How do I get the information I need?
Eight key areas that support effective purchasing in WebCIS 4.0. Focus on purchasing activities with P&L relevance
Most purchasing activities have an impact on the P&L as a result of posted invoices. Depending on inventory turnover, this happens more quickly or more slowly. But what purchasing concludes through contracts, orders, and price agreements has an impact on the company’s results. Purchasing must know and be able to show the extent of this impact, whether positive or negative, and through which price changes in which purchasing markets, if it wants to be perceived as a value driver within the company. In addition to activities that influence the income statement, there are issues that are more likely to fall into the categories of purchasing performance, cost avoidance, and liquidity preservation. These are no less important, but they must be presented and reported separately with the appropriate explanations to management and controlling. It is crucial that no false expectations are raised when all purchasing results are lumped together and sold as “savings.”
Maverick buying – still a major flaw in the purchasing process
Who isn’t familiar with this issue? Many orders are still being processed outside of purchasing structures. We repeatedly encounter maverick buying rates of more than 25% in implementation projects. One of the main goals of WebCIS 4.0 is to curb these side issues. The absence of a complete MM branch makes many professional purchasing and supplier management processes difficult, which results in considerable additional costs for the companies affected. Transparency is the most effective factor in proactively and successfully addressing the issue of maverick buying.
Simulative cost breakdown – how to meet customers on equal terms in price negotiations
A question we are frequently asked as a software manufacturer these days is: How can we use WebCIS 4.0 to assess suppliers’ price demands? Is it possible to understand a price increase demand without disclosing an open-book calculation, or can it be countered with arguments? In WebCIS 4.0, we pave the way for step-by-step traceability through simulative assumptions of cost components and cost drivers. Price indices for raw materials, energy, and other cost blocks can be combined like building blocks to ultimately provide an assessment of whether an entire supply portfolio is priced in line with the market.
Scenario-based purchasing planning – how to create a reliable forecast in WebCIS 4.0
What is the target price for next year? Nothing is more unpopular in purchasing than this question. It’s logical, really. How can a purchaser know the forecast price when markets are highly volatile and suppliers refuse to agree to long-term prices? The honest answer from a purchaser who knows their markets can only be: “I can’t predict a price, but I can give you a worst-case/best-case scenario.” Two to three scenarios that reflect the top-down market assessments of the product group managers, coupled with an automatic plan/actual comparison and a dynamic forecast, turn purchasing planning into a routine process that meets expectations and reflects market conditions.
Initiative management as the link between current analytics and planned measures
What measures are used to successfully initiate and implement ideas? What is the purchasing result at the end of a process chain consisting of individual steps? Not all measures necessarily lead to savings. Risk reduction in the supply chain and quality improvements in purchased parts usually also mean a greater burden on the company. This must be systematically documented, tracked, and reported. Professional measure management in WebCIS 4.0 is fully integrated into the existing information landscape, making it easy to enrich analytical MM and FI values with measure information.
Volatile purchasing markets from a sales perspective – how do you argue this to customers?
As a rule, more than 50% of a sales price comes from purchasing. The rest is made up of manufacturing energy, transport costs, and other costs. When comparing costs between two reporting dates, which products have increased in price and by how much? How do the enormous increases in energy and fuel costs and personnel costs affect product costing? Without a list of sales products available at the touch of a button in the form of parts lists that make all purchased parts, monthly prices, and raw material influences transparent, it becomes difficult for any sales professional. In WebCIS 4.0, this is not only displayed in general terms, but also tailored to each customer with all simulation options that allow the argumentation to be customized to the customer.
Risks in the supply chain – supplier performance and delivery risks as essential information
How efficient or risky are the supplier portfolio and the entire supply chain? Which suppliers are “preferred” or at most “second source”? Do the delivery reliability and quality metrics continuously fed into WebCIS 4.0 indicate far-reaching delivery problems? Are important parameters such as creditworthiness, financial stability, and reliability of suppliers in the green zone in the medium to long term? Individual values and the compilation of individual pieces of information are not what is needed here. In real-life purchasing, overview dashboards with warning lights and push notifications must be available to provide information in critical cases.
CO² footprint in the supply chain – automatic data exchange with WebCIS 4.0 is a top priority
How can CO² emissions in logistics and the subsequent supply chain of suppliers be determined and linked to existing information about the supplier at the touch of a button? The information required for this is available in WebCIS 4.0 and can be used to determine pollutant values based on goods receipts without any manual effort. The process for calculating the CO² footprint for production and manufacturing is similar. In summary, WebCIS also offers an information platform for these topics, enabling both data exchange and complete transparency in the supply chain.
Werner Güntner
CEO – SoftconCIS GmbH
published in the eSOLUTIONS Report 2023
