Procurement 4.0 in SMEs - Does strategic procurement also make sense in SMEs?

The current situation

Buyers in medium-sized companies spend the majority of their time with manual activities that are time-consuming and error-prone. There is hardly any time for value-adding work. The use of too many different and non-harmonised IT tools leads to interface problems and media disruptions. Unclean master data also block efficient processes in the often small team. Procurement in medium-sized companies faces major challenges: For example, higher costs and an increasing number of projects have to be managed with a mostly small budget while time and resources have to be invested in organisational and employee development. Moreover, purchasing in medium-sized companies often still has to establish itself in the company, for although resources and budgets are usually limited, the purchasing department must contribute to growth targets and better availability for production. Procurement needs a functioning master data management system as well as resources and tools for the analysis and evaluation of suppliers. That is why the argument “That is how we have always done it” must not be a reason to not question structures and processes and to not optimise them. As a result, specific changes are necessary in order to make medium-sized companies fit for the procurement of the future and to transform them into resilient business partners inside and outside of their own company.

How to do that

In order to implement a digital strategy in purchasing, the status quo must first be explored. Then it must be decided what has to be improved. It is essential that the procurement management sit down with the procurement team to work out together where there are deficits and what needs to be improved. This should also specify what is mandatory and what is optional meaning which measures are to be implemented immediately and without great resistance and which measures can only be tackled later. Generally, it makes more sense to implement sustainable changes in small steps than trying to change too much at once. When working out a digital strategy for purchasing,  it is important to consider which departments should be involved (IT, accounting, suppliers, etc.) in order to implement the measures decided upon. Regular communication with everyone involved also contributes to the success of the project – the IT department in particular should be involved in the project at an early stage.

What are the benefits of strategy in procurement in medium-sized companies?

Nowadays, strategy in purchasing means a digital strategy. Tools for the automation and digitisation of procurement – such as the software solution from Netfira – lead to process optimisation, acceleration, simplification, relief of workload, transparency, and high data quality that is so urgently needed in medium-sized companies. Innovative automation tools transform purchasing in medium-sized companies into a modern, future-oriented purchasing organisation which also appeals to young professionals and enables buyers not only to react but also to act. Thanks to less manual workload, the procurement department has more time to concentrate on strategic tasks, such as supplier evaluation and analysis. Consequently, it can significantly increase its value contribution, reduce process costs, generate savings and keep supplier dependency as low as possible.

Conclusion

It can be concluded that strategic procurement is also of central importance in medium-sized companies. Strategic and operational procurement influence each other and both have to function efficiently – this can be achieved with the help of innovative software solutions. Strategy is particularly relevant nowadays with procurement being confronted with digitisation efforts in the company, cost increases and high expectations of added value. A digital strategy in purchasing is also to be understood as an opportunity to achieve a more efficient cooperation with other business areas, to establish oneself as a useful partner within the company and to increase the status and reputation of purchasing with a successful project. However, there is no uniform strategy for medium-sized businesses because they are too heterogeneous. Rather, each company must decide for itself how strategy in procurement can best be implemented.

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