eProcurement to supplier management

DIG accompanies end-to-end digitization
eProcurement made the start, in the future KOSME wants to implement further phases with DIG - up to supplier management.

KOSME: Entry into eProcurement

With around 160 employees, the special machine manufacturer KOSME is a typical Austrian SME. With a three-phase project, the purchasing department is now realising the value-added potential of business digitalisation - starting with eProcurement: Phase 1 includes the installation of the catalogue platform DIG.procure and the connection of the company's suppliers - from very large to very small.

"Until a few years ago, digitalisation and eProcurement were thought of strongly in terms of EDI - but that is too narrow for medium-sized companies with an extensive network of suppliers," says Purchasing Manager Thomas Mikl. At KOSME, the large suppliers that would be suitable for EDI can be counted on one hand: "Bernecker & Rainer for classic catalogue items, Schinko as a contract manufacturer - but we see the main benefit in eProcurement in the connection of the many small partners, some of whom do not even use an ERP system, so they are used to sending documents by e-mail. That's where DIG really comes into its own."

Transparent Buying

Since November 2019, the day-to-day procurement of indirect materials has been carried out via the eProcurement solution of the DIG catalog platform: For this purpose, the specifications of the purchasing department were precisely implemented, particularly with regard to account assignments, purchasing authorizations, cost-specific approvals, and supplier catalogs. Defined products are available for individual users depending on their membership of a user group. Approval processes depending on value limits and the dual control principle for each order can thus be complied with in an uncomplicated manner: "The eProcurement workflow has proven itself particularly in the Corona-related home offices: Approvals of individual purchase orders can be given from the workplace or even mobile via laptop or smartphone - instead of printing them out and obtaining signatures!"

Catalog to free text order

A total of 7 catalogs with thousands of products are currently linked to the system, and an expansion is being worked on. "Free text orders were particularly important to us: We use these for maintenance contracts, spare parts, services, etc. In other words, all things for which an order number would have to be created specifically in our ERP system, which is ultimately expensive.

Thomas Mikl emphasizes the flexibility in the digital mapping of the specific release guidelines according to material group, cost center and value limit.

Requirement-specific ordering information

Regardless of whether an order is placed from the catalogs or via free text or OCI stores (e.g. Amazon Business - not used at KOSME eProcurement), various information can be assigned to each order: from a specific delivery address or the company location to the respective goods recipient. For account assignment, 44 different digits have been integrated; in addition, a project number and an investment number can be freely assigned. Together with the optional purpose of use, a clear assignment of each order is thus possible. Approval is also carried out on several levels, depending on the material group and value limit: "At KOSME, we generally maintain the four-eyes principle, but three approvals may also be necessary - the system is completely flexible in this respect." The persons responsible in each case are derived directly from the cost center and the material group as well as from the management. After the order has been approved, it is stored in the in-house document management system, while the supplier receives a PDF in a defined KOSME layout - or an EDI file, depending on the type of connection.

Agile development, straightforward changes

"We were aware that we are not IT experts," Mikl explains the initial situation of the eProcurement project. This made the choice of partner even more important to him: "The problem arises as early as the tendering stage: on what basis is the offer made? We don't have the possibility to work out the project so gradually that all steps are clear in detail." That's why flexibility and handshake quality were important to KOSME: "I saw a presentation by Harald Allerstorfer at Partner Day 2018 and was convinced: they live our values, work flexibly and fit in with us." With this impression of handshake quality, the project was able to get off to an agile start - even DIG's extensive blueprint was constantly revised: "In coordination with the individual departments, there were always changes, new fields, and so on. DIG implemented all of this extremely quickly and flexibly, without breaking the budget." And this even though the project took six months longer than originally planned, which was due to the sustainable structuring of the master data and the ECLASS strategy.

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Full service in catalog connection

The key to the solution is the availability of the product data. That's why those responsible at DIG take care of the connection once the (content catalog) suppliers have been announced: The technical conditions are clarified and the eProcurement catalogs are imported. These are then randomly checked - especially with regard to prices and general conditions. The entire supplier master data record is updated once or twice a day, and any changes are summarized in a clear delta report for approval.

Different entry points

Various points with single sign-on (one-time login) were provided for entry into the eProcurement system: the company's own intranet, the ERP system INFOR, and the company's own wiki. In this way, the work environments of the individual user groups (management, IT, design, mold making, purchasing, etc.) are taken into account in the best possible way. "Since KOSME is integrated in the IT system of the parent company KRONES AG, appropriate coordination had to take place when embedding it in the intranet," Mikl recalls with satisfaction, "This worked out excellently with DIG, as did the cooperation with our vendors for the ERP and document management system." Currently, 40 users are working with the system; newly registered users automatically receive standard rights, and an admin can adjust them accordingly.

Optimize process costs and reliability

"Digitization is a top priority for KOSME in purchasing: With the available technologies, process cost reductions and a high level of security are also achievable for SMEs. However, eProcurement is not the only necessity for us to expand our competitiveness," Mikl paints a picture of the near future. In phase 2, the document flow in the area of direct material will be focused: "Here, DIG offers a solution with convenient alternatives to EDI, which suits our supplier structure very well. Due to our business model, however, this will be an exciting task." This is because numerous parts of the special machines are manufactured according to concrete specifications: "These are transmitted as PDFs, in 2D and 3D representations, as the basis of the order. Assigning all these specifications from our document management to the concrete order in an automated way will be very challenging in any case."

Ideal partner for further digitization

In the next phase, the focus will be on supplier management in the form of efficient tenders and tools for strategic buying: "But this will not be the last step: Digital processes also open up new options for processing complaints or evaluating key figures." For the buyer, what counts most is value creation: "It is immensely valuable to know in which product group the highest optimization potential exists - daily updated key figures provide a reliable basis." And relieving the burden on employees provides the necessary resources - for example, to optimize cost calculations together with the design department: "Technically equivalent alternatives to price drivers make us competitive. This is where the purchaser's time is more profitably invested than in the manual reconciliation of receipts." As a vendor-independent, flexible expert in the central areas of business digitization, DIG is the ideal partner for this path into the future, even beyond eProcurement.

How KOSME supplier Bernecker & Rainer stabilizes supply chains with EDI?