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18 May 2017

Digitization of procurement processes in medium-sized companies

There is a considerable need for innovative software for digitizing procurement processes. The goal is the strategic realignment of purchasing in medium-sized companies. Companies are “not well prepared for digitization”, as a new study by the HTWK Leipzig shows.

Cutting the cost of procurement processes through digitization

According to the current study “Indirect Purchasing in Focus” by the Leipzig University of Applied Sciences (HTWK Leipzig), procurement costs can be halved by digitizing purchasing processes compared to manual procurement. A particular focus of the study was on the consideration of C-parts procurement, since the parts are not directly required for the actual production of the end product, but support it (see ABC analysis). As result of the study it is certain that “the procurement of indirect need […] in an enterprise can become a substantial cost factor”. A calculation example from the study: “With around 7,100 orders per year, digitalized processes could reduce its ordering costs from just under 820,000 euros by 40 percent to 480,000 euros”.

Uniform information basis in the company

If purchasing processes run digitally, procurement strategies can be standardized company-wide and thus optimized. The demand on the purchasing department is to automate manual activities and to accelerate reaction times in order to positively influence the success of the company. With ECM solutions these requirements can be realized. Everyday work processes are supported, for example, by the digital mapping of work processes, such as electronic invoice processing processes (also with interfaces between ECM and ERP), or the bundling of supplier data in digital supplier files. This makes procurement coordination more transparent throughout the entire company.

Source: IT rebels (17.5.2017)

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