So können digitale Tools den Fokus eines strategischen Einkäufers neu ausrichten

How can digital tools realign the focus of a strategic buyer?

Ivoflow at the MANN + HUMMEL Purchasing Summit in Ludwigsburg

Data processing and visualization, information procurement and recommendations for action - purchasing managers are now heavily involved in operational activities. There is hardly any time left for traditional strategic tasks and projects such as strategy development and supplier negotiations. In addition, there have been geopolitical and social changes in recent years that have required quick reaction times and made long-term planning almost impossible: from the Covid pandemic to the blockade of the Suez Canal and the war in Ukraine. Companies are now faced with the challenge of realigning the focus of their procurement organizations: away from operational processors and towards strategic drivers of business success. Nicolas Neubauer, co-founder of ivoflow, explained in his presentation at the Purchasing Summit of Mann + Hummel, the global market leader in the field of filtration based in Ludwigsburg, how digital tools and in particular ivoflow can support this change.

What is the MANN+HUMMEL Procurement Summit?

The family-owned company's specially organized event takes place every year at its headquarters in Ludwigsburg. The aim of the three-day event is to bring together procurement managers from all locations worldwide to discuss developments, challenges and strategies and to exchange ideas. MANN+HUMMEL also invited three external speakers to share their experiences of digitalization in procurement as part of a presentation – including the software company ivoflow. Hanno Höhn, CPO at MANN+HUMMEL: "We were excited to find out what opportunities there are in the analytics environment – combined with AI – for strategic procurement."

Challenges in procurement: resilience, sustainability and profit maximization

In his presentation, Neubauer began by discussing the developments of recent years that have had a significant impact on the role and remit of a buyer. "In the years before the coronavirus pandemic, the focus of companies was clearly on reducing costs through measures such as increasing productivity, annual business plan negotiations and increasing volumes in a stable economic situation." Since 2020, however, this focus has shifted: Companies are placing increasing emphasis on parts procurement, sustainability and resilience and have introduced various task forces to this end. However, this has been accompanied by a decline in the performance of purchasing departments. Thanks to his many years of experience as Global Commodity Manager at the automotive company ZF Group, Neubauer knows about the problems of purchasing and their pain points. The geopolitical instability since the start of the corona virus pandemic has not only caused costs to skyrocket, but also the speed of change in the market. Legal regulations for greater sustainability and the development of resilient supply chains have further exacerbated the situation.

"Loss of profitability and the declining efficiency of purchasing organizations are just two of the many consequences for companies from various industries"

Now that industries have recovered from the initial shock of the recent crises, cost pressure is once again coming to the fore. "It is once again a question of generating savings in order to achieve the targets set in purchasing and ensure the profitability of companies." In addition, the focus is also on the further development and qualification of employees. "Our customers often complain that their purchasing teams are too involved in operational business and merely act as processors of production requirements. Digital tools such as ivoflow can remedy this," says Neubauer.

Realigning purchasing with digital tools

But how do companies manage to give their purchasing teams more time for their actual tasks? In his presentation, Neubauer presents four pillars on which strategic procurement should focus:

  • Supplier Relationship Management Platform (SRM): how to strengthen supplier relationships and ensure compliance through a centralized platform
  • Visibility and transparency in the supply chain: access to data in real time makes it possible to react proactively to risks in the supply chain and avert them
  • Artificial intelligence and machine learning: corresponding applications can improve decision-making capabilities and identify savings opportunities using algorithms
  • Data analytics and predictive modelling: those who are well positioned here can optimize their sourcing strategies and minimize risks with advanced analytics

With this tech stack as a foundation, buyers are once again able to focus on their core competencies. As far as profit maximization is concerned, one of the main problems in most companies is the well-known silo mentality - not only in the individual departments, but also at data level.

"On the one hand, there is the internal data on suppliers, prices and contracts. These are maintained decentrally in different systems, which increases complexity. On the other hand, there is external market data such as material costs, exchange rates, logistics and wage costs and much more. These two data sources need to be linked together."

In this way, data can not only be visualized, but also provide actionable insights for individual users that impact the company's results.

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