eProcurement – process and cost optimization through an automated material flow
Digitizing the procurement process achieves potential savings at every single step.
The digitization of purchasing not only brings enormous efficiency gains and cost optimization. With the digital transformation of procurement processes, entirely new workflows become possible that change the way ordered products are handled – and open up further savings potential, for example in merchandise management.
One of the most important rules for success in digital transformation is not to simply mirror analog processes 1:1 digitally, but to take advantage of the opportunities offered by digitization. In this way, completely new workflows can be designed and processes predefined that require little or no manual intervention over long stretches. However, digitization is not limited here to process automation. Particularly when technical systems make increasingly data-based autonomous decisions, efficiency in indirect procurement can still be significantly increased.
Automated material flow for indirect requirements
How this works in practice can be seen, for example, in automated material flow. First and foremost, this means that when stock levels fall below defined levels, an order is automatically triggered via the eProcurement solution. The digitization and networking of the purchasing area and warehouse management provides the necessary basis for this. The advantages are obvious. It would be fatal, for example, if work had to be interrupted in a laboratory because there were no more latex gloves available. Such interruptions in work and production, resulting from a faltering coverage of indirect requirements, can lead to damages that are many times higher than the material price of such C-parts.
The situation is similar with MRO (maintenance, repair, operations) goods. Missing spare parts and consumables such as filters, grease or sealing rings mean that maintenance and repair work cannot be carried out. Digitizing purchasing thus helps to prevent unplanned machine downtimes and production losses due to insufficient supplies of C-parts.
Goods issue and goods management
Automated order triggering because stocks are running low in the warehouse – that may sound simple at first. However, the case becomes more interesting when you look at the different options for issuing goods. For example, a system can be equipped with scanners that register every withdrawal. Dynamic solutions then do not react to a fixed value of remaining items, but extrapolate the current consumption – and trigger the order in a way that avoids the warehouse running empty during the usual delivery time.
Another application is an automatic goods issue machine. This is available for many different products – from tools and consumables to personal protective equipment (PPE), cleaning materials or food. Using digital access control, withdrawals can be assigned, either individually or across departments. This makes it possible, for example, to prove that the required – or even prescribed – protective equipment was available to all employees.
Such a vending machine solution has several positive effects. On the one hand, there is the improved control of consumption, for example when there is a high level of volatility, the cause of which one would like to get to the bottom of. In addition, an accurate and up-to-date overview of the flow of goods, which results from the connection to the ERP system, enables the optimization of inventory management and thus also a containment of capital commitment. In addition, an automated issue not only reduces personnel expenses, it can also be operated 24/7 and thus enable more flexible processes.
Digitization potential beyond purchasing processes
Digitizing the procurement of indirect requirements alone and managing them via an eProcurement solution is a worthwhile investment that improves efficiency and gives the purchasing department back more freedom to deal with the important strategic tasks. (Related: eProcurement – 5 factors for profit in purchasing)
But this is only the first piece in the mosaic of digitizing the entire company: the more departments and processes are involved, the greater the benefits that can be derived from digitization. Thus, the changes brought about by the introduction of an eProcurement solution are not limited to the purchasing department or internal logistics. In the context of progressive digitization, operational processes that go beyond this can also be simplified and made more flexible. One example is so-called maverick buying: Since employees can simply order directly from catalogs via their own user access, the risk of unauthorized ordering of materials or services outside the standardized procurement channels is reduced to a minimum.
If desired, the eProcurement platform can also be linked to the enterprise resource planning system. This is then implemented as part of a compact project with manageable costs. In this way, orders are transferred electronically directly to the ERP solution, thus avoiding double manual entry into both systems. Accounting or controlling can also be integrated into the digital workflow in this way.
Contemporary and future-oriented procurement can thus provide the impetus to rethink other processes in the company and to tap additional potential for increasing efficiency and corporate management.
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