Press Release
May 10th, 2023
Digitalization in SMEs: Not a project for the future, but part of the present
Eros Vecchio
"Whoever does not digitalize, loses. So what?" This mocking aside still seems to be widespread, especially among medium-sized businesses. It seems strange that despite the urgent need for digitization having been preached for over 20 years, many have turned a deaf ear. It is about much more than just shifting resources into strategic procurement areas; it is about the future of medium-sized businesses.
"I'm always surprised that even large mid-sized companies haven't really started with procurement digitization," says experienced purchaser Jan-Henner Theißen. He has accompanied purchasing and transformation projects of global procurement organizations for companies such as Benteler Group and AGCO Corporation and now uses these experiences as a purchasing consultant at TargetP.
Additional challenges as an additional trigger
According to Harald Allerstorfer, CCO of Austrian business digitizer DIG GmbH, it is definitely not due to a lack of solutions: "We have been offering highly flexible solutions in the areas of e-procurement and automated document processing for over 20 years."
The flood of administrative tasks of supply chain due diligence and EU taxonomy already necessitates digitization – a welcome trigger for establishing or expanding digital procurement processes. "The technical solutions to introduce efficient, largely automated processes for the administration of the supply chain due diligence law (LkSG), for example, are available and can be integrated into e-procurement via interfaces," emphasizes Allerstorfer. Solutions from providers such as Curecomp, Prewave, Integrity Next, or Sphera (formerly Riskmethods) offer a sufficient selection. But for Theißen, this is only part of the picture: "The need for change does not arise from LkSG and Co but from the big picture! The disruptive, global environment necessitates that we focus on value contributions in procurement beyond the usual cost reductions!" This refers to intangible values such as the protection of people and the environment. "All of these are customer expectations in B2B and B2C."
Repositioning procurement
Companies such as Volkswagen and DMG Mori have already announced that they will soon only work with correspondingly ethically positioned business partners. Therefore, procurement must take responsibility as a designer of integrated supply chains and multi-stage supply networks. "Procurement has the fundamental task of keeping its own company in the game," emphasizes Theißen. This requires entirely new competencies in areas such as data science, enterprise social governance, risk management, or social procurement. Accordingly, dealing with platforms such as LinkedIn is one of the basics of the new generation of purchasers. "The training offer is still lagging," notes Theißen. Although associations offer courses, there is a lack of structured competency building. "Prof. Dr. Florian Kleemann from the Munich University of Applied Sciences is a pioneer with his master's program in Digital Sustainable Procurement and Supply Management."
Despite many flagship projects, Theißen often sees SMEs as insufficiently prepared for current challenges: "There is often a lack of willingness to invest in procurement and relieve it." Allerstorfer shares this experience: "Despite convincing amortization periods, e-procurement is often put on ice. Because the purchaser is already there, IT or project resources are lacking, or the existing SAP is considered sufficient." However, it is overlooked that ERP systems reach their limits with catalogs. "A popular argument is also specific, complex accounting and approval processes that we can usually map out. The digitization step offers the opportunity to question and optimize your own processes."
Spend analyses reveal potential
However, in family-run companies, measures often depend on the personal opinion of the owner, Theißen points out: "As a fan of the middle class, it hurts me a lot when important areas of action such as category, supplier, risk, and sustainability management are left unaddressed!" He also regularly experiences the absence of a clear purchasing strategy: "Here, procurement can use convincing figures that illustrate the actual situation and support it in arguments with the management."
That's exactly what the trained supply chain manager Samir Kharkan has specialized in: "After successful SCM projects at Metro AG and experience in procurement consulting as well as at the software company Orpheus GmbH, I recognized the potential of data in the middle class and founded Scalue with Thomas Teichmann around four years ago." Since then, he has been fighting for more transparency in the middle class. "Many companies do not know where and how exactly they spend hundreds of millions of euros per year. That's exactly what our software shows in great detail." This goes hand in hand with potential savings from automation, consolidation, etc. "Especially with the maverick buying rate, most people are surprised that the actual numbers exceed their worst fears." Despite the enormous potential shown, procurement continues to astonish with inaction. "Unlike sales, procurement is not under pressure. Yet it has absolute C-level potential if it implements these things - and almost risk-free."
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Enforcing interests
"The purchasing department, which vehemently represents the company's interests to suppliers, must do the same internally for itself!" The current economic situation strengthens the back. "In recent years, it has often been the purchasers who have saved the company's results - this momentum must now be used!" TargetP! supports this with coaching, creating business cases, and argumentative backups. "Subsequently, it is about procurement defining what software it needs and leading the way. Because if colleagues from IT take over, there is a high risk that the solution will not meet the requirements." An experience that Allerstorfer also shares: "IT departments resist best-of-breed approaches. And so solutions come, regardless of whether they are the optimal solution." Therefore, procurement must see itself as the manager and operator of the solution, Allerstorfer adds: "It defines the platform, the right suppliers, catalogs, prices, and of course the processes. The users are the requesters, while procurement takes care of further development regarding other countries, product segments, or other processes." Theißen adds here: "If procurement introduces a system that helps everyone, it improves its standing in the company. For the next step in its new role as an innovation driver and generator of essential competitive advantages."
The original source can be found here
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