint?
1) Still follow traditional paper forms of Purchase Order processing
2) Every purchase order has with it the follow-on documents like Goods Receipt, Service Confirmation, Invoice and some enterprises also expect their Suppliers to fax in or mail in a Purchase Order acceptance document, adding to more paper in the enterprise
3) A standard Purchase Order can have at average 5-150 line items for processing, some times the PO schedule is broken down into staggered delivery schedules adding more paper on every transaction.
4) This is no joke, I have seen one of my clients maintaining files for Purchase Orders for a trail of upto 5 years for Compliance reasons, imagine the amount of paper, files storage locations, they require to justify a non Sustainable process.
5) Some clients even have amendments that follow the initial Purchase Order making it even worse for printing more paper
6) In the Standard communication method setting, they have Fax as the standard communication protocol for the Supplier and they need to use up ink which is another process that leads to increasing carbon foot-print.
The list is end-less, and it’s no exaggeration that customers at some installation bases, still continue to use these traditional methods, the adoption to B2B needs to be big bang, no matter what the investment it, it will go a long way for the enterprise and also for the environment.
What are the best practices available for immediate on-boarding?
1) Use Supplier Self Services (SRM-SUS) component to automate the Purchase Order Processing process, PO transmission, acknowledgement, changes amendments etc, also supplier can electronically submit a GR, ASN and a goods receipt via eCollaboration
2) Use other standard P2P EDI channels, if SUS is going to be too difficult to transform into. interesting read: PIDX, CIDX google it, you'd enjoy
3) Use e-mail communication at minimum for PO processing, so that you don’t have to print.
P2P and B2Bare the opposite sides of the table, a customer PO becomes a Sales order for processing, against which, we need to pick, pack and ship, adoption of the B2B channels will help cut the carbon foot-print in every stage of the enterprise processes.
Ariba Supplier network and HubWoo are also platforms where you can do the collaboration via a subscription.
A typical process mentioned in the SRM WIKIS on Supplier order collaboration
A typical document exchange in an SAP e-Procurement process
Some customers have also gone the extra mile in building their own third party custom EDI solutions, forcing suppliers into electronic collaboration; this is the way forward for most of the companies to leverage their capabilities.
During my stint at an Oil field services major being a supplier to an Oil company major, 70% of automation in processes was achieved using standards like PIDEX (Petroleum Industry Data exchange) and CIDEX (Chemical Industry Data Exchange)
The American Petroleum Institute's Petroleum Industry Data Exchange (PIDX) and the Chemical Industry Data Exchange (CIDX) are to cooperate on developing standards for XML-based electronic business transactions within and between their global industries. With combined annual sales of more than 2 trillion dollars, the chemical and petroleum industries represent a significant market for business-to-business transactions.
In our next topic
We will be talking Contract Management, we would refer to an enterprise wide Contract management situation where we get truck loads of paper forms that are governing elements, some companies want to see it in physical and some have an electronic repository.
We will see how SAP Contract Life-cycle management and SAP SRM Central Contract Management can help reduce carbon footprint powered by top notch best practice processes.Don’t miss that one, as we will talk the whole nine yards around best of breed contract management processes.
Follow us on twitter @SAP_Procurement and @tridipchakra