Sustainability has become a critical component in corporate and government sourcing strategies. This is because one of the first steps to be taken towards becoming a sustainable business is changing both the processes by which your organisation purchases through its supply chain, as well as the types of environmentally friendly products and services it buys. But sustainability is more than reducing the impact on the environment. It’s also about taking steps to maximise longevity in the market, recognising that higher energy costs and taxes, as well as stricter government legislation will raise the cost of operations in the long term.
By integrating your e-procurement system with back-office functions, such as compliance and finance, and the corresponding systems such as ERP and CRM systems, you can initiate a paperless internal workflow. This will not only reduce a lot of manual effort, but save greatly on the amount of paper forms and printed documents circulated in your office.
Another contributor to paper savings is invoice integration. If your supplier is able to integrate its invoice system with your e-procurement system, then invoices should automatically be generated from purchase orders, which in turn should be generated from the quote. This will ultimately result in less potential for error and less paperwork. Once you receive the invoice, you’re able to conduct a three-way match of the quote, purchase order and invoice electronically, via your e-procurement system.
A third contributor to paper savings is online credit card transactions, or the use of P-cards. The remittance of payment electronically via a credit card not only speeds up the purchasing process, but alleviates the need for invoices to be created or cheques to be cut.
If you’ve implemented even one of these three best practices and you’re not tracking the paper and energy savings, then you’re missing out on an easy and immediate way to demonstrate procurement’s contribution to your corporate sustainability efforts.
Tracking the paper and energy savings is a very straightforward process, and one you can begin today. Take inventory of the steps in the purchasing process that utilised printed or faxed paper prior to implementing your e-procurement system. Be sure to include the average number of pages each step included (e.g. do your invoices average 2-3 pages?), and then look at the total volume of purchases now performed by your e-procurement system.
Armed with this information, you can do some simple calculations in a spreadsheet to determine the amount of paper you have saved in a given month or year. You can even take that a step further and equate the energy savings (and subsequent carbon emission reduction) that comes from reduced paper production and reduced printer and fax machine usage. Consider this: the production of one ream of paper (500 sheets) equates to 6% of a tree, 27.8 kWh of energy, 6.4 kg (14 lbs.) of greenhouse gas, 180 litres (47.6 gallons) of water waste, and 2.6 kg (5.7 lbs.) of solid waste. To print or fax that same ream of paper would be an additional 10 kWh of electricity and 5 kg of carbon emissions. That may not seem like a lot, but once you multiply these figures with the amount of paper you are saving with e-procurement, the impact could really add up over a year.
Once you’ve calculated the environmental impact of reducing the paper trail, you need to share this information with your executive leadership. This is easy to track and measure, especially once you’ve got your base formula down, and should be done on at least a quarterly basis.
Environmental considerations may not be the primary driver behind implementing e-procurement but, by utilising e-procurement best practices, you can reduce the challenges typically faced when deploying and administering a sustainable procurement initiative. There are nine e-procurement best practices which can help you reduce your environmental waste and implement; and manage your sustainable purchasing programme.
For more information, click here to read our new white paper: Building Sustainability into Your Supply Chain Through e-Procurement.