Solving the Challenge of Paper Exceptions

Feature Article | October 4, 2004 by admin

For centuries paper has been the lifeblood of commerce. From bills to payments, small businesses, large corporations, non profits, and governments have run their organisations using paper. Why then even today, after the ERP revolution, does paper remain at the heart of business processes? The answer is simple. Paper is the most flexible medium for communication and transportation of information between humans. Paper is easy to use, simple to understand, and quick to notate.

Paper touchpoints

The goal then for organizations automating their business should not be to build the paperless office, but rather the paperless process, where paper is a touch point for users and third parties but is not the core of the business process. This approach retains paper as a simple medium for communication with humans – a one-way user interface. But paper is moved to the edge of the process and shifted to electronic information where it is most effective. The result is an adaptable and flexible supply chain.
To understand this, one has to consider the finance department at the heart of the supply chain. The finance department is split into different functions and departments that handle purchasing, order entry, credit control, and payments. Each function is inter-dependant and linked to the other as well as to other parts of the enterprise. Although the finance department’s investment in for example SAP software has changed the speed with which information flows, the sales order still arrives on paper, billing still occurs on paper, the purchase order is still paper, the payment is often made on paper, the delivery note arriving in the warehouse is on paper, the shipping labels are still on paper, and so on.

Exceptions that can break the process

The procure-to-pay process is a good example of how paper documents remain integral to the process. In an ideal world, a company mails the purchase order to the supplier; the supplier’s bill is matched against deliveries and purchase orders electronically, and then passed for approval. Once the payment has been approved, the company must pay the supplier, and the transaction is complete.
Now consider the exceptions to this process. Not all suppliers have email, so companies must be able to email, fax, or print purchase orders. Not all suppliers speak the same language, so they need to be multi-lingual. For a purchase order to be processed quickly, it needs to be well branded and clear and must inform the supplier of what, where, and when to ship. It must also tell the supplier who to bill and how to get paid. Yet, not every supplier’s bill matches an order, not every supplier has an account, and not every bill has the right information. Some bills are lost in the mail. Approvers may be located offsite. Nor is every bill approved. These exceptions put paper back at the heart of the process.

Document process automation layer

One solution is to invest in additional purchasing technology to bolt onto SAP to tackle each part of the process or to buy an invoice processing package. This approach is sufficient if an organization has no prior investment in training and development. But to move users from SAP post implementation involves a leap of faith, new user training, and a major business commitment. The second solution is to force suppliers to use pre-defined standards. This approach may work for global corporations but is unrealistic for most businesses. The third option is to put a document process automation layer around the SAP solution to manage the flow of documents.
This third option allows the smooth flow of paper or electronic communications, managing the exceptions at the outer edge of the business while the SAP application runs the core process. The document process automation layer delivers paper to users or suppliers as required and electronically captures and lifts content from paper and can even initiate transactions to reduce data entry and approval times. Such a solution also allows users from any location to instantly share documents using the SAP User interface or over the Web.

Choosing the best medium for the recipient

In action, document process automation takes all the documents coming into a process, including paper-based communication, coverts them to electronic images and stores them into a repository. Content can be extracted from these documents and passed into SAP environment for review, approval or data entry. Document process automation also reformats and enhances all communications leaving the SAP environment destine for customers or suppliers. These communications are converted into the best medium for the recipient – from paper, fax, email, XML or any number of combinations and automatically cross indexed, linked and stored in the repository. Users are given instant access to an image of the original document and all related documents without leaving the SAP environment via the document process automation layer.
An example of this is found in credit control. To recover payment the credit control team send bills and statements to customers. Once a bill is due the credit control clerk makes a call to the customer asking for payment. If a dispute arises over a bill the credit control clerk needs to send copies of documents to the customer, extending cycles and resulting in longer day’s sales outstanding (DSO). With a document automation layer in place, the credit controller has instant access to every communication made from the last bill to the customer’s purchase order and these can email or faxed straight to the customer in real-time. This reduces the day’s sales outstanding, reduces call times and operational costs while dramatically improving customer service.
As a result, the process is not tied to paper, yet paper can remain part of the process, when and where it’s better for users. This approach allows documents to span processes, allowing users to work more efficiently by focusing on the job at hand. The more flexible working environment improves staff morale and drives up capacity. The result is that customers are more satisfied, suppliers are more responsive, and workers are more productive.

Steve Carter

Steve Carter

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