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How to achieve electronic supplier connection

Even in the age of digitalisation, supplier connectivity still poses challenges or even problems for procurement. Reasons for this are often found on the company or procurement side and on the supplier side.

 

Current situation

This is how the everyday situation in many companies looks like: Interface problems due to different IT tools, faltering document flows and high, tedious effort for the maintenance of master data. The multitude of manual, time-consuming activities blocks employees and processes in purchasing, order processing and accounting. Often, there is also dissatisfaction on the supplier side: many customers mean many different customer systems. It is virtually impossible to adapt to all different systems. Suppliers are usually reluctant or even refuse to cooperate when it comes to changing their own processes for customers. Reasons for this are: too expensive, too time-consuming, no capacity, no financial resources.

However, modern procuremtn of the future will only work if processes run automatically, document flows are digitalised and, if possible, all suppliers are connected electronically – this also includes the smaller ones.

 

EDI and OCR are not the solution

Traditional software solutions do not bring the desired success. EDI (Electronic Data Interchange) and supplier portals are the techniques that have long been touted as the most promising solutions. Admittedly, these techniques are much more efficient than transactions between suppliers and customers, which are handled manually or in some cases still in paper form, but a large proportion of suppliers are still not connected to customers electronically. Moreover, EDI is too complex and too expensive, especially for SMEs. Suppliers, for example, are planning to implement new systems in the future but do not want to invest in upgrading their old systems. Others have implemented systems but cannot activate additional resources through rework. Moreover, there is often a general lack of internal human resources for such projects.

Supplier portals, on the other hand, have the disadvantage that suppliers have to do the data entry. In addition, many companies have introduced an OCR-based system for invoices (Optical Character Recognition). This has at least succeeded in achieving a certain level of semi-automation. Documents, particularly invoices, are scanned and data extracted. However, manual work is still necessary to correctly interpret and analyse the content of the document so that the data can be passed on to connected systems. One hope, however, has not been fulfilled: OCR cannot be used for other document flows. Instead, additional work is generated because OCR systems do not work accurately enough. The hit accuracy is unsatisfactory for many document types. Furthermore, they are unsuitable for the end-to-end digitisation of a supply chain or even for a bidirectional connection of a supplier, because they do not transfer data or documents in both directions. This does not provide a solution to the requirement of seamless electronic connection between companies. So neither EDI nor OCR can replace a comprehensive digitisation strategy.

 

The solution for a successful electronic supplier connection

The most important thing to begin with: driving forward digitisation in purchasing goes hand in hand with supplier connectivity. Only if as many suppliers as possible dock onto the customer’s system can significant process and cost advantages be brought about.

 

But how is this possible?

With the Netfira solution, suppliers can be connected easily, quickly and cost-effectively using state-of-the-art technologies such as apps and AI. Unlike OCR, data and document flows can be exchanged seamlessly and bidirectionally. Netfira’s software solution is therefore a promising alternative to EDI and OCR. Moreover, full integration into existing ERP and accounting systems as well as IT systems is possible. Netfira flexibly docks onto all ERP customer systems. This results in a high level of acceptance among suppliers, as they do not have to change their systems, do not need any training and do not incur any costs. The modularly designed tool landscape of Netfira enables the precise coverage of the requirements of operational purchasing. It can be used as a supplement to existing systems and combined and expanded at any time.

 

Advantages for procurement

The digitalisation of purchasing together with the connection of all suppliers – even the small ones – means a significant optimisation of the purchasing process.Buyers have to perform fewer manual and error-prone tasks and therefore have more time for value-adding activities. In addition, the time gained allows for more intensive contacts with suppliers and customers as well as more flexible handling of special requests. On top of that, the digitalisation of the entire supply chain leads to shorter response times, high process reliability, full transparency for purchasing and improved master data quality. The optimisation of purchasing thus results in the optimisation of all business areas.

 

Conclusion

Digitised procurement is the entry into the digitisation of the entire company – and successful digitised procurement starts with the electronic connection of all suppliers.

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