The multinational cosmetics retailer Lush has helped its procurement teams achieve optimal cost reductions and negotiate significant discounts with suppliers following one bold initiative: automating accounts payable (AP).
In Lush’s 250-store North American division alone, the company was printing 120,000 paper invoices annually.
The process was laborious and inefficient: it required someone to place each invoice in a physical folder and post it to the correct authoriser for approval.
Paper invoices could sit on a desk for too long or even go amiss – whereupon the process would have to start all over again.
In 2017, the company took decisive action.
Its rapid growth in North America was proving one thing: paper-based invoices couldn’t keep up with the growth rate and the pressing need to keep vendors on board.
Enter a cloud-based invoice automation system, which has to date ensured that 92% of the company’s invoices are touchless.
The system routes invoices via email and has an audit tracking capability to pinpoint exactly where any individual invoice is, and what levels of approval have so far been secured.
With automated invoicing, Lush can now see if someone is sitting on an invoice, as well as who has altered any invoice cost codes, and how.
The company uses machine learning to ‘teach’ the automated system on how to route invoices, increasing the speed and accuracy of payments to vendors and boosting supplier confidence in the company.
Far from being replaced, procurement professionals have been empowered by this technology.
Institute of Finance & Management consultant Judy Bicking, who worked for Johnson & Johnson when it implemented such a system over 20 years ago, said that it helped break down the silos between AP and procurement teams.
Procurement could now use the new visibility afforded by the technology to gain a clear view of what’s being paid, and how fast.
This, in turn, has helped them to use those insights to achieve substantial new cost reductions through negotiated discounts and better pricing.