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New Analyst Research Sites Gap in End-to-End Buying Cycle

Posted By Administration, Thursday, August 14, 2014
Updated: Tuesday, August 12, 2014

by Leela Rao, GT Nexus


Retailers are always looking for ways to improve their business. Some changes are apparent to final end consumers, like website updates, launch of mobile apps and more speedy delivery options; but what about back-end improvements that happen behind the scenes? Operational investments can save retailers millions in operational expenditures by squeezing cost out of their supply chains, streamlining their international trade operations and injecting financing where appropriate. When retailers have complete visibility and transparency for themselves and their entire trading community, they know they can reap real benefits.

A growing number of retailers and analysts are placing procure-to-pay processes beneath a microscope to understand its exact impact on the retail business. Industry research analyst group Edgell knowledge Network recently published an insightful paper on procure-to-pay, or P2P, that allows for this exact type of visibility. In June 2014, EKN surveyed 83 retailers on their omni-channel supply chain.1 Here are highlights from EKN's Order Management Survey report:

The Numbers are Challenging

  1. 51% of retailers do not use an integrated process or system for managing purchase orders, buying processes, trade documents, finance options, and payment settlements in the supply chain.
  2. 6 out of 10 retailers report no change or decreased performance when it comes to chargeback rates and cost per purchase order.
  3. 40% of companies stated their single biggest business challenge is the lack of unified purchase order view linking different stages, points of interaction (i.e. channels, brands or retail or wholesale formats) and stakeholders in the internal and external supply chain.
Factors that Contribute to Supply Chain Complexities
  • Growth in product volume and breadth of assortments
  • Expansion in channels such as online, which is expected to grow from 13 to 19.1% by 2016
  • Lack of data standards and variable procurement
  • Expanding number of global partners and trading documents
  • Fluctuation in lead times of products
Existing P2P processes don't work, as half of all retailers are mixing and matching different technologies and operating systems to try to satisfy their PO management, financial management, and ERP tools that are siloed. Burn rates in those systems are approximately five years, after which the technology becomes obsolete. While P2P is crucial, it also needs to be sustainable and give full real time visibility which can only be achieved using cloud technology. 

Successful P2P and Supply Chain Transformation
The survey findings reveal that in order for retailers to successfully manage the omni-channel, they need to focus their strategy around supply chain transformation. By leveraging a P2P product that shows a unified buying cycle tied to a single and integrated platform, retailers will have a harmonious business process providing complete visibility and collaboration covering:
  1. Purchase order management
  2. Logistics, customs, and related invoice and document management
  3. Finance
  4. Cost structure
  5. Vendor synergies
  6. CRM opportunities
P2P is the ultimate tool in assuring a retailer's supply. P2P removes operational and financial risks and a single integrated platform will allow retailers to optimize their run rates, reduce inventory excess or out-of-stock issues and unify financial processes. Building customized P2P models only slows down retailers as their systems often times cannot communicate with their partners. P2P platforms should be able to communicate seamlessly with partners, which is best enabled through cloud technology networks.

[1] http://mktforms.gtnexus.com/PPSolutionsStrategiesSCAssuranceCollaboration_Reg.html

Leela Rao is Retail Marketing Manager for GT Nexus. She has more than 10 years of experience working with fashion brands/labels including Levi Strauss & Co., Sephora, Estee Lauder, and L'Oreal Companies focusing on global product development, international channel execution and luxury products. Leela helped integrate Sephora's loyalty program, Beauty Insider, into Sephora in JCPenney stores. She later joined Levi Strauss and Co. where she partnered with wholesale and retail partners such as Dillard's, Macy's, and Kohl's to deliver heritage programs to Levi's enthusiasts. She has also developed marketing strategies for new market entrants Yellow Brick Coffee and Amyris. Leela received an MBA in Marketing and Finance from New York University's Stern School of Business.

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Tags:  P2P  Procure-to-Pay  Visibility 

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