It is in purchasing that profits are made. Although it may appear to be primarily a matter of buying at favorable prices, other factors must increasingly be considered, including, more recently, the issue of digitization.
In our opinion, there is only one question that needs to be answered to do justice to the role as a significant profit earner: Is your purchasing department powerful?
- Powerful in the face of rising volatility?
- Powerful in the face of increasing complexity?
- Powerful in the face of increasing variant diversity?
- Powerful in the face of supply shortages?
- Powerful in the face of cost pressure?
For this, you need a purchasing department that is strategic and at the same time fast and agile.
TMG Consultants has a 360° view of this, keeping a firm eye on resources, organization and processes in order to bring the performance of purchasing to a TOP level. The level of digitization required to achieve this must be given significant consideration.
RELEVANT DIMENSIONS AND LEVERS IN PURCHASING
From TMG's point of view, different aspects can be identified that are fundamental for the overall success in purchasing. Using our broad and long-standing experience, we support you along this journey by identifying potential problems, analyzing your purchasing structure and providing you with a long-term perspective. This leads to a sustainable improvement of purchasing, supplier management and material group management.
This goes hand in hand with a collaboration that inevitably crosses all functions. Successive implementation is achieved by taking an integrated approach to optimizing your procurement activities.
All dimensions and implementation levers are considered in detail and critically scrutinized. For example:
- Analyzing spend cube incl. commodity structure
- Recording and analyzing current purchasing processes and organization
- Reviewing the process for integrating the purchasing organization into product development
- Recording and analyzing the different role profiles in purchasing
- Recording and analyzing current measures and projects in purchasing and re-evaluation
- Determining the degree of digitization maturity in purchasing
- Review of control processes and relevant key figures
From these insights, tailored concepts and alternatives are derived, and recommendations for action and decision templates are developed and agreed. These are consolidated into an implementation roadmap in coordination with your organization, thus enabling your purchasing department to achieve procurement excellence. Results of the roadmap include:
- Process efficiency in strategic and operational purchasing
- Suitable systems & selected methods for digitization in purchasing
- Repositioning and organizational design in your organization
- Established competency profiles of your purchasing functions and roles
- Transparency and trust in the purchasing organization as a critical success factor for economic activity
Use the findings of our study "Best Practice Purchasing Processes" illustrated in our IMPULS "Target Process vs. SAP-Ariba to take your processes one step further and align your resources and organization accordingly.
The Target process of strategic purchasing
DERIVATION FROM OUR STUDY "BEST PRACTICE PROCESS OF STRATEGIC PURCHASING"
Key digitization opportunities in purchasing include:
- IT system support of standard processes, such as contract management, by means of standard software
- AI-based supplier search substantially supports material group management and exploits existing global and local potential quantitatively and qualitatively
- Supplier assessment "digitalization" to determine how digitally and future-proof your suppliers are positioned
- End-to-end supply chain to integrate low-volume suppliers to ensure transparency
- Supplier integration using AI & robotics for the integration of strategic suppliers with different systems
Intelligent and AI-based supplier search - AI for Procurement
Do you know the potential hidden in your strategic purchasing? Imagine that you could use digital technologies not only to reduce your purchasing prices significantly and sustainably, but also to significantly optimize the processes in your procurement department with a focus on efficiency and effectiveness. With the help of intelligent solutions, digital transformation is also making its way into your company's purchasing organization.
SUCCESS FORMULA FOR PURCHASING (EFFICIENCY LEVERS IN PURCHASING): SYSTEMATICALLY IDENTIFYING SUPPLIERS AND POTENTIAL SAVINGS
In our view, intelligent digital solutions can be the decisive lever in the search for suppliers in order to be able to answer the classic key questions of purchasing as quickly as possible:
TMG APPROACH TO AI-BASED SUPPLIER SEARCH
By using Big Data and Artificial Intelligence, significant time, cost and resource savings can be achieved in the search for new suppliers and the quality of search results can generally be raised to a new level. This is demonstrated by examples and concrete figures from current projects based on TMG's Big Data and AI-powered approach. Visit our page on 7Q1 and see for yourself. The digitized scouting and sourcing process shortens the time it takes to a request to a potential supplier to just a few hours. Search and validation tasks that used to take buyers several days or weeks can be completed in a matter of hours. Generally, it is possible to identify and evaluate far more suppliers than a buyer would be able to achieve with the on-board resources available to him. The hit rate is significantly higher.
SCOPE OF THE TMG APPROACH TO AI-BASED SUPPLIER SEARCH
- Globalization of procurement: The internationalization of a company's own procurement is becoming increasingly important and, considering the TCO, generates corresponding advantages such as reduction of costs, better security of supply, risk minimization, etc. Knowing and retaining the right suppliers is critical to success.
- Price benchmarking: Thanks to an efficient and rapid identification of new suppliers, strategic purchasing gains transparency about the current situation on the relevant procurement markets and about possible savings potential. These are suitable for showing one's own suppliers at what prices certain services are currently available on the market or for strategically considering supplier changes.
- Local-for-Local-Sourcing: The spatial proximity of suppliers to the actual production and sales location and the associated availability of production-relevant resources, materials and preliminary products is often a critical success factor on the one hand and a major challenge for strategic purchasing on the other. AI-based approaches make this possible quickly and effectively.
- Support for planned sourcing/new awards: Planned new awards or sourcing can be supported at any time by means of an AI-based supplier search, which allows purchasing to focus on value-creating activities. Language barriers, time-consuming research, etc. are taken over by intelligent algorithms and are no longer necessary for the persons involved.
- “Emergency“-Sourcing: It is not uncommon for highly efficient emergency plans to have to be introduced in order to prevent the production supply from being cut off. In the event of such a crisis, AI-based search can provide support and help to secure supply with the aid of "emergency sourcing".
IN SUMMARY - WHAT OUR APPROACH ENABLES:
- Short-term material cost reduction in purchasing for existing or new suppliers
- AI-supported generation of arguments for supplier negotiations
- Short-term consolidation of the supplier portfolio
- Reduction of process costs and efforts in strategic purchasing through data-based identification and validation of new suppliers - global and language-independent
- Efficient collection of global price benchmarks - highly individual and specific to the required materials
- Binding offers from identified suppliers after only a few weeks
TMG's proprietary AI-based solution is easy for anyone interested to use, with no licensing costs or internal approval loops. Visit the 7Q1 – AI for Procurement page and see for yourself!