The Covid 19 pandemic has been causing widespread disruption across global supply chains. However, it has also highlighted pre-existing issues with procurement and forced leaders into rethinking their processes. In particular, the optimisation of long-tail supply chains, which had already been a long time due, is now top priority.
For many companies, the main priority over the past half a year has been to stay above water by reducing costs as much as possible. But even in these deeply uncertain times, there are also long-term opportunities to be realised. The modernisation and standardisation of long-tail procurement won’t just help now – it will also help drive growth long after the pandemic.
In particular, the need to work remotely has emphasised the importance of new procurement operations, such as online purchases, paperless operations, and automation of Accounts Payable. By harnessing the potential of buying online, businesses can promote greater efficiency, transparency, and adaptability to the constant pace of change.
Drive digital transformation of procurement
An increasing number of companies are offering their products and services digitally, whether it’s software-as-a-service (SaaS), online stores selling physical goods, or subscription-based payment models.
Long-tail suppliers typically account for around 80 to 90% of a business’s supplier portfolio. Yet despite this huge figure, these long-tail suppliers only account for an average of 10 to 20% of the company’s total spend. With new digital tools available, combined with the increasing capabilities of many suppliers, companies can now manage their long-tail spend more efficiently and with the same rigour they do for core spending.
By digitising online payment processes, employees can request and complete purchases no matter where they are. Automated online procurement ensures that employees must get an approval before making purchases, thus reducing maverick spend. Whether approval happens automatically according to business rules or by a manager is up to the business. Complete audit trails ensure there’s no missing information, thus reducing the back and forth between employees and accounting teams. Accounts Payable having to do detectives work to try and link countless invoices to the right buying employee in the organisation is a cumbersome administrative process that many enterprises struggle with on a daily basis.
Simplify Accounts Payable processes
Late and incorrect payments have been a recurring side effect of the pandemic, as companies struggle to navigate around furloughs, remote work, and fewer employees. For example, the UK experienced a 209% increase in overdue payments since the beginning of the pandemic.
Through online payments, suppliers are paid instantly. This means enterprises no longer need to spend a significant portion of their time onboarding long-tail suppliers and manually handling invoices from them. Decreasing the workload on Accounts Payable will significantly free up their time to focus on strategic procurement, which is what matters most during Covid-19. By contrast, long-tail procurement should be as frictionless and automated as possible. Accounts Payable should not have to track down employees to link to invoices that pile up. And they certainly should not spend time creating long-tail suppliers in comprehensive accounting systems based on simple online payments. Automating long-tail procurement is an efficiency booster that enterprises cannot ignore - and for online purchases there are huge benefits to reap. Moving spend to online payments can greatly simplify procurement processes all the way from purchase request to posting of invoices and eliminates the expensive and time-consuming process of onboarding long-tail suppliers.
Ensure compliance and auditing
Migrating to paperless operations helps simplify compliance and auditing while giving remote procurement teams full visibility into their critical processes. This presents a big improvement over traditional paper-tracking processes, which are time-consuming and notoriously prone to human error. Also, it’s practically impossible to rely on paper-based operations in the age of remote work.
Utilising cloud technology is the optimal way to facilitate online purchasing processes as it provides easy access from anywhere. And, since every operation happens in the digital space, there’s always a complete audit trail. This also makes things easier from a compliance standpoint, since businesses can enforce company policies and regulations at any scale. Compliant and user-friendly processes is a must in the age of remote work to ensure that it’s easy for employees to follow business guidelines no matter where they are.
Improve long-tail supply chain management
Employees across different departments should be authorised to make smaller purchases for the sake of efficiency, instead of having to wait for approval from managers who don’t want to be burdened by approving every single long-tail purchase. However, to make this possible without increasing maverick spend, it’s important to facilitate instant, pre-approved purchases based on a clearly defined set of business rules. If long-tail purchases can be made anytime, anywhere, and aligned with internal policy, procurement will barely have to think about manually managing their long-tail supply chains.
By automating online payments for long-tail suppliers, employees can speed up procurement and increase agility. Managers also have greater control over spend, and Accounts Payable no longer has to handle thousands of invoices every month. Best of all, these fully digitised processes can be managed from anywhere, which means remote work no longer has to be a barrier to procurement. This environment is beneficial to both businesses and their employees, who can benefit from streamlined and instant purchases.
Thanks to the power of cloud technology and automation, online purchases provides greater agility, cost-control, efficiency and empowers employees. And these are benefits that companies can continue to realise long after Covid-19.
Mazepay helps procurement teams drive value, improve cash flow and become more efficient during times of economic uncertainty. Get in touch today to learn more about how Mazepay can help you simplify your business.