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Why procurement should focus on digital supplier connectivity

A guide through the solution provider jungle

 

Initial situation

There is a growing consensus in companies that procurement needs to modernise. Today, operational procurement in particular is still too much characterised by manual, error-prone and time-consuming tasks. Manual document comparison as well as mountains of paper from physically filed documents are still common. As a result, boring and monotonous work diminishes the image of purchasing as well as the attractiveness of the workplace. In addition, analogue processes prevent buyers from devoting themselves to value-creating and thus important tasks. However, strategic procurement plays an increasingly important role in a digitalised and interconnected B2B world. Operational procurement must therefore function quickly, efficiently and reliably so as not to tie up time and resources that are needed for strategic tasks. Therefore, operational processes must be automated and digitalised, as it is undisputed that automation and digitisation offer significant potential for increasing efficiency, avoiding errors, and speeding up delivery and production.

The problem: Too many solutions

The willingness to automate purchasing with the help of software solutions exist, but the implementation of a digitisation project does not come without obstacles. This starts with the fact that the number of solutions with different objectives and concepts is very confusing for small and medium-sized businesses. For many years, providers have focused on larger purchasing departments. In line with their size, extensive and powerful solutions were – and still are – often designed and offered in order to (supposedly) meet the high demands of networked processes and digitalised supply chains. As a result, many automation solutions for procurement perform poorly in terms of the simplicity of implementing the systems. In addition, complicated connections and a long duration of implementation processes are frustrating and hindering for procurement.

The right approach to finding a solution

So how do you go about finding the right eProcurement solution? First of all, it should be clarified internally how purchasing is to function in the future, which areas should be able to be mapped electronically and how a more complex integration can proceed. In addition, this small checklist can help determining the criteria:

Small checklist

  • Is the solution lean and quick to implement?
  • What exactly is the benefit for the department? 
  • What is the economic benefit?
  • How can the solution help me to quickly start the procurement of the future? 
  • How flexible am I with this solution? 
  • Do I have to buy everything from one vendor?
  • Can I dock onto solutions from other providers at a later stage?
  • Is the system modular and open to additions from other vendors?
  • How well does it integrate into my existing system landscape?
  • Does the solution help me to make even better use of my existing IT systems?
  • What does the supplier connection look like? 
  • What costs and what effort does the supplier have?
You can also download Netfira’s detailed checklist for your successful digitalisation project in procurement here:
 

Tip: Digital supplier connection as a cornerstone

The electronic supplier connection plays an decisive role in the digitisation of purchasing. For this reason, it is advisable to pay particular attention to this criterion when selecting a solution. After all, procurement can only become an innovation driver if it is able to digitally connect as many important suppliers, partners and service providers as possible via smooth operational processes. Without supplier connectivity, an optimally functioning digital process chain is not possible. Supplier connectivity is often simply ignored because it is too difficult, too cumbersome and too expensive, or simply because the right tools are not available. Furthermore, the responsibility for supplier integration often lies with the suppliers themselves. 

But studies show: Suppliers want automation solutions that can be implemented quickly via a standard interface and are easy to operate without training.If  possible, they should not lead to any costs. The implementation effort for the application must be low. And above all, the processes on the supplier side must not be affected. In short, the connection must be one thing above all: simple. Traditional technologies, such as EDI, OCR or supplier portals, don’t meet these requirements. Either they are too complex – as in the case of EDI – and therefore often very expensive, or they offer no benefit to suppliers and are error-prone (like OCR). Portals place the burden of data entry entirely on the suppliers and are therefore particularly unpopular with them. The solution therefore lies in modern alternatives to EDI, OCR and supplier portals.

Conclusion

Not every customer who wants to automate his or her operational procurement processes and digitally connect as many significant suppliers as possible needs complex solutions that focus primarily on strategic procurement. Often, lean tools that can be implemented quickly are sufficient for automating all operational processes, especially for medium-sized companies. Implementing the right modules at the right time is an intelligent approach. A simple digital connection to as many central suppliers as possible serves as an important cornerstone for the successful digitsation of operational procurement.

Do you want to learn more about intelligent automation tools and innovative technologies such as cloud computing and AI? Then download the new e-book from Netfira here for free!

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