Let’s leverage the advantages of digitization in purchasing

Most of us in the business world are familiar with the buzzword “digitization”. Unfortunately, specifically purchasing is lagging in its digital potential, although appropriate IT processes could make work life easier, faster, and more effective.

shutterstock.com | Dilok Klaisataporn

The potentials of digital purchasing are vast, ranging from paperless sourcing on online platforms to automated accounting. Yet, the reality of it all looks different. Making entries into the system manually, Excel lists and heaps of papers — ­highly qualified employees in purchasing usually spend the majority of their working day on tedious manual processes. All this comes at the expense of strategic issues, for which there isn’t enough time. The reason usually stated is a lack of budget for a new ERP system or additional modules. It’s sad to say that digitization is just a pipe dream.

At the push of a button — are online shops making life easier for shoppers?

The subject of online shopping currently seems to be ever-present — not only privately, but also in purchasing. Corresponding offers for the purchasing department are springing up everywhere like mushrooms. Nevertheless, this concept is still a vision for the majority of companies. Digital platforms are rarely used in purchasing practice. The reason for the reluctance quickly becomes apparent. In many online stores, orders are entered or placed manually in the ERP system, and the data is then transferred using Excel lists. Reducing workload looks different and so, filling out inventory and sourcing materials become time consuming, unwelcome tasks.

Nevertheless, positive contrasting examples also exist. The December 2022 issue of the German purchasing trade journal MBI Einkäufer im Markt (No. 24) shows how digitization can make things easier for purchasing. And it does so by means of an online store that is linked to the company’s own ERP system, thus enabling sourcing at the push of a button. In the said article, the example of a stainless-steel component manufacturer is presented. The online store, which was introduced last year, can be accessed through the web browser and is linked to the ERP system in a flexible way.

The integration into the company’s own ERP system

With an ERP connection, the underlying database can provide product information in various file formats while the product catalog can be integrated into the merchandise management system. This allows items in the shopping cart to be automatically imported into the ERP system, including product information, such as descriptions, prices, quantities, and delivery times.

The review and approval process take place as usual in the ERP system, and the order is automatically transmitted to the supplier using an EDI interface, i.e. to the valve plant as in the example above. Annoying, additional Excel spreadsheets managed by hand are no longer necessary, errors avoided, availabilities automatically checked, and alternatives suggested. By the way, linking consignment warehouses is also conceivable in this context. In this respect, I have had excellent experience with the tool manufacturer Wurth, who also delegates ordering to the relevant requisition areas using an app.

Are you already keeping pace with digitization? Or does room for improvement exist in your purchasing operations in this regard? I will be happy to support you with a free appointment about digital purchasing, or I’m available on LinkedIn to answer any questions you may have. Many other exciting topics are also covered in my new book, Purchasing in Transition [Der Einkauf im Wandel].