Magazin
Authors

Alexander Götte
Project Manager at h&z

Sven Heim
Senior Project Manager at h&z

Ralf Schulz
Partner at h&z
Head buyers are under pressure. They’re supposed to implement digitalization as quickly as possible in order to achieve the efficiency gains hoped for. But what does a successful digital transformation look like? h&z helped a German mechanical engineering company through the process.
The Supervisory Board was convinced that automating processes could significantly reduce operational activities. The CFO had also thought for some time that the Purchasing department had too many people to handle the operational processes. Other departments regularly complained about laborious and inconvenient procedures. And the CPO (Chief Purchasing Officer) heard restrained remarks from employees again and again: the IT tools they had to work with were archaic.
Purchasing: Making business processes more efficient
It had long been clear to the CPO that digitalization would change his life and that of his team. But what was still in the dark was how to manage this in concrete terms, how quickly the right technology would be available, and which technology would fit at all. All customer and business processes were supposed to become faster, more efficient, and more convenient. Supplier relationships would have to be formed differently, and ultimately the whole organization would need to change. But how exactly?
Digitalization: From skeptic to committed comrade-in-arms
When we at h&z came in, the CPO had “his back against the wall,” to put it dramatically – a state in which one rarely has good ideas and solutions readily available. In such situations we rely on the creative methods we’ve developed ourselves: We use “inspiration workshops” sometimes before the precise analysis of the respective organization and its weak points. They clear the mind and allow one to get a first perspective on:
- What might work?
- What works now, what later?
- What private experiences have those involved already had with the effects of digitalization?
- What changes are we expecting in the near or distant future?
It was the same with this client. Some of the workshop participants took the opportunity to make their deep skepticism regarding possible changes clear. Cleverly moderated, this was even helpful for the further process because we were able to see the sore points. And from experience, we know that the most honest skeptics often end up being the most committed comrades-in-arms.
Digital processes: Success brings employees on board
There followed a precise scan of the entire organization and collection of weak points and ideas. It took two months of extensive interviews and data assessment until the result was ready: a matrix of professional, organizational, and technical “pain-and-gain points,” which immediately included the expected resistance to the change process.
Change processes, of course, give rise to fear:
- Fear of being let go
- Fear of losing power
- Fear of being overwhelmed.
That’s why it’s often better first to establish a preliminary vision of the direction to be taken and then very quickly introduce the first small supporting functionalities of a purchasing solution with immediately visible positive effects. This allows the initial basic resistance among those concerned to be broken down.
That’s how it was here: As soon as the first functionalities were available, interest was aroused. Individuals saw the opportunity to develop further and felt supported on this journey into the future, which is still very uncertain in parts.
Straight to the goal with the right digital solutions
Much of what is being “hyped” today is not yet technically possible. Other things that one might dismiss as science fiction may arrive faster than you think. The software offering is highly complex and unclear, too. At h&z, we can rightfully claim that we have a good overview of these topics. As consultants in the most varied industries, we’re constantly occupied with the topic and continually observing the latest IT solutions. To sum up, we can confidently say:
- We know where things are headed.
- We know which software solutions fit.
- We know how to approach employees so they accept these solutions well.
- We know how to launch the ship.
Robotic process automation shortens the ordering process
The difficulty at the company in question was that the respective systems weren’t compatible with one another. With h&z’s market knowledge, it was possible to quickly identify suitable solution providers from among the 300 or so suppliers of purchasing software for a temporary solution – at least until a long-term solution had been developed. After the supplier selection, the process was able to be replaced quickly by “robotic process automation” and the ordering process was cut from two weeks to two days.
At the same time, project management had to be accelerated, e.g.
- awarding tenders,
- formulating requirements,
- evaluating suppliers in the RFQ process, and
- conducting the final negotiation and selection.
State-of-the-art software can greatly simplify and accelerate the cooperation between Purchasing, Development, Finance, Production and other functions. This worked in the present case as well.
Digital transformation: New roles and functions for buyers
After the digitization of the first process steps, the CPO was already able to free his team from routine non-value-adding tasks and make them available for more important and much more interesting duties:
- Developing suppliers
- Managing risks
- Negotiating better
- Making innovations usable and bringing them into the company
- Securing and expanding Purchasing’s seat at the decision-makers’ table
A target operating model developed by h&z, an individual structure and process organization, assigns new roles and functions to the buyers. It links processes with the right technologies, initiating the change toward the Purchasing of the future.
Our mechanical engineering firm has made a good start and the CPO has regained control of the shape of the future. He’s achieved his first successes and already reduced manual activities by 20% in the first year, with the prospect of 50% in the medium term. He now also has good chances of seeing a positive return on investment in the second year of implementation of his “roadmap” developed with h&z.