Roadmap for purchasing digitization
How to successfully digitize purchasing processes?
Max Winkler from Neuman Aluminum provides the answers! With his proven roadmap for purchasing digitization - from the involvement of all stakeholders to the further development for the future of buying and the purchasing department to the innovation department!
Roadmap to digitalization
With 13 production sites in Europe, China, the USA and Mexico and over 3,000 employees, NEUMAN ALUMINIUM is one of the world's leading experts in aluminum forming. In Austria, the company began digitalizing its purchasing processes - and faced particular challenges in the process. But what are the key factors for successful digitalization in buying? Neuman's experience provides a valuable guide for anyone driving digitalization forward.
When Max Winkler, MBA, Global Head of Group Procurement at Neuman, made the decision to digitize in 2020, he was faced with a situation that is common in many companies. "Although the four plants concerned in Lower Austria are only a few kilometers apart, the purchasing departments of the four divisions were worlds apart!" Despite the standardized ERP system, the procurement processes were inhomogeneous: "Some received orders by e-mail and transferred them manually into the system; others worked with BANF, including subsequent entry and telephone ordering. Transparency in the procurement volume by product group or supplier overview? Unthinkable!"
Optimization potential in the Opex and Capex area
Oberste Prämisse war daher die Homogenisierung der Beschaffungsprozesse. „Der Weg dorthin musste aus meiner Sicht mit der Digitalisierung starten, um in weiterer Folge über eine Standardisierung zum gewünschten Ergebnis zu kommen.“ Die Meilensteine auf diesem Weg standen fest: fehlerfreie Beschaffungen über ein einfaches System, effizientere, homogene Prozesse in allen vier Units und einheitliche KPIs. „Der Start war in Österreich, gefolgt von der Ausweitung auf die deutschen und slowakischen Werke“, so Winkler. Doch zunächst brauchte es den nötigen Funken für die Zündung – und den holte er sich von der Geschäftsführung.
More success with support from C-level
„Wir sind ein eigentümergeführtes Unternehmen“, beschreibt Winkler die Ausgangslage. Die damit verbundenen kurzen Entscheidungswege nutzte er, um die Geschäftsführung vom Projekt zu überzeugen. „Natürlich wurde dazu ein Business-Case samt Einsparungspotenzial errechnet. Aber dabei muss man sich immer bewusst sein, dass diese Zahlen die wahren Vorteile maximal andeuten, mehr nicht!“ Denn tatsächlich liefere Digitalisierung durch die Fokussierung auf die Kernkompetenzen des Einkaufs (also die Lieferantenpflege oder die eklatante Kostenreduktion durch die Konzentration von Warengruppen) ungleich höheren Mehrwert. „Alleine durch die freigewordenen Ressourcen für die Weiterentwicklung interner Prozesse zur Qualitätssteigerung, was für uns als Automobilzulieferer besondere Bedeutung hat, macht sich Digitalisierung bezahlt! Insofern ist die Entscheidung für eProcurement absolut risikofrei.“ Mit dieser Darlegung der langfristigen Vorteile erhielt Winkler das Commitment der Geschäftsführung. „Das lieferte den Rückenwind, um den Einkauf zum Entwicklungsturbo fürs ganze Unternehmen zu machen!“
Success factor change management
"I think this is neglected far too often. And it was a particular challenge for us due to the different levels of development of the individual units - some were already working very digitally in purchasing, while others were using paper documents," recalls Winkler. Different setups were therefore necessary to create individual acceptance for administered, structured processes and to convince users. "Of course, the objection regularly comes up that it has worked like this up to now, which is why you have to come up with arguments that provide the individual with advantages!" The awareness of risk management, the focus on time savings and quality assurance and the impact on the entire company proved to have traction. "Creating a sense of responsibility for the total costs of ownership and, for example, emphasizing error avoidance as an advantage for each individual has proven successful for us."
Top-down vs. democratic development
However, the strategic approach is also crucial to success, emphasizes Winkler: "I can leave this to a selected group of experts or to senior management. Or I can democratize this process and involve as many people as possible, from the management to the users. At Neuman, we have opted for the latter due to our corporate philosophy." However, this approach requires a motivating big picture, the Global Head of Group Procurement points out: "For us, as previously mentioned, this was essentially characterized by the benefits for the entire company." And he has another tip for such a digitalization strategy: "With such a broad-based initiative, you should always look for key people who motivate and monitor their environment, so you can control this process much better."
Step-by-step roll-out
"As tempting as it may seem to initiate the big bang, it only works in theory," says Winkler and therefore recommends a gradual introduction: "We first standardized the ERP processes before we introduced eProcurement and later eSourcing. This followed a clear, gradual plan."
Technology as a success factor
The technology decision also played a role in this. "Initially, we looked at marketplaces like mercateo. However, we were not convinced by this due to the lack of supplier control in terms of prices and product ranges." The decision was therefore made in favor of an eProcurement system. "It was also important for us to have a correspondingly large number of options to adapt the functions to the living organization. Usability is also a crucial issue for user acceptance!" The actual implementation showed that the least digitized unit made the fastest progress: "This also proved the decision for DIG GmbH, which convinced us with an intuitive user concept in addition to the fair price model and proximity." Winkler was also keen to ensure the continuous further development of process digitization: "The team from Linz is the ideal partner for this!"
Digitization as a think tank
"A key consequence of our broad employee involvement was the high level of identification of all colleagues with the project. That's why ideas came very quickly from the individual departments about what else could be digitalized," says Winkler, referring to the barcode scans with automatic reordering function, for example. For the implementation, he formed a magic triangle with the respective idea providers and DIG: "A blueprint is designed with the department, the process tree is specified with DIG and the whole thing is optimized again with the users." The implementation time averages around one month, says Winkler with satisfaction: "So far, at least twenty ideas have been developed for our eProcurement, but also for eSourcing, which bring us massive benefits on a day-to-day basis."
Digital sourcing with a pilot department strategy
If the digitization measures are more complex, Winkler swears by the initial use in a pilot department. " Sourcing quickly revealed a high level of complexity in the process tree. The depth of information, right down to the technical drawings that are attached to a tender, increases the potential for errors." The communication processes for queries, deadlines or rejections were also quite demanding. "That's why we opted for the pilot department strategy." The roll-out takes place in a department that is committed to the special features of a beta phase and provides valuable feedback: "We collect this feedback in weekly coordination rounds and process it together with DIG in an agile development process until the solution is ready for the overall roll-out." This is planned for mid-2024.
From order office to innovation department
The success proves Winkler right: "Compared to around 1,500 orders in 2021, we were able to increase the procurement processes running via eProcurement to 3,600 this year - although my goal is to only use our ERP in purchasing at the back end. In future, everything in the front end will run via DIG eProcurement." Similarly, eSourcing has already paid off in the beta phase: "Since going live at the end of 2022, 201 tenders have been carried out - with savings of over € 200,000. Without negotiation, mind you." In addition to the consolidation effect, eSourcing also means that suppliers can prepare themselves better, but also feel more competitive pressure due to automation. "In any case, Purchasing at Neuman is now taking on much more of the role of innovation driver," says Winkler, describing the new self-image. In the same breath, he gives an outlook on upcoming topics: "From my point of view, these are clearly sustainability processes and CO2 reporting obligations, contract management and compliance, as well as the automation of sales processes with EDI. And of course, we won't be able to avoid A.I. either. I'm thinking of using it for production and purchasing planning."
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