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The Cost of Paper in the Supply Chain

The Cost of Paper in the Supply Chain. Malcolm McKinnon CEO, SITPRO Ltd Presentation to UN/CEFACT Plenary September 2008. Presentation Objectives. To present SITPRO’s “Hermes” report To demonstrate potential benefits from implementing straight-through data processing = “ STP”

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The Cost of Paper in the Supply Chain

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  1. The Cost of Paper in the Supply Chain Malcolm McKinnon CEO, SITPRO Ltd Presentation to UN/CEFACT Plenary September 2008 SITPRO Simplifying International Trade

  2. Presentation Objectives • To present SITPRO’s “Hermes” report • To demonstrate potential benefits from implementing straight-through data processing = “ STP” • To explain how we are going forward in the UK • To reinforce case for international trade data standards SITPRO Simplifying International Trade

  3. About SITPRO • Who we are: UK’s trade facilitation organisation – world leader in our field • Mission: To make international trade easier • History: Established 1970: • simplified trade documents • better border regulation • international standards • capacity building SITPRO Simplifying International Trade

  4. Objectives of research • Confirm scale of perishable food import and export markets • Identify and value documentary issues arising in this market • Assess potential benefits from replacing current documentary systems with integrated paperless trading (straight-through processing = “ STP”) SITPRO Simplifying International Trade

  5. UK Perishable Food Imports Meat 14% Fish 7% Other Dairy 46% 6% (of which bulk foodstuffs = 30%) Flowers 3% Vegetables 10% Fruit Coffee/Tea 12% 2% Estimated Market Size: £26 billion 2005 SITPRO Simplifying International Trade

  6. Perishable Food Supply Chain 2005 UK perishable food imports/exports = £37 billion SITPRO Simplifying International Trade

  7. Supply Chain Costs • As a percentage of the wholesale product price a key supplier has assessed the costs of his supply chain as: • 64% of berries from Chile • 70% of tomatoes/bell peppers • 80% of apples • Spoilage rates vary from 5% to 30% and can reach 50% for soft fruit SITPRO Simplifying International Trade

  8. Market and Documentation • Substantial UK market with significant supply chain costs • No single company sees or manages the whole movement • some activities, transactions and costs invisible or hidden to participants • Little realisation of true costs of documentation • many companies focus on just-in-time deliveries • Paper documentation is a major administrative burden on business and government SITPRO Simplifying International Trade

  9. Scale of Documentation SITPRO Simplifying International Trade

  10. Incidence of Missing/Delayed Documentation 1.4 million incidences annually SITPRO Simplifying International Trade Source: Consultants’ research of over 500 consignments

  11. Impact of Missing/Delayed Documents • Impacts on both government and businesses • Personnel and time spent in: • obtaining and verifying priority documents • processing deferment claims to recover overpaid duty • recovering missing documentation • physically tying together overall documentation and storing final document sets • Environmental impact of paper documents SITPRO Simplifying International Trade

  12. Impact of Missing/Delayed Documents SITPRO Simplifying International Trade

  13. Impact upon Country of Origin • 7-10 days typically required to assemble documents • 4 government agencies and 5 logistics providers(fruit from analysed African countries) • Impacts upon product shelf life and reduces revenue including to exporting countries – many developing countries SITPRO Simplifying International Trade

  14. STP savings evidence • European Electronic Invoicing report (2007) states € 243 Billion savings by adopting E-invoicing alone across Europe • Gateway Sweden, Finland, Korea all introduced various STP systems with substantial savings • Australia – cane sugar now STP based saving 4.4% of total value SITPRO Simplifying International Trade

  15. Conclusions • Current documentary systems cost perishables supply chain more than £1 billion annually • Consumers pay more than necessary • Development of perishables trade from developing countries inhibited • Potential savings of over £700 million from straight-through processing SITPRO Simplifying International Trade

  16. International requirements for STP • Business process mapping (by trading partners) • Identification of data to be exchanged (Export data import data) • Common data definitions (UN/CEFACT data standards) • Interoperability of data communication (UN/CEFACT message standards) SITPRO Simplifying International Trade

  17. Hermes Research Report SITPRO Ltd www.sitpro.org.uk / reports / hermes.pdf SITPRO Simplifying International Trade

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