eProcurement with best usability: Palfzone

E-procurement with high user acceptance, without free-text BANF

PALFINGER, the world's leading supplier of innovative crane and lifting solutions based in Bergheim near Salzburg, made a successful start with its eProcurement system: The introduction of e-procurement was geared to user acceptance right from the start, which is not surprising given the company's digitization expertise. However, the dynamic nature of the rollout is remarkable - as is the strategy to avoid free-text orders or BANF.

"The project was originally initiated by our colleague Matousch, who is now responsible for regional purchasing," explains Michael Kunz, Global Lead Buyer from the Indirect Spend/Investments division at PALFINGER. "The name Palfzon also dates from this time - and together with the claim 'one click - you get it', it clearly defined the goal." An e-procurement system, in other words, that corresponds to the well-known American online retailer in terms of user experience and breadth of offering - and at the same time maps PALFINGER's highly complex signature policy.

Various approval processes

"We really do order everything according to the dual control principle," says Manuela Troppmair (Global Lead Buyer Indirect Spend/Investment at PALFINGER), summing up the challenge of complex approval processes. Depending on the value limit and the type of goods, a wide variety of approvals may be required: "Even the smallest orders involve the cost center manager. In the case of hardware, the IT department is also involved, and in the case of dangerous goods, occupational safety is involved," says Kunz, describing the range of approval scenarios. For investments, the approval of different authorized signatories is required, depending on the amount. The accounting department, which has to activate asset numbers, is constantly involved. And, of course, the specific people involved are always changing. "Creating a system for this was quite a challenge," emphasizes Kunz. A total of ten interfaces are used to control the complex account assignment process, among other things. In SAP, each order is then processed up to automatic payment (P2P).

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Advance design for high project efficiency

In view of the complex requirements with regard to approvals and account assignments, the cooperation with DIG was particularly important in the run-up to the project, says Kunz: "We had a number of coordination meetings on site in order to outline the processes down to the last detail in workshops. A lot of work, but it paid off in the end in an efficient, spot-on implementation!" There is also praise for the entire DIG team: "They are great to work with, we worked out optimization potential together and ensured a structured project process."
And because digitization is a top priority at PALFINGER, the potential in terms of return on investment was presented in detail to the management board prior to project planning, Troppmair recalls: "However, the benefits from supplier negotiations, strategic decisions and, not least, a time saving of around 30 minutes per order were clear."

Large offer instead of free text orders

PALFINGER took a strategic approach to designing the e-procurement system as a whole, as the example of free text ordering shows: "We decided to offer our colleagues such a wide range of products that special requests do not even arise: For example, there are around 50 ballpoint pens available," says Troppmair. If something is missing, the BANF in SAP is deliberately used instead of the convenient free-text order: "Instead of the convenient order from the workplace, the request takes the time-consuming route through the departments. In this way, we avoid inquiries because of some small thing for which there are umpteen alternatives in the system," Troppmair continues.
The bottom line is that this reduces the time and effort involved, even though around 40 suppliers are connected, some with several catalogs (because they are different for the various countries). This is due not least to the convenient onboarding of the negotiated catalogs by DIG Catalog Management. "This process always runs smoothly, and we can concentrate fully on strategic negotiations," adds Troppmair.

eProcurement in an individual design: the Palfzon is immediately familiar to users.

High user acceptance from the start

At Palfzon, great attention was paid to design and UX (user experience): "Without users, our entire concept would come to nothing - that's why the visual appearance is part of the concept in the sense of the PALFINGER brand with the goal of easy usability and clear presentation of search results," Kunz explains. Convenient single sign-on was therefore a matter of course in order to keep the barriers to accessing the system as low as possible. The fruits were reaped during the roll-out, Troppmair is pleased to report: "At the beginning, colleagues were skeptical, but within half a year we already had 55% users. Our self-explanatory user guidance is also a success; training is only needed in exceptional cases."

Outlook for the further roll-out

PALFINGER also uses regular, site-specific reporting to analyze usage and make improvements to the offering where necessary. "In the past 12 months, almost 10,000 orders with a total volume of 1.2 million euros were recorded from nine connected sites," Troppmair is informed. There are therefore concrete plans to roll out Palfzon to more of the more than 33 production and assembly sites worldwide: "However, we also have sites that do not yet have SAP - but that will change with the introduction of S/4HANA, so we will connect many more plants. In any case, PALFINGER EPSILON in Elsbethen near Salzburg will be added next year," says Troppmair.

Shall also soon use eProcurement: PALFINGER EPSILON site in Elsbethen.

Challenge: Catalogs in local language

Kunz points out a limiting factor in the rollout: "Of course, you need the right suppliers. But it's not just a question of them delivering to our sites in Bulgaria, for example, but that we need the catalogs in the relevant language - but these are not always available!" This applies all the more to technical descriptions, where you quickly reach the limits even with English. That is why PALFINGER pursues a strategy of relying not only on international suppliers but also on regional sources of supply: "We therefore negotiate with suppliers at different levels - I myself negotiate with transnational suppliers, and my colleagues on site negotiate with regional suppliers," says Troppmair.