Wednesday 19th Dec 2018 - Logistics & Supply Chain

Companies ‘hemorrhaging’ cash due to error-prone processing

A new survey of more than 300 Senior European IT decision makers in UK, France and Germany reveals that 3.4 out of every 100 orders are incorrectly processed due to manual intervention, resulting in avoidable financial losses and long-term cost implications. On average, businesses processing one million orders a month are incurring penalty charges of more than €16 million every year as a result of these operational inefficiencies.

Despite increasing supply chain complexity and globalisation, eight in ten European IT managers are still heavily reliant on manual communication methods, such as email and fax, for sending and receiving order and purchase documents amongst supply chain trading partners. Only half of European businesses currently communicate electronically with suppliers and customers.

The Sterling Commerce survey, conducted by independent research company Vanson Bourne, also revealed that many businesses are still struggling to integrate IT systems of external supply chain partners, further inhibiting their ability to automate document processing. European companies rated integration with back-end systems as their most pressing issue relating to trading partner communications. This was followed by the ability to meet customer and supplier mandates in order to handle new EDI related protocols and resources required to operate B2B infrastructure.

European businesses incur an average penalty charge of €39 per incorrect order due to errors created re-keying data. The results also reveal that across Europe, France lags with the largest proportion of orders to incur financial penalties with 5.48 out of every 100 orders, averaging €48.25 per order. This is followed by Germany with 4.25 orders per 100 incurring penalties of €30.47 on average and finally the UK, with 2.43 orders receiving charges of €36.3 per order.

Dave Carmichael, senior product marketing manager at Sterling Commerce, said: ‘The results illustrate a clear and pressing need for European businesses to address their ongoing reliance on manually-intensive document processing. In an environment of increasing competition, penalty charge-backs add up to a significant loss in revenue over time that can no longer be ignored by senior management.

‘In addition to addressing the negative impact of short term penalty charge-backs as a result of processing errors, businesses also need to take into account the hidden, longer term impact of manual document processing. Process inefficiency has a tremendous impact on business agility in the long term, holding back European businesses from exploiting market growth opportunities.’

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