Supply chain · 18 September 2017

UK business owners spend 125 hours a week managing supply chain friction

A high proportion of paper invoices was cited as the greatest supply chain time drain
A high proportion of paper invoices was cited as the greatest supply chain time drain

The average business owner spends around 55 hours per week tackling paper-based invoicing checks, according to new research revealing the five processes causing most friction within UK supply chains.

E-invoicing firm Tungsten Network asked company decision makers across the country how efficient their supply chain processes were, and if manual systems impacted on their firm’s productivity. The results showed a significant number of working hours were absorbed by paper-based tasks.

On average, respondents spent around 55 hours per week undertaking paper-based processes and checks, 39 hours chasing invoices discrepancies and errors, and 23 hours responding to enquiries from suppliers. Around five hours were also spent handling international tax admin, with three hours dedicated to preventing invoice fraud.

The five greatest supply chain friction factors for UK business owners

  1. High proportion of paper invoices received
  2. Too many non-PO based invoices
  3. High volume of supplier enquiries regarding invoice or payment status
  4. Lack of automated exceptions
  5. Lack of automated approval

When totalled against Britain’s average hourly pay rate of £13.65, business owners could be losing as much as £88,725 each year resolving payment issues.

Commenting on the findings, Rick Hurwitz, Tungsten Network CEO, said “cumbersome and time consuming” supply chain processes were preventing businesses from reaching peak levels of performance.

“Technology means we can do away with the tiresome and menial tasks that clog business work streams and instead boost productivity and efficiency,” he said.

“It is surprising that in this tech enabled day and age businesses are still spending so many hours per week managing a process that could be automated.”

When asked how highly they would prioritise streamlining supply chain processes within their company, over a third said it had become a top priority for 2017. However, a fifth admitted it wouldn’t be addressed any more immediately this year than previously.

Hurwitz added: “If businesses aren’t tied up chasing invoices or receiving phone calls from suppliers doing the same, they have more time to explore opportunities for growth with existing customers and go after new ones. If all the data from past invoices is easily accessible, opportunities to identify variances that will target inefficiencies are more visible.

“The technology exists to remove this supply chain friction, which can cause stress, waste time and ultimately impact the wider economy, and we want to challenge UK businesses to seize the day, embrace digitisation and begin enjoying the benefits of a frictionless back office.”

Comparatively, small firms did perform slightly better than larger organisations in the “friction index” developed by researchers, which showed they were less likely to lose “valuable resource” chasing payments and responding to queries.

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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