During my 17 years in the B2B Integration market, I’ve seen that a lack of automation among small volume trading partners has been a persistent source of pain for companies. In fact, according to a 2019 IDC survey, “more than 33% of organizations still use manual forms and fax for their business transactions.” 1 This means a significant number of organizations are still dealing in manual transactions with their small trading partners.
These partners, typically suppliers, have low volumes compared to other suppliers, often because they offer seasonal or niche products. When you consider each of these partners individually, it’s easy to overlook or “live with” the additional time and costs of processing purchase orders, load tenders and/or invoices manually because the individual impact is minimal. However, if you view your smaller partners as a category, you may find that the total volume can be substantial and perhaps equivalent to the volume of one of your largest suppliers! If that’s the case, you have a great opportunity to significantly save time and reduce costs with automation.
The costs of manual processing
New research by Aberdeen2 reveals the true costs of manual transactions. In a survey of 165 organizations of all sizes and across industries, Aberdeen analysts found that the average costs of manually processing documents according to type are:
- PO = $43
- Load Tender = $42
- Invoice = $46
We all know that manual processing introduces the risk of error, but I was surprised to learn that a third or more of each document type have errors when processed manually:
- PO = 33%
- Load Tender = 36%
- Invoice = 35%
And, fixing those errors is even costlier:
- PO = $182
- Load Tender = $197
- Invoice = $189
Going back to my earlier point, if you take small partners as a category and for example, analyze just POs, some quick math shows that the costs of manual processing can really start to mount:
Additional benefits of small partner automation
In addition to cost savings, there are other benefits companies can expect to receive by automating small suppliers: 45% of respondents told Aberdeen that customer service improved due to a drop in unresolved issues and 37% reported increased responsiveness to exceptions.
What’s holding companies back from automation?
When researchers dug deeper and asked why companies don’t automate, 54% said it wasn’t among their IT spending priorities. But now that you’ve seen the data you may be able to influence and change spending priorities. Do the math and make the business case by consolidating your small suppliers into a single category.
In addition, 36% said they lack the tools to automate. However, small partner automation tools exist and continue to improve. Watch the demo, learn more about these tools here and view the video to hear how companies are using them today.
Finally, 31% told researchers that their costs were not out of line with competition. That just adds fuel to the business case! Small partner automation is an opportunity to get ahead of the competition and establish a cost advantage, not to mention improve customer service.
Interested in exploring this further? Let me know, as we’d be happy to help you build the business case for small partner automation in your organization.
- Data Exchange in the Era of Digital Transformation, An IDC InfoBrief, sponsored by IBM, April 2019
- Manual Documents Processing Pain Points, Survey Findings – November 2019, Aberdeen, sponsored by IBM