The digitisation of procurement during Covid-19

The top topics of procurement

Introduction

Since March 2020, the Corona pandemic has presented the global industry and economy with unprecedented challenges. Naturally, procurement in Germany and Austria has also been significantly affected by this. 

“The Federal Association of Materials Management, Procurement and Logistics in Austria (BMÖ; Vienna) conducted a follow-up survey between 16 June and 17 July 2020 to find out how purchasing and supply chain management (SCM) assess the impact of the COVID 19 crisis and what measures are being taken. [….] 55 company representatives from Austria and Germany participated.” (Management Summary, Results of the BMÖ Survey, p.1).

Digitalisation of procurement in Covid-19 times

The most important topic for purchasing in the current situation is digitalisation with 65% (survey results, p. 4).

This shows that the Covid-19 crisis has created an even greater awareness that technology and digitalisation tools are a stabilisation and success factor in times of existence-threatening crises, which can decide on the economic survival of a company, and not just a negligible item on a business agenda. While process efficiency and smoothly running data management have long been decisive prerequisites for modern and resilient purchasing, these issues are now even more important as many companies expect a significant drop in sales this year. Thus, cost-efficient digitised processes are becoming increasingly relevant.

AI technologies in procurement

The survey results show that many of the companies surveyed are already using new technologies. Digital marketplaces/platforms come in at 66%, eInvoicing solutions are cited by 64%, and data mining/big data analytics reach 60% (survey results, p. 16). Cloud-based IT solutions are currently only used by 32% of the companies surveyed, but at 45% they are seen as having good development and future potential. The trend is even clearer for artificial intelligence: while only 6% of the companies use AI, 77% are convinced that AI has high application potential for purchasing in the future (survey results, p. 16).

This is also demonstrated by Netfira’s AI-based software solution. Innovative artificial intelligence can show its full strengths especially in operational procurement, which is predominantly charaterised by manual tasks. When processing information and data, it imitates the human behaviour of those involved in the process. This means: automated data exchange at the push of a button with almost 100 percent data accuracy. AI thus brings enormous added value to purchasing and facilitates and accelerates B2B communication. Time-consuming and error-prone work is noticeably reduced and buyers have the opportunity to invest time and resources in the current “top issues” such as risk management (62%), supplier management (62%) and liquidity management (31%) (survey results, p. 4). Another advantage of AI is that it allows unstructured data to be processed reliably and accurately. Moreover, AI is the future for connecting business partners. Already today, all suppliers, even the small ones, can be connected easily and quickly with Netfira’s AI-based solution.

Cloud-based software solutions are also increasingly gaining ground, because they position companies in a modern and future-proof way. The Netfira solution for procurement, for example, is offered as a SaaS solution (Software-as-a-Service) and operated in the cloud. Compared to on-premise solutions, the SaaS service model offers low costs, high flexibility and cost-effective scalability. This is particularly important in times of crisis like these, as procurement must be able to react to developments and requirements in an agile, flexible and cost-efficient manner.

In addition, AI is always more effective in a web-based platform than in a locally installed version, because the latter always has to be kept up to date in a cumbersome way via software updates. Consequently, the Netfira solution combines the cloud-based service model and artificial intelligence, two forward-looking technologies that benefit each other and thus noticeably optimise operational purchasing.

Barriers to the use of new technologies

The results of the survey indicate that although the companies surveyed recognise the application potential of new technologies, they encounter technical and organisational obstacles when implementing and using them. The obstacle  lack of compatibility and interfaces between systems tops the list of reasons why the implementation of future-oriented technologies does not succeed or does not succeed smoothly at 55%. This is followed by the reasons of lack of investment budget with 49%, no good data quality with 43%, entrenched working methods with 40%, high data protection requirements with 38% and lack of technical infrastructure with 36% (results of the survey, p.18).

In times of Corona, the topic of software-supported work facilitation for purchasing is more important than ever. This is because “Covid-19 caused delays, delivery failures and production stoppages in particular” (survey results, p.8), forcing companies to deploy a broad portfolio of measures to mitigate the risk of delivery and supplier failures (survey results, p.7). In order to meet these extraordinary challenges, operational processes in particular must be automated, efficient, fast and error-free. This is where the Netfira solution for the automation of manual procurement and sales processes comes into play: The modularly designed tool landscape enables the precise coverage of the requirements of operational procurement. It can be used as a supplement to existing systems, combined and expanded at any time. It can be easily integrated into existing ERP and accounting systems and connects to all ERP customer systems. The effort for the internal IT is minimal, the users do not have to change their processes.

Conclusion

The majority of the companies surveyed agree with the thesis that the crisis highlights the high importance of purchasing and supplier relationship management for companies (survey results, p. 20). That is why it is now all the more important to further optimise and modernise procurement. Purchasing departments whose processes are already largely digitalised and automated now have a decisive advantage and can act and react more securely, efficiently, quickly and flexibly. The survey shows that large companies can advance the digitalisation of their processes in all areas faster than small companies (survey results, p. 19). This in turn makes it clear that there is a great need for software solutions and smart automation tools that are also designed for the requirements, structures and conditions of small and medium-sized enterprises. Despite all the challenges and negative forecasts for the coming months, the Covid-19 crisis also represents a great opportunity for companies. After all, digitised and automated processes lead to gains in time, costs, resources and efficiency – even in non-crisis periods. Moreover, companies that have already mastered the digital transformation are also prepared for possible future crises.

 

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