Battle at the edge
On the front lines in the battle to eradicate paper -- where the business touches customers and suppliers -- paper has remained stubbornly entrenched for many types of transactions. But that's also the area where businesses see the greatest opportunity for savings.
For example, Web-based ordering is a great alternative, but it won't work if customers don't want to play ball. "In the early '90s, we thought everyone would go to the Internet. Five years later, we found that we had more paper than ever," says Boren Novakovic, Whirlpool's senior supply chain strategy manager for the North American region. The problem: The appliance maker receives more than 1.5 million orders a year from home builders who still send them in by fax.
Whirlpool couldn't eliminate its fax machines because those customers often work in the field and don't have Internet access. "If they want to do it by fax and we can't accommodate that, they will ... go to another product manufacturer," says Ehrman.
Now Whirlpool captures incoming faxes digitally, rather than printing them out. A new document-exchange system from Esker receives incoming faxes and archives the images to an IBM DB2 CommonStore repository.
In the next phase, currently in pilot, Whirlpool will use optical character recognition (OCR) technology to automatically extract data from faxed forms and route them to its SAP system, which will process the orders and fax back a confirmation.
Extracting data from images is tricky, however. Whirlpool's plan calls for a 95 percent pass-through rate on incoming faxes, but success will depend on a change in business processes: getting customers to use standard forms.
"We'll have a digital nightmare," says Novakovic, if Whirlpool simply converts all of its paper-based processes to digital ones without any standardization or business process improvements.
Raymond James also plans to use OCR to extract content from document images. One challenge, however, is that clients sometimes hand-write changes on the form. Rules must be created to flag such contract changes, Harris says.
Ultimately, Harris would like to create business processes that allow the processing of incoming fax orders to be fully automated. "If we could do that, it would make a huge reduction in staffing requirements," he says. But that isn't likely to happen anytime soon. Raymond James currently uses an automated fax service from EasyLink Services, that captures incoming fax images, routes them and attempts to extract some content using OCR. The system does a good job routing document images, and the OCR pilot has been successful, but that process doesn't work for all forms. "There's no way to guarantee the accuracy rates Raymond James requires," says Bill Fallon, vice president of marketing at EasyLink, so each fax must also be manually reviewed.
Bank of New York has also faced challenges in extracting data from imaged requests. "We're largely dealing with an institutional client base where they each have their own formats -- or no formats. We're doing OCR selectively," Thum says.
The bank has had imaging systems in place for years but has reached a point of diminishing returns. Most business transactions have moved online, but, Thum says, "paper nonetheless remains." Although incoming paper documents are scanned, many originals must be stored for compliance or legal reasons. But while the total percentage of documents remaining in paper form may be relatively small, the absolute numbers of documents coming in by mail and fax are still significant.
As the costs of manual processing increase, the potential for cost savings is providing a strong incentive to push the remaining paper-based processes out of the business.