Optimizing supplier relationships with data analysis
Digitalization with control cockpit
3CON T e c h n o l o g i e s is one of the leading suppliers in the manufacture of highly automated production systems for the automotive industry. The smart processes that the international plant manufacturer promises its customers are also put into practice in Purchasing, where DI (FH) Mario Mair, MBA, manages the digitalization of supplier relationships in a targeted manner as Global Head of Procurement.
"Digitalization is a living process with great potential for positive organizational development," says Mario Mair, underlining his basic philosophy. "But in order to identify which suppliers can be used to optimize processes and what impact this will have on colleagues in Purchasing, you first need reliable data!"
Own data analysis with Google tools
With this in mind, Mair and the data specialists from the software programming team at 3CON installed an analysis tool based on Google Data Studio. This allows the effects of digitalization measures in purchasing to be clearly presented. "It was very important to me that we use internal expertise to develop the tool for the entire team." Ultimately, everyone should be able to work with it and develop a shared view of things and the corresponding goals. "For me, it's about presenting and checking the concrete effects, for example when an EDI route is set up to a supplier. Does the rate of manual processing of invoices and order confirmations decrease as desired? Or are there obstacles that we have not yet identified? And are there differences in the product groups and what are the reasons for them?" All of this is essential in order to understand digitalization in purchasing, identify optimization potential and use it in a targeted manner.
Decision-making basis for initiatives
"In 2022, we added an AI channel to the processing of incoming EDI invoices, which automatically reads PDF invoices. As a result, the manual processing rate fell from 36% to 9% in 2023, while the proportion of electronic invoices that are fully EDI-automated rose from 21% to 70%," says a satisfied Mair. Nevertheless, it is worth taking a closer look: "With our tool, we can see on a weekly basis where the electronic exchange is working - and can analyze the reasons if there are manual outliers." The purchasing expert gives an example: "If we have an EDI line with a supplier, for example, the degree of automation should be 100 percent. If it is not, the reason may be that we order in units but delivery is by pack. Or that surcharges make manual clearing necessary." In addition to these correctable reconciliation discrepancies, free text orders can also be the cause: "These are generally welcome at 3CON through our DIG GmbH Procurement Platform. Our previous experience helps us to assess this and take initiatives where necessary."
EDI with web portal
In addition to EDI, 3CON also uses DIG Web-EDI as an input channel. "Especially in technical purchasing, where we purchase drawing-based parts from traditional manufacturing companies, among other things, this method has proven its worth!" So far, around 2,500 orders have been processed since the beginning of 2023 in such a way that the suppliers obtain their order data including the design drawing (after being informed by email) via their access to the web portal and also enter or upload their order confirmations, delivery bills and invoices there. "We also use this channel to communicate any changes efficiently," explains Mair. "And it's bi-directional: the producer sometimes points out optimization possibilities to us." The acceptance of this communication channel is high in any case, because: "The upstream sourcing, i.e. the tendering of orders, also runs via such a portal solution. And it costs the supplier nothing, while the central availability of information regarding the current status brings advantages."
Partnership-based digitalization
For Mair, there are good reasons why the success rate of this type of information exchange is usually impressive: "Digitalization only works in partnership. We approach our suppliers, think through our joint efforts for document exchange and develop a strategy. Then we sit down with the DIG specialists and see what a concrete solution looks like." Development instead of hasty action: "Staying in contact, gathering experience and continuously improving step by step, allowing time for preparations and tests - that's our approach. And only when this is successful do we move on to the next partner." In technical purchasing, for example, with six suppliers now connected via EDI, the rate of electronically transmitted orders has doubled in just a few months. "Order confirmations are also important because they used to involve a lot of manual work - digitalization noticeably reduces the workload for our colleagues here!" With DIG, they have a partner who thinks along with them and develops solutions: "Kanban management, for example, presented us with major problems because the monthly invoices had to be allocated manually to the respective islands. We were able to solve this with the order confirmation including the order number related to the Kanban island. When filling the chutes, on the other hand, we went down the route of automatically creating orders as CSV files as purchase orders, etc. Depending on the workflow, a certain amount of solution creativity and technical flexibility is required." However, with over 1,000 active suppliers a year, the aim is not to connect everyone digitally: "But even the main suppliers bring a great deal of efficiency."
Building up employees instead of saving
"Even though we didn't have to fill two positions due to digitalization, it's not about cutting staff - on the contrary!" This is because the transformation from a (data) maintenance department to high-performance procurement requires resources: "Our focus today is increasingly in the strategic area, but the requirements are also changing as a result. At 3CON, we support our buyers in this change - and digitalization provides the necessary freedom." The analysis tool also provides support here: "I can zoom in down to employee level and see objectively who benefits and is relieved by the digitalization of which supplier relationships - and where support is needed. This organizational development is also optimally supported by our data cockpit and DIG as a flexible digitalization partner!"
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