The solution
A central platform for purchasing C-parts and indirect procurement.
Memminger-IRO is a renowned supplier of high-tech components to textile manufacturers in over 100 countries. Until 2010, the company ordered from stock.
"By optimizing the entire ordering and delivery process, we can now order as required without having to worry about supply bottlenecks."
Uwe Gutekust
Head of Purchasing, Memminger-IRO GmbH
In practice, this meant that a new search for the most favorable offers was set up before each order - an enormous effort for the purchasing department. The first steps towards digitalizing procurement were then taken. These involved bundling the purchasing volume for office materials with a single supplier using a dedicated digital procurement platform. Due to the benefits and positive experiences, the procurement of packaging materials such as cardboard boxes and adhesive tape was also quickly digitized. And with a second supplier that also has its own procurement platform.
"We quickly gained a lot of positive experience with the digitalization of indirect procurement," reports Mr Gutekunst, Head of Purchasing at Memminger-Iro. "However, the different purchasing systems were still complicating the process. We were therefore looking for a central platform that could be used to handle the purchasing of C-parts and indirect procurement." The procurement platform simple system emerged as the winner from the subsequent competitive comparison, as it had the greatest overlap of requirements with the product ranges on offer.
The introduction of the platform was fully implemented in less than six months. Since the start of the cooperation with simple system, the proportion of centrally procured products has been continuously increased to 65%. The remaining share is currently covered by local business partners from the region.
The special thing about working with the new e-procurement platform. The required products are ordered independently by the employees of the departments as needed. A total of 80 personal and impersonal, shared accounts have been created on the platform for the approximately 230 employees at the company headquarters in the Black Forest. Up to a certain budget limit, orders are approved by a supervisor in the purchasing department. For higher amounts, the management must give approval. Instead of the tedious internet searches that had previously been the norm, employees were now able to quickly select the products they needed themselves using electronic catalogs from various suppliers. In this way, the pure processing time in purchasing per order was more than halved from five to two minutes. With around 100 orders per month, this is a relevant variable.
For Memminger-Iro's purchasing department, this reduction in workload means above all that the resources saved can be invested in the procurement of A and B products. In view of the sales volume, significantly greater contributions can be made to improving the margin and thus to the sustainable success of the company. Another advance is the reduction in stock levels, which means less capital is tied up. "We used to have a space of over 25 square meters just for toner cartridges and other materials," recalls Mr. Gutekunst. "By optimizing the entire ordering and delivery process, we can now order as required without having to worry about supply bottlenecks."
The processing time in Purchasing has been more than halved from five to two minutes per order.
UweGutekust
Head of Purchasing, Memminger-IRO GmbH
Last but not least, the introduction of simple system also marks the start of the further digitalization of company processes. "The connection of e-procurement to the ERP solution proAlpha was one of our first interface projects in this area," explains Mr. Gutekunst.
Ultimately, a look at the return on investment (RoI) shows Memminger-Iro's management that they did everything right. By entering into e-procurement on the simple system platform, the purchasing department can once again devote itself fully to its strategic core tasks. "Even the development costs of the ERP interface are negligible in view of the comprehensive benefits," concludes Mr. Gutekunst with satisfaction.
