Trends in E-Procurement

Trends in E-Procurement

Suppliers are becoming more and more intertwined in increasingly complex networks. The 10 largest suppliers of Daimler are an example of this. Together they have 588 suppliers, who in turn depend on more than 2900 other suppliers. These companies are spread far across the globe and depend on each other at various levels. These interdependencies between and among suppliers are more far spread than expected, as we saw a few months ago... think about toilet paper, pasta, masks and/or disinfectants!

One thing that the Corona pandemic has shown us is the high degree of dependence of German industry on these suppliers due to the close interdependence. This is because the share of foreign added value in the total added value is around 25%. By comparison, in France this share is 23%, in the UK it is around 22% and, in the US only 12%.

The main problem: lack of suppliers of parts from China.
One possible solution is multiple sourcing!

Here, a single part is produced by several companies. This enables greater flexibility. Online manufacturing networks can also be part of e-procurement. In case of failures, they can react more flexibly and thus prevent a shortage of materials. Especially an orderly and simple search function for specific parts provides more flexibility in the search for suppliers.

In particular, the increased digitization and networking of the various parties in e-procurement enables a flexible and fast response to supplier failures, especially in times of crisis. Well-known examples of this are networks such as Facturee or Techpilot. The latter connects companies with more than 16,000 buyers from more than 21,000 supplier companies. These offer over 280 different manufacturing technologies.

Currently, around 14% of German companies use these digital networks in their e-procurement. In future, 44% intend to use these networks.

The technology in which most of the respondents see great potential for the future is Big Data Analytics. With this technology, it is possible to evaluate large amounts of unstructured data. It is however becoming more and more noticeable that the respondents are generally more critical of future technologies in 2020 than in 2019. In particular, the block chain technology is viewed critically by a large proportion of the respondents. Only 5.5% of the respondents see this as a very important future technology.

The main obstacles to further digitization of procurement are mainly internal reasons.

The three main obstacles are lack of internal data transparency/structure, general internal resistance and lack of support from management.

In conclusion: Multiple Sourcing is both a blessing and a curse! ... having many possibilities, means also having to manage multiple suppliers and a lot of monitoring. The ability to analyze data and derive actions from it remains essential in e-procurement if you want to enjoy the advantages of ongoing digitization.