How Retailers Can Keep Pace in a COVID-19 Economy

Managing spend is a tall order for retailers today. As the workforce grows more geographically distributed, and as employees increasingly drive business spending from the bottom up, it's harder to track cash flow across multiple touchpoints — from sourcing and manufacturing to advertising and employee supplies.

COVID-19 has intensified these issues, forcing retailers to make swift operational and purchasing decisions around disrupted supply chains, sanitation products for storefronts and warehouses, and transitioning some employees to go remote. As added strain, they're also facing mounting economic pressures to cut costs.

Moving forward with resiliency requires retailers to fundamentally rethink their approach to procurement. Rather than fragmenting direct and indirect spend or cutting more direct spend altogether, they must set up their purchasing systems and processes to increase visibility and control over all types of spending.

Forget the Traditional Definition of ‘Procurement’

According to Levvel’s 2018 Procurement Insight Report, fragmented procurement processes, outdated and inadequate technology, and frequent off-contract spend are major pain points for organizations. For next-gen companies, especially direct-to-consumer brands, the increased reliance on third-party logistics services and outsourcing instead of holding inventory calls for a new procurement model.

Traditionally, procurement processes have been centralized, with a single procurement officer or department in charge of making inventory decisions. That approach is too inefficient to support the pace of business today, and doesn’t support services-based procurement or cover the full gamut of spend that a retailer needs in a corporate office and across storefronts and warehouses. Next-gen procurement is built for distributed decision making — it manages the purchasing process across the organization, from request to reconciliation, and provides real-time visibility to finance, procurement and employees, improving alignment and team efficiency.

Democratize Data to Fuel Visibility

Staff-level employees have started demanding the front seat in purchasing decisions. More than 80 percent of non-C-suite employees now have a say in the matter, flipping the bureaucratic spend structure on its head and removing the bottleneck of having to wait for approval from procurement leaders or department heads.

The rise of bottoms-up spending, and the explosion of B-to-B purchasing more broadly, means that today’s tail spend is tomorrow’s core spend. In other words, purchases that take place at the edges of an organization — e.g., an employee buying software — are becoming central to a company’s operations.

In order to empower employees to move quickly while maintaining visibility, retailers must grant teams real-time insight into financial information that will help them make informed and responsible decisions. For example, the marketing team needs the ability to independently monitor where it stands against its budget at any given point, without having to wait for the finance team to close the books or share a spreadsheet.

Rein in Maverick Spend With the Right Tech Tools

Typical procure-to-pay solutions fall short because they often rely on catalogs and user licenses, which restrict access to purchasing power. This forces employees to either move through a slow, confusing, bureaucratic process, or to go around the process altogether.

Maverick spend cannot be controlled by only focusing on the few employees with licenses, or what’s in the catalog — that’s why it's maverick. As such, companies instead should seek out easy-to-use tools that are available to all employees, capture any type of spend, with proactive guidance to keep spend within policy, and make the process so effortless that teams don’t even have to think about whether it's compliant or not — it always is.

Forward-thinking retail companies have already made it a priority to empower their distributed teams by opening up visibility and purchasing power across the full supply chain and beyond. In the process, they're maintaining total control over cash flow. Those that have are finding it significantly easier to keep operations moving smoothly and secure a tight handle on spending while the virus continues to take a toll on the broader industry.

Retailers are facing an unprecedented new challenge during a time that already finds many on shaky ground. Those that bring visibility and control over the full breadth of their spend will be in a stronger position to make more strategic decisions, stay agile, and remain competitive as they navigate the realities of the COVID-19 economy and beyond.

Andrew Hoag is the CEO and founder of Teampay, a distributed spend management platform that gives you total control and visibility over spending.