Over the years, retailers have come to understand the importance of digitising the customer-facing parts of the business, such as marketing and advertising, customer service and the checkout in order to reach consumers who are spending more of their time online.
But many retailers, especially small businesses without big technology budgets, haven’t done as good of a job at digitising their backend systems. Suppliers tend to be even further behind in the digitisation process.
As a result, some parts of retail, such as procurement, continue to be carried out using outdated technology and largely manual processes, and retailers and suppliers are missing out on potential efficiency gains and cost savings, according to Raymond Lam, Managing Director of Pagero Singapore.
“A lot of businesses think their current system is good enough. For example, creating invoices, saving them as PDFs and forwarding them to buyers in an email,” Lam said.
“They think they’re using a digital system because they’re using email, but it’s not fully automated because someone from the other end has to process the invoices. They have to pick it up, print it out and enter it into the system.”
Since many people are working from home due to Covid-19 and don’t have access to office equipment like printers and scanners, this manual approach has become impractical if not impossible. Beyond the pandemic, it remains incredibly inefficient from an operations standpoint, according to Lam.
“If you send an email and it goes to junk, someone has to call and ask, ‘Have you received my email?’, and send the email again,” he explained.
This might not sound like a major dealbreaker, but Lam pointed out that many retail businesses negotiate discounted terms with suppliers in exchange for buying in bulk, but these prices are generally only available if payments are made on time.
“If your invoices are not processed on time, or you don’t pay on time, that leads to your discount being affected,” he said.
Another problem with a procurement process that relies on emails and PDFs is the risk of errors being introduced when data is transferred between systems. And this can ultimately impact the customer experience.
“Very often, you go online and find that goods are not there, or are out of stock, and that comes all the way back to how the items were bought and fulfilled and put on the online site,” Lam explained.
Businesses can avoid these pitfalls by switching to electronic invoicing, which is part of Pagero’s purchase-to-pay solution and removes the need for retailers to receive paper-based or PDF invoices and manually enter information. Instead, information is automatically exchanged between the retailer’s and supplier’s accounting systems, making the process truly digital.
“Electronic invoicing is all about real-time, accurate and quality data,” Lam explained.
Pagero’s digital solution also includes an onboarding service to help suppliers digitise their side of procurement, which has traditionally been a major challenge in the retail industry.
“We try to meet the needs of the retailer as a buyer and the supplier as a seller,” Lam said. “The buyer side is called purchase-to-pay and the seller side is called order-to-cash, and both sides have their own ordering and fulfilment and payment process.”
Getting suppliers up to speed on digital procurement technology is particularly relevant at the moment, since many retailers have started working with new suppliers after experiencing stock shortages during Covid-19 and realising their supply chains were not adequately diversified beyond China.
“Businesses that might have sourced from one area in the past, now have to source from different places and have to think about different country regulations and how to stay compliant with the format of the invoices that you receive,” Lam said.
That’s where Pagero comes in. It not only has a broad network designed for global interoperability across any infrastructure, but also an in-house regulatory team that constantly checks which invoice formats are required in each country.
For Lam, one of the most important things for retailers to remember in the journey to becoming a digital-first business is that just because tech investments have failed to deliver on their promises in the past, that doesn’t mean they should stop investing in new technology when there’s a case for it.
“Maybe they bought something off the shelf due to pricing or because it was good to look at, but it’s not useful at all. When we come in, we focus on helping them understand what the challenge is, and how our product can meet the challenge, so they don’t fall into the trap of buying technology for the sake of buying it,” Lam said.
Contact Raymond Lam for more details about Pagero’s automated procurement solutions at: firstname.lastname@example.org or +65 6738 6746.