How to choose the optimal digitalisation system for your purchase?

How to choose the optimal digitalisation system for your purchase?

If you want to digitalize your purchasing processes, it is important to take into account a number of different aspects. We are deliberately not talking about choosing the "best" system as such, but the system that is functionally and cost-optimal for you, i.e. the best given your purchasing needs and possibilities.

Basically, there are two ways to digitise the purchase:

If you use ERP systems such as SAP, Oracle, Infor, etc., or the ERP system of a home-grown software vendor, you may find that

• the offered ERP modules for purchasing are not in line with your needs
• especially multinational ERP systems are unaffordable for you
• the system suppliers refuse to make any modifications for you, or the modifications are at exorbitant prices
• the operation of these systems is not user-friendly and so they are not accepted by your buyers, increasing the cost of implementation
• the implementation of these systems is often accompanied by costly consultations.

Alternatively, you can implement a cloud-based SaaS (System as a Service) solution to complement your ERP from developers who have specialised in digital purchasing.digitalizace

We will explain the advantages of SaaS on the example of the Promitea system by Apitea s.r.o., which was developed on the basis of the following principles:

Completeness of digitisation

Promitea as an integrated solution consists of the following modules:

• Total Spend Analysis for cost analysis of purchasing activity. Structures and maps the baseline state of purchasing and identifies areas where rapid and effective improvements can be made ("low hanging fruit")

• Catalog Purchase for purchasing standard products by both the purchasing department and authorized requesters in other departments with a user-friendly workflow

• e-Sourcing for the purchase of key products (leverage goods) by category managers using RFIs, RFQs and electronic auctions

• SRM (Supplier Relationship Management) for selecting the best suppliers and developing relationships with them

• Purchase 2 Pay for electronic fulfillment from order to invoice

The customer has the choice of a complete implementation or any combination of these modules. It is clear that the highest efficiency of digital purchasing can be achieved by implementing all modules together. In practice, it is recommended that the implementation be phased in individually for a given customer.

1. Concentration on the essentia

The Pareto principle also applies to digital purchasing: with the most important 20% of all possible workflows, you cover about 80% of all essential purchasing functions. The price of the remaining 20% of functions will cost you more than 80% of the additional costs.

Promitea concentrates on the 20% of the most important workflows, with additional functionality that can be added at any time according to actual needs.

Implementing 100% digitisation is costly. The marginal benefit of 80% of non-important workflows is limited. We recommend implementing these workflows only after the most attractive features have "earned" you the next steps :-)

In addition, SaaS operators permanently add additional features based on their experience and customer requests, which integrally build on the existing workflow.

2. Acceptance of digitisation

We know from experience that the introduction of digital purchasing often encounters initial skepticism from purchasing associates. This attitude stems from a distrust of change. What good is the best system if it is perceived as an intruder with no obvious benefit!

You can overcome these potential aversions more easily if you

• provide your employees with an explanation of the system, its objectives and provide the necessary training
• the new solution is logically structured and easy to understand
• the user interface is friendly and intuitive
• the system greatly facilitates the work of the purchasing department
• the provider will provide prompt support if needed. Alternatively, it has worked well to allocate motivated staff to implement the new system and pass on their experience to their colleagues. The most effective consultant is a sympathetic colleague :-)

3. Structural change in purchasing activities

How will digitalisation affect purchasing practices? The initial state can be characterised as follows

• Manual workflows cause disproportionate process costs.
• Manual processes tend to be introduced for one-off or rarely needed non-standard processes, thus complicating their management.
• "Lack of planning produces operational chaos".

When developing the Promitea system, we took a diametrically different approach:

• division of workflow into main and secondary (see point 2).
• consistent standardization and normalization of main workflows
• definition of required master data and data interfaces
• setting control parameters for digitized workflows

4. The system implementation process

Promitea contains the results of the above approaches in the basic settings. The decision parameters are adjusted according to the customer's needs after agreement with purchasing management. In this way, system setup costs are minimized. The system can be implemented in record time.

Customer participation in the implementation of the system is limited to

• Taking master data from the customer's existing ERP system using agreed interfaces, or supplementing this data from other sources.
• Setting decision parameters for defined workflows.
• Pilot operation and system acceptance.

Depending on the customer's data situation, the following indicative timelines can be named for the implementation of Promitea modules:

• E-Sourcing and Total Spend Analysis: several days
• Catalog Purchase: several weeks depending on the organization of applicants and approvers
• SRM: only becomes apparent after several months, depending on the exchange of information between the contracting authority and its suppliers

5. Operational improvement versus strategic change

The above-mentioned modules are operational tools that make purchasing more efficient, although some advocates of digital purchasing partially elevate them to strategic.

In the literature, strategic measures refer to far-reaching structural changes that make not only competitive advantages available to a business organisation as such, but also permanent changes that are unavailable to competitors in the long term. Examples of strategic changes:

• Invention on demand
• Make or buy
• Vertical integration
• Design to cost
• Specialisation versus modularisation
• Strategic Alliances
• Fusion

Changes of this nature are implemented in teams in which other departments such as marketing, R&D, production, logistics and controlling are represented in addition to purchasing.

The operational results of digital purchasing also indirectly support strategic decisions. One of the interfaces is SRM and its analytical insights into the supplier market. Effective operational intelligence also provides the financial means to analyse strategic solutions and frees up the purchasing department's capacity to permanently evaluate various development alternatives.