Greening the Supply Chain at Imperial College London using ICT John Whitlow – Head of Purchasing

Areas to be covered in the Presentation AGENDA Imperial College London – A Brief Background of the Institution Sustainability in Purchasing – A Different Focus The Initiative – Improving the Environmental Performance of the Acquisition Process in the Supply Chain Our Approach using ICT Environmental & Social Benefits Close - Questions

Imperial at a glance The Institutions objectives: world class scholarship, education and research in science, technology and medicine interdisciplinary collaborations communicate and share knowledge Established in 1907 Turnover of £700 million Academic faculties: Engineering Natural Sciences Medicine Business School

Sustainability in Purchasing – A different focus Sustainability in purchasing often looks at the complete product life. Rather than focusing on the complete product life cycle for this initiative we looked at one small part of the life cycle to try and minimise our environmental impact. The focus was to look at the purchasing and pay finance business process to see if we could yield environmental and process efficiency benefits. By using ICT in a smarter way we thought we could deliver all of the above benefits. That was the challenge we set ourselves!

The Initiative – Improving Environmental & Operational Performance for the Finance Department We examined our procure to pay processes to see how technology could be used more efficiently and effectively. The Project had 2 main drivers : 1.Look at the Procure to Pay cycle to see how we could improve sustainability & efficiency by removing unnecessary resources 2.Review and utilise the latest software and technology including on-line catalogues, business to business trading, xml order transmission, web-based storage of documents, and the use of electronic invoice exchange.

The Project Objectives How could Imperial make a serious impact and improve our environmental and operational performance whilst trading with our key suppliers? A project team was established with the following objectives: To improve operational efficiency To increase customer satisfaction To reduce the number of paper documents internally & externally To reduce energy consumption To minimise the amount of transport used in this part of the procurement cycle As part of this project a cost benefit and environmental impact analysis was undertaken to determine how we could use electronic procurement software systems (i.e. Green ICT) to streamline our processes and that of our supply chain to minimise the environmental impact of our operations. Project costs - Total persons days was 360 and the cost was £174k.

Our Purchasing Environment The Product Mix Spend of £300 million per annum High volume of transactional activity 1,500 buyers across the organisation 160,000 purchase orders sent out to our suppliers per annum 200,000 invoices received from our suppliers per annum 240,000 invoice approvals from departmental buyers required Complex supply chain with 6,000 active suppliers covering all of the scientific disciplines and central service functions Majority of purchases are covered by a purchase order with a small number of exceptions

How did we improve our Purchasing System We use Oracle 11i as our ERP system We implemented the Advanced Procurement Suite and the Oracle Accounts Payable Module in 1999 All of our purchasing is now electronic – No paper is used! Our eProcurement ambition is to trade with as many of our mainstream suppliers on a B2B basis. This allows us to streamline our purchasing process and improve our environmental performance We trade with 24 of our largest suppliers using “punch-out” technology. All of their catalogues are on-line. We do not manage supplier content. This removed 1,000’s of catalogues taking up valuable space! All of these orders are transmitted electronically using XML messaging All of our other orders are ed/faxed

Our Payables System – Pre 2006 We processed on average 200K paper invoices each year The majority of invoices were posted to us and were then keyed in by staff in our central Accounts Payable Team. Once keyed and checked invoices were photocopied and posted out via the internal mail to administrators in all of our departments ready for authorisation. This equated to 200,000 items of mail being sent out each year The departmental administrators would then check and forward invoices on to staff in their own department for final approval Unless departmental staff notified central Accounts Payable of any issues with an invoice it would be processed by the settlement date if below £10K in value All invoices above £10K in value were automatically put on system hold and required active authorisation before approval Lots of call and queries from suppliers about payment issues

What did we do to improve this process? We had good quality purchase order data so by leveraging existing Oracle e-business technology and an electronic invoice exchange we were able to receive 50% of our invoices electronically We used “fuzzy logic” to match invoice line details with purchase orders so that we achieved a 90%+ match rate making most of the transactions “touch- less” We re-engineered the invoice approval process so that stopped sending out paper copies and this instantaneously removed copying and 200,000 paper documents When an invoice was matched it created an alert to buyers advising of payment allowing passive approval All invoices including the electronic versions are held on a web based portal freeing up valuable office and storage space

Environmental & Social Benefits Combined effect of project was to remove 2.3m pieces of paper – benefits Imperial and our supply chain partners A saving of 202,000 C% Envelopes A saving of 19,512 CO² kg in paper manufacturing A saving of 296 trees A saving of 112m litres of water A saving of 510 kg of air pollutants A saving of energy resources related to transportation Freeing people to engage in more creative aspects of their work Meet our obligations to preserve the natural environment Influence change elsewhere

Relevance to the HE Sector The approach can be adopted by other institutions – the features we used are available on most finance systems Suppliers are engaged across the sector – More activity is underway and low barriers to entry as we use similar suppliers We are using industry standard protocols for transmitting and receiving data Environmental and financial benefits can go hand in hand through use of software – good return on investment Lessons learned Work closely with your suppliers – software, service providers etc Potential for a paperless office in proven Recognise the need for change Don’t underestimate the need to involve all the stakeholders in the process

Thank you – Any Questions