DRIVING TOWARDS
PROCUREMENT 4.0
- Shobhit Mohanty
Harsha Kadimisetty
PROCUREMENT –
SPINE OF INDUSTRY 4.0
Revenue
Functions
Industry 4.0 is forcing organisations to re-think their
organisational set-up across all major functions
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Shift to as-a-service model
Real time market intelligence
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3D printing based rapid prototyping
Real time access to user feedback
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Cost
Functions
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End to end digitization & automation
Connected stakeholders
Real time analytics
Dynamic Production Planning
Shop-floor automation
Connected warehouses & logistics
Real time visibility
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4
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1
WHAT IS PROCUREMENT 4.0?
Leveraging real-time data from connected systems &
stakeholders to enhance value added via Procurement
Procurement 2.0
Procurement 4.0
Procurement 3.0
Procurement 1.0
MANUAL
• Paper based processes
• Localised
• Completely unplanned
• Low spend predictability
• Small teams, handling
clerical work items
STRATEGIC
• Paper based; ERP linked
• Semi-Global
• Production led planning
• Low spend predictability
• Large low-skilled teams
• Cost function
DIGITAL
ELECTRONIC
• OMS & ERP linked
• Globalised
• Category led planning
• Predictable, high spend
• Large teams low-skilled
• Cost-function
•
Completely digitised
•
Globalised
•
Pro-active planning
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Predictable, optimised spend
•
Mid-sized skilled teams;
horizontally integrated
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Strategic function
• Admin function
1600 - 1960
1960 - 1995
1995 - 2015
2015 - Present
CURRENT STATE OF
ENTERPRISE PROCUREMENT
Enterprise procurement systems have remained the same
for 20+ years leading to inefficiency & high TCO
Share of Enterprise Purchase Systems
<1%
5%
15%
15%
~80%
Enterprises use manual or
ERP based minimal
purchase systems
•
Lack of robust systems cause
purchase silos; causing increased
TCO and inertia to change
•
Highly manual, paper based
process, leading to inefficiency,
low productivity and negligible
<1%
65%
Manual
Procurement Software
End to End R2P App
ERP based
E-Procurement
Enterprises use a system that
brings visibility across R2P
process
strategic input from purchase
•
Low visibility makes it difficult to
identify bottlenecks, areas of
improvement & create bias
INDUSTRY FOCUSSED ON
IMPROVING PROCUREMENT
Enterprises have already begun shifting to Procurement
4.0, as seen from examples around us
Industry examples
of Shift to
Procurement 4.0
Global Auto safety parts OEM
Global Automotive OEM
• Building internal software to digitise and
automate large portions of procurement
• Improve productivity, weed out corruption
Global organisations have begun
moving towards Procurement 4.0 while
medium-scale enterprise are still
grappling with challenges borne out of
Global elevator manufacturer
Large Auto parts supplier
• Vendor managed “material marts” or
kiosks; coupled with P2P automation
• Enable shift in inventory risk, reduce TCO
largely manual, non-transparent and
inefficient processes
BUT THE RESULTS HAVE BEEN
MIXED SO FAR
Mentioned initiatives have failed to deliver planned
benefits, ROI with majority POAs remaining unchanged
BENEFITS
•
Price improvement across
select categories
•
Visibility across certain parts of
the purchase process
• Visibility driving limited gains
in spend predictability
~73%
Of Digital Transformation
initiatives fail
(McKinsey – 70%. Forbes –
84%, Genpact – 67%)
NO CHANGE
•
Minimal change in bottom line
as pricing across majority
categories remain as-is
•
Adoption challenges imply no
process improvement
• Inefficient with low visibility
Status Quo
LOSSES
•
Purchase teams still operate as
cost function, negligible
strategic input
•
Worsening supplier relations
resulting in product delays, low
quality
•
Purchase silos continue to exist
•
Long deployment cycles
causing lower ROI
•
Lock-down led opportunity cost
FIRMS ARE MISSING THE
BIGGER PICTURE
Digitisation led changes need to be evaluated from
multiple perspectives before implementation
LACK FOCUS ON UPSKILLING TEAM
Initiatives not accompanied with requisite upskilling people; teams still act retrospectively
LACK OF VISIBILITY
NO DUE-DILIGENCE ON SOFTWARE
Tech initiatives driven at CXO level based on sales
pitch; need thorough assessment on implications
Unclear on actual areas of improvement, lack
framework to solving procurement challenge
NO ACCOMPANYING PROCESS CHANGE
Tech must be accompanied with required process
change to realise benefits; adds to complexity
LIMITED ECO-SYSTEM CHANGE
No change in supplier digitisation level;
stakeholders remain disconnected
TECHNOLOGY + PROCESS
FRAMEWORK FOR CHANGE
Procurement 4.0 is a revolutionary change, enterprises
need to adopt a framework driven, phased out approach
ITERATIVE IMPROVEMENT
AGILE APPROACH
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Build agile processes that can be altered on-the-go
based on data-driven insights
Up-skill team; imbibe adaptability & critical thinking
DATA DRIVEN
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Leverage data across R2P to better decision making
Shift from reactive to pro-active mindset
Benchmark against industry to measure outcomes
VISIBILITY AND AUTOMATION
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Streamline internal processes
Bring visibility across R2P process
Improve productivity through automation
CONNECT ALL STAKEHOLDERS
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Connect everyone on to a single platform
Push all stakeholders to elevate processes
Enable free flow of information
2
WHAT IS AERCHAIN?
Our software product provides end to end Requisition to
Payment management capabilities for enterprises
Aerchain is the platform powering your procurement, which seamlessly
connects relevant stakeholders, brings visibility, improves efficiency and
spreads intelligence across the process
TECHNOLOGY + PROCESS
WHERE DOES AERCHAIN FIT?
ITERATIVE
IMPROVEMENT
Aerchain is built keeping the challenges faced by endcustomers shifting procurement 4.0 in mind
Domain experts for guidance on industry •
best practices
Benchmarking analysis toolkit
Dedicated account management teams
to help with team up-skilling
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Combines end-to-end visibility with
modularity for flexible adoption
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Aerchain services to reduce capital
dependency and improve agility
DATA
DRIVEN
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Best-in-class analytics capabilities,
horizontal across all modules
Sophisticated quote analysis toolkit
Data-driven supplier selection module
Mobile visibility to enable on-the-go realtime tracking
VISIBILITY AND
AUTOMATION
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End to end Digital tracking
Automation of reminders, follow-ups
Digital footprint of product through the
•
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entire process flow
AI engine to eliminate manual checks
Global visibility of stakeholders
CONNECT ALL
STAKEHOLDERS
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Single platform to connect suppliers,
end-users, purchasers & managers
Ratings system for improving
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accountability across eco-system
Easy and free flow of information
Mobile app for remote connectivity
AGILE
APPROACH
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HOW CAN AERCHAIN HELP?
Quote Management
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Digitally Handled PR's/Indents
Digitally handled clarifications loops
Digitised approvals flow
RFQ / Supplier Quote management
Quote analysis toolset
Negotiations & E-Bidding*
Automated RFQ follow up's
HOW CAN AERCHAIN HELP?
Order Management
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Automated order follow-ups
Live tracking
Scheduled Recurring Orders
Returns / Replacement Management
Barcoding based Gate Entry & Inwards
Automated accounting verification
done at an Invoice level
HOW CAN AERCHAIN HELP?
Supplier Management
• Supplier side quote and order
management portals
• Mobile first functionality
• In-built negotiation and clarification
process flows
• Intelligent supplier ratings
• Quote & order status live tracking
HOW CAN AERCHAIN HELP?
Accounts Payable
Automation
• Touch-less Invoicing and e-PODs
• AI enabled, completely automated
three way Invoice matching
• Single portal for all supplier payments
reconciliation
• Authorisation based automated
payment disbursements
THERE IS MORE…
AERCHAIN SERVICES
With Aerchain, we aim to not only elevate the
entire procurement process of large enterprises,
but also drive short term gains for purchase
teams to capitalise on.
In partnership with various eco-system players
we have built three core service offerings that
seek to address ground level challenges, all
enterprises are grappling with-
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Aerchain Go
First mile logistics aggregation
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Aerchain Pay
Purchase financing services
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Aerchain Source
Pay per use sourcing engine
AERCHAIN GO
SIMPLIFY INWARD LOGISTICS
AERCHAIN GO
Inward logistics aggregation service , with
scheduled deliveries and real time tracking
ENTERPRISE CHALLENGES1.
2.
3.
4.
Supplier logistics services provided at higher cost, of
poor quality & provide no visibility
Operational hassles with respect to documentation
Reconciliation challenge across material collection,
segregation and transfer
Self-service milk runs- high variability in ROI
AERCHAIN GO SERVICES
1.
2.
3.
Reduce costs via cluster aggregated milk runs
Schedule deliveries as convenient for any time of day
Barcoding enabled system to ease reconciliation &
provide end-to-end, real-time visibility
AERCHAIN PAY
OPTIMISE PURCHASE FINANCE
AERCHAIN PAY
Purchase Finance service in partnership
with acclaimed NBFCs
ENTERPRISE CHALLENGES1.
2.
3.
4.
Highly variable supplier credit lines on both counts of
duration and interest rate
Hidden cost item on product quotations
Major point of discomfort w.r.t supplier relations
Operational challenges with regards to reconciliation
and documentation
AERCHAIN PAY SERVICES
1.
2.
3.
4.
Reduce costs thanks to t+1 settlement cycles
Market defined interest rates, significantly lower than
supplier interest rate
Improved room for negotiation
Completely digitised & automated, helps improve
cash flow management
AERCHAIN SOURCE
ENHANCED SOURCING NETWORK
AERCHAIN SOURCE
Leverage highly curated sourcing network
as a service, offered as an op-ex model
ENTERPRISE CHALLENGES1.
2.
3.
4.
Limited visibility regarding the best suppliers
Current sourcing base is highly localised, unable to
leverage benefits of industry clusters
Low credibility of existing external supplier databases
No information on industry benchmarks
AERCHAIN SOURCE SERVICES
1.
2.
3.
4.
Leverage highly curated network of 10,000+ suppliers
Database backed by real-time intelligence basis
supplier actions on Aerchain platform
Ease of access helps improve competition
Potential to work with highly acclaimed suppliers,
serving some of the best firms in the region
BENEFITS OF AERCHAIN
WHAT WE CAN PROMISE
60%
• 60% improvement in
efficiency of purchase
team
• Enables team to focus
on strategic functions
70%
>10%
• 70% improvement in
purchase SLAs
• Ensures 0 production
downtime and more
productive engineering
teams
• 10% reduction in
purchase spend across
2-year horizon
• Optimise spend via
higher visibility, best in
class network and
transparent pricing
OUR PARTNERS IN THE
JOURNEY
Thank you!
Want to talk? Please reach out toShobhit Mohanty
+91 81071 35660 | shobhit@aerchain.io
Head of Sales