A recent survey from the Lünendonk market researchers found that in Germany, the level of connectivity between suppliers and purchasers reaches between 5 and 50 percent, which shows typical characteristics of small and medium-sized enterprises.
In concrete terms, this means: Many SMEs seem to standstill before reaching procurement 4.0. They’re not able or willing to part with the sum of money for a complex e-procurement solution and EDI connections to which most approaches to automation have been restricted to so far.
Instead, they often process their orders and invoices manually – via telephone, e-mail or fax. But these communication channels are slow and error-prone, additionally much necessary information can’t be accessed at the right time.
A recent study from SAP shows that there is no alternative to the automation of procurement.2 According to the study, 73 percent of procurement, finance and supply-chain managers from numerous international companies agree that digital change offers great opportunities to improve procurement.
There will be more time in the procurement department for conceptual and strategic tasks, by standardised and automated processes. Therefore, companies can provide an effective response to customers and markets and become able to discover innovative developments.
Cloud solutions are becoming increasingly popular
“Companies can already use the opportunity to connect suppliers electronically, with cloud solutions constantly gaining popularity such as SAP Ariba, which are faster, simpler and cheaper than on-premise systems,” Sebastian Asshauer explains.
He is a specialist in Ariba-based procurement solutions as an associate partner at the IT consultancy firm apsolut. Ariba is – with an annual trading volume of 1.25 Trillion USD – the global market leader when it comes to cloud procurement solutions.
It links buyers and suppliers from over 2.5 million companies and 190 countries. Ariba covers a wide range of functions for operational and strategic procurement processes.
In addition to this, Ariba cash management can be used to manage procurement processes, control expenditure, implement potential savings and build a stable supply chain.
Companies get the opportunity to achieve the best price-performance ratio by enabling access to thousands of sources of supply. In turn, SAP Ariba offers suppliers a platform to expand their global customer base and simplify their distribution cycles.
Global leading trading platform
Larger companies have decided to use the global trading platform Ariba, following the SAP acquisition in 2012. Using preconfigured interfaces, companies can integrate the SAP Ariba cloud solution into their existing SAP ERP or SAP SRM (SAP Supplier Relationship Management) system.
These hybrid cloud scenarios offer companies the advantage of protecting their existing investments. At the same time, processes can be standardised due to best-practice solutions, which are not among the core competences of procurement, by outsourcing them into the Ariba cloud-system.
Nevertheless, most SMEs are still sceptical about SAP Ariba because they shy away from the expenditures associated with an implementation project. But this can change, a tailored and bundled SAP Ariba solution is now available for small and medium-sized enterprises.
This preconfigured product was launched as part of an SME business initiative by SAP in co-operation with the IT-consulting company apsolut Group, which is specialised in procurement processes.
The licences and prices for this product are also affordable for SMEs, as it uses core functions from the cloud-based Ariba full version. The advantage of this lies in short implementation time of a few weeks and manageable project costs.
Procure-to-pay as email-based process
The preconfigured SAP Ariba procurement solution provides best-practice workflows, features, and form templates that enable small and medium-sized enterprises to manage procure-to-pay processes as email-based processes with suppliers, which can go from ordering to incoming goods, all the way to invoicing.
This allows the procurement processes to be managed faster and more cost-effectively. One example for this is that no paper-based invoices are generated and no procurement processes are carried out through the procurement department.
The keyword for this is: “Maverick Buying”. With this, SMEs become able to improve compliance and audit whether all previously agreed conditions are adhered. The target groups of the preconfigured SAP Ariba procurement solutions are companies with an annual purchasing volume from 50 million EUR.
Since suppliers can use most parts of the SAP Ariba SME solutions free of charge, another obstacle on the way to procurement 4.0 can be removed.
According to the above-mentioned Lünendonk study, an important reason for the low level of networking with the purchasing companies is that “many suppliers seem to be overwhelmed by technological solutions and are not willing to commit money to them”.
Process and technology-knowledge are indispensable
Sebastian Asshauer from apsolut advises SMEs to get a specialist IT consulting partner on board for an SAP Ariba project, who combines knowledge about procurement processes with SAP and SAP Ariba knowledge.
Sebastian Asshauer refers to another way to relieve the procurement department by saying that “this partner can, if necessary, also take over communication with suppliers and the catalogue management”.
Professional external support is also useful when the preconfigured “Basic Sourcing” solution of SAP Ariba is going to be supplemented with additional features from the full version.