AALTO UNIVERSITY

Case Finncontainers: Estimating the Environmental

Effect of Green Information Systems / e-Invoicing
ICT Enabled Business Process Development

Group 7
10/11/2014













Submitted by Group 7
John Opoku Aduadjei john.aduadjei@aalto.fi
Vipin Muraleedharan vipin.muraleedharan@aalto.fi
Deepti Tandon deepti.tandon@aalto.fi


Introduction
Ms.Sarianne Reinikkala, the managing director of Finncontainers, is pensive about the fact
that most of the suppliers still rely on paper based invoicing system though the company
has actively stood for its electronic counterpart. Finncontainers have made considerable
investments in e-invoicing system, convinced of the reduction in work hours and processing
costs. Ms. Reinikkala is in pursuit of ways to establish the benefits of e-invoicing over paper
invoices.

Drivers of the e-invoicing idea

E-invoicing is an integrative cum innovative thought that can bring about positive
environmental changes as well as a great deal of process improvement. The following
aspects have contributed to its development in recent years
1) Emergence of corporate responsibility and environmental considerations as its
prominent manifestation.
2) Rising emission levels and its adverse effect on climate changes prompting greater
regulatory constraints.
3) Negative impact of the emissions on the GDP and associated financial implications
4) Large volumes of invoice generation (around 50 billion annually in Europe alone)
5) Modern, open-source, internet enabled systems that offer a paradigm shift from
expensive, partner specific technologies like EDI, hence enabling greater participation
from SMEs
6) Support from International trading organizations, EU etc in context of the processing
cost savings, time and material savings, and decreased number of errors in the e-
invoicing procedure

Outgoing paper-based invoice

Essential components of an outgoing invoice A4 sheet paper + Envelope

Associated CO2 emissions with paper & envelope 15.2 gm each

Total CO2 emission = 15.2 * 3 = 45.6 gm (inclusive of invoice meant for archiving)

CO2 emission involved in traditional postal services = 21 gm per invoice

Annual CO2 emission by franking machine = 103 * 34.2 gm

CO2 emission by heating machine = 96 * 33.8* 0.229 = 743.06 gm


Outgoing electronic invoice

One CD can accommodate all incoming and outgoing invoices for a year.

CO2 emission resulting from disposal of 2 CD-ROMS = 20 gms (including backup copy)

CO2 consumption by mail server = 2.76 gm per invoice

Electricity consumption per invoice = 0,000006 kWh/KB * 20 KB = 0.00012 kWh

CO2 emission associated with electricity consumption= 103 gm * 0.00012 = 0.01236 gm per
invoice

Incoming paper-based invoice

Storage of incoming paper invoices are exactly identical to that of outgoing invoices.

CO2 emission involved is prominently from electric power consumption by the heating
machine.

Incoming electronic invoice

Archiving the incoming electronic invoice is similar to that of outgoing electronic invoice

Electricity consumption per invoice = 0,000006 kWh/KB * 20 KB = 0.00012 kWh

CO2 emission associated with electricity consumption= 103 gm * 0.00012 = 0.01236 gm per
invoice

Finncontainers manages 1310 outgoing and 840 incoming invoices annually

Annual emission of paper based invoices

Total annual emission of CO2 by outgoing paper invoices = (66.6 gm per invoice * 1310
outgoing invoices) = 87.3 kg

CO2 emission by franking machine= 103 * 34.2 gm = 3.6 kg

CO2 emission from heating = 743.06 * (1310+ 840) = 1597.6 kg

Total = 1688.5 kg of CO2 emission

Annual emission of e-invoices
Outgoing and incoming combined = ((1310+840) * (2.76 +0.01236)) + 20 = 6 kg
As observed from the above calculations, the emissions by paper invoicing system is
enormously huge compared to e-invoices.

Now let us compare the time and effort involved in both the processes.

The incoming paper invoices have to be converted into a text searchable format by scanning
but this process is highly sensitive to errors. So a manual review and verification is required
post this process. Both scanning and verification are highly time consuming. Moreover,
scanners used for this purpose are highly expensive.
Time involved is also much higher in paper based system. To enter data into an invoice form and
cross verify it, it takes approximately 4 minutes and 40 seconds. Also, sending it by traditional postal
method takes another 3 minutes and 46 seconds. And once the payment is made, it takes 25
seconds per invoice to verify the data, even when processed in batches.
For the electronic counterpart, the manual effort can be eliminated and the process can be
automated. Altogether, it takes 5 minutes per invoice.
Incoming paper invoice also takes around 5 minutes as compared to 1.5 minutes taken by its
electronic counterpart.

Challenges
A basic e-literacy has to be imparted to the employees in going ahead with e-invoicing
system
Though the direct impacts of e-invoicing are negligent, the indirect impacts are many and
hard to estimate