In the Episodes 24 to 26 of WUEconomcis Outside the Box podcast, I talked with Prof. Dr. Ronald Bogaschewsky, head of the chair of business industry management at the University of Wuerzburg about Digital Procurement and Supply Chain Management (SCM). We discussed current trends, potentials, challenges, to which degree companies are „digitally“ prepared in the context of procurement and SCM and where the journey is going in the next years.
In the first part (Episode 24) we talked about the waves of development in digital procurement (eProcurement) and the reasons why not every firm has jumped on the (internet) train, yet.
“Who doesn’t jump on the (internet) train loses track“
This is a statement of Prof. Bogaschewsky from the year 1998. 20 years later, obviously not every firm and organization has jumped on that train. Good news first: not everybody who has missed it, has left the market (yet). But those who are still resisting to introduce digital (procurement) processes and applications are highly vulnerable and are taking an enormous risk of losing track in a highly competitive market environment. Time has not been standing still and the train of digital transformation, internet services and technological progress has dramatically picked up speed.
Why hasn’t everybody jumped on the train yet?
At the beginning, there are technical and financial obstacles. Larger organizations have realized the potentials around the turn of the millennium and made first large investments into digital applications and ERP systems – besides the upside effects, there have been a lot of “childhood diseases”. It took several years before it really paid off for smaller companies to invest in digital procurement applications. Moreover, besides the technical and financial hurdles, organizations have to face internal obstacles. Digital transformation needs a solid and strategic change management. Buying the software and setting up basic digital equipment is just the first step. Even if you have set up the sensors that create all your data, you still need to manage it. One of the biggest challenges is to take the people with you. Companies have to take into account the needs, insecurities, and fears of their employees.
From an industrial organizational point of view, companies have started to realize, that they cannot afford spending more money on improving manual processes and tasks that can be done much better and more efficiently by computers. New technologies and applications in procurement disclose opportunities to automate routine tasks and free resources so that employees can focus on more strategic tasks, for instance in the field of strategic buying and global sourcing. Consequently, people that have been working on the same job for several years – often for decades – have to learn totally new processes and tasks. Therefore, it is very important and in the responsibility of the (change) management to guide and support the whole staff. Education is the only option – especially for those who are on the job for several years/decades.
Waves of eProcurement and Supply Chain Management
As mentioned before, not everyone has purchased a ticket for the train (yet). The landscape draws a heterogenous picture. On the one side, there are a lot of companies that are still having retentions to digital transformation and are hardly dealing with any digital procurement applications – instead they still take the phone or fax to place an order. On the other side, there are companies that have applied some procurement applications for a couple of years now – these firms have already gained experiences and have learned that the potential benefits are huge. Therefore, many of them have entered the next stage and plan to integrate e.g. stand-alone solutions in a single sign-on portal in order to create seamless processes where the purchasing process is an automated cycle – from the order to the payment and the whole book-keeping.
As mentioned before, the first big wave of digital procurement can be dated around the millennium turn and is characterized by the implementation of ERP systems and specific software solutions for purchasing and supply chain management. It is therefore related to increasing automation and efficiency – organizations have built a process framework that saved money and time. The „second wave of procurement“ was also triggered by the rise of global sourcing. As the eastern markets were opening up more and more in the first decade of the new millennium, a lot of firms saw enormous potential and opportunities. Successful and sustainable market entry affords strategic actions. The introduction of procurement software and applications supported companies to free resources for these more strategic tasks, such as strategic buying and global sourcing.
Last, but not least, many mostly smaller enterprises have recently started to introduce digital procurement solutions. Whereas ten years ago, companies had to make rather large investments to implement digital procurement applications, companies today have access to low-cost web-based solutions and seamless environments. To come back where we started, one could say, that a lot of smaller firms are finally jumping on the train and take the chance to secure their competitiveness.
#procurement #eprocurement #strategicsourcing #scm #supplychain #business #digital #strategy #change #
About Prof. Dr. Ronald Bogaschewsky:
Besides his academic stays at the Universities of Goettingen, Dresden, and Wuerzburg (since 2001) as well as the IBM Los Angeles Scientific Center, Prof. Dr. Bogaschewsky keeps close contact to the world of business. He has been a member of the board of the BME (Association for Supply Chain Management, Procurement and Logistics, the professional association for supply chain managers, buyers and logisticians in Germany and Central Europe, founded in 1954) for 20 years and still heads the BME Science Board. Therefore, the chair copes with public as well as business organizations on a regular basis. For detailed information about Prof. Dr. Roland Bogaschewsky please click here: https://www.wiwi.uni-wuerzburg.de/lehrstuhl/bwl2/team/lehrstuhlinhaber/