Digital Procurement

Over 60% of all companies do not use any digital tools in procurement

More than 60% of the companies do not use any digital tools for workflow assignment and/or supplier management. Many or rather most companies are still trapped in the Excel world. Using Excel as an e-procurement system brings several challenges.

You cannot talk about real-time collaboration when you work with Excel. It makes collaboration even harder. As soon as an Excel spreadsheet is used by several people, the inconsistencies and data loss are bound to begin. It requires a lot of commitment from users just to keep the file "clean".

A current survey by the German Federal Association of Materials Management, Purchasing and Logistics (Bundesverband Materialwirtschaft, Einkauf und Logistik e.V. - BME) clearly shows that the digitization of entire value-added and supply chains puts companies under enormous pressure. However, more and more companies are recognizing the necessity of using electronic solutions in purchasing, logistics and supply chain management.

The increasing digitalization also affects the procurement sector. Procurement describes all activities of a company that deals with the procurement of goods of all kinds from external sources. The primary objective is to ensure a reliable long-term supply at the lowest possible price.

"Digital procurement" does not mean keeping Excel lists for the management of suppliers and orders.

Nevertheless, digital procurement is still in a digital experimental phase. According to the company Procurement Leaders, less than 10% of the companies surveyed have procurement solutions based on key technologies such as Big Data, IOT or serverless architecture.

The common name for an electronic procurement setup is "e-procurement". The ordering process is carried out via digital platforms using network technologies.

Procurement Leaders also estimates that the world's top 500 companies can save up to $86 billion dollars by implementing a complete e-procurement system.

For digital procurement to work, it must be linked to the Enterprise Resource Planning (ERP) tool and thus to all relevant operational and strategic processes of the company.

Before investing in new technologies, the different areas of a company must be thoroughly networked.

Abolishing information silos is therefore the first task prior to the introduction of new systems or technologies.

For a fast and efficient procurement, not only the re-ordering must be done automatically and digitally, but also internal processes such as accounting, or invoicing must be digitally interlocked with the procurement. This is the only way to react flexibly and agilely to delivery bottlenecks and failures.

The Corona-related delivery bottlenecks show: Many purchasing departments need to readjust their procurement strategies. In particular, the digitization of the procurement process needs to be promoted.