Today’s retailers are already struggling to stay afloat in the tough economy while meeting growing shopper demands – in such a scenario, a lack of collaboration with suppliers adds another level of challenges. With insufficient process collaboration, retailers as well as suppliers have to deal with funds/profits recovery, invoice mismatches, fund mismanagement, manual errors, delays, and a load of other non-value added activities. These activities eat away a great deal of time and resources. According to a study by The Byline Research Group, 96% of invoice processing involves keying data from paper; it takes an average of 12 days to process a single invoice; and 25% of invoices are paid late — adding additional pressure in the supply chain.
So, what can retailers and suppliers do together in order to build a seamless network and optimize the order to pay cycle? Here are some thoughts:
Centralized and integrated data
The primary requirement for collaboration is easy access to information at a central location for both retailers and suppliers. This not only provides a single version of the truth, but also offers visibility into every stage of the fulfillment and payment process. When the information is centralized, it becomes easier to forecast inventory requirements; consolidate requisitions from various outlets, geographical locations, and departments; and benefit from volume pricing, discounted rates, or competitive deals from suppliers.
Streamlined procure-to-pay cycle
Enabling complete visibility in order to optimize the procure-to-pay cycle is the next step towards achieving a steady state of collaboration. This can happen through process automation and defining of workflows that put the right data in front of the right people so that they can take timely action. Transparency also enables easier and faster reviews and resolutions. By using a platform specially designed for linking suppliers; retailers can effectively automate payments/receivables, boost monitoring, simplify tracking, and significantly reduce the workload on business resources.
Advantages of collaboration
Effective process collaboration offers several advantages. It improves cash flow while reducing financial leakage or funds loss. It can automate and streamline the process flow and detect the discrepancies in the cycle quickly. Faster procurements and better relationships with the suppliers is just the beginning. A significant benefit achieved by the retailers is higher quality and quantity of promotional deals. With effective collaboration retailers can track, audit, and report deals while providing the feedback loop visibility to the suppliers.
Automated invoice management
We often find that many retailers still struggle with paper-based invoices that require multiple reviews and corrections. Moreover, there is a constant need for follow-ups resulting in tremendous delays. With effective supplier collaboration a robust workflow can be created for:
- Guided invoice submission
- Real-time three-way matching
- Validation and review
- Exception handling
- Tracking and reporting
This can bring suppliers and retailers on the same page and offer several benefits like reduced errors, minimized re-processing overheads, faster processing, and better cash flow to suppliers. Due to effective management of large quantities, value of payment discounted invoices can also be increased, leading to substantial bottom-line savings.
An Aberdeen report titled: B2B Collaboration: No Longer Optional, states that the leaders in B2B collaboration revealed significant gains in terms of a 50 percent reduction in time for cash-to-cash cycles and optimized service levels. Process collaboration can bring many benefits and there is no reason why retailers should not invest in it.