Procurement 4.0 digitalises your purchasing operations using a software-based solution and permanently ensures the best price for your entire product range – with a high degree of compliance security. This enables your purchasing organisation to concentrate on strategically important issues.

Does your supplier want to increase prices by 5%? Are you unclear as to how their cost drivers have changed since the last negotiation? Would you like to simulate relocating production to new sites and countries before actually doing so? Procurement 4.0 provides you with detailed information on the cost development of individual components between freely selectable times. A glance at the dashboard is all that’s needed.

Making the complex transparent and plannable

Our Procurement 4.0 projects are not clichéd one-size-fits-all solutions. They highly depend on our customers’ individual challenges. Procurement 4.0 allows the supplier’s current price to be checked and evaluated at any time. This turns a complex business operation into a simplified one. At the same time, Procurement 4.0 ensures best price security. The following five steps always form the core of our approach:

  • Data analysis: First of all, we record and analyse what items the company procures and what commercial and technical characteristics they have.
  • Cluster formation: In the next step, we combine items with similar characteristics into clusters and determine a reference item for each cluster.
  • Product cost calculation and indexing: We then identify the cost drivers based on a cost structure and supply chain analysis. What’s more, we select suitable indices and develop price formulas that link the reference item price to their development – and the other cluster items to the reference items.
  • Implementation on the market: We verify our assumptions in intense discussions with the suppliers. Afterwards, we ensure a significant price reduction in the price negotiations – and make sure the formulas become part of the supplier contracts for this purpose. Pricing is now fully automated and companies permanently pay the best possible prices. 
  •  Indexing, controlling and management: By indexing the cost drivers and transferring the price function to the software, we create real-time transparency and thus make controlling and corporate management easier. Additionally, the “Predictive Analytics” module allows for well-founded price forecasts, which further simplifies management and, for example, increases the opportunities to pass on rising material costs.

How it works

The classic areas in which this software-based solution is used range from raw materials and production materials to services. All items are sorted into clusters that can be compared based on material technology, production technology and service character. Specific price functions are then created using a calculation mask based on a huge database. In the first step, these permit price security across the entire product range. In the second step, this price is updated daily as a best price using the attached indices. What’s more, many operational activities are omitted, allowing Purchasing to concentrate on the truly strategic issues – with a high level of compliance security. Sales receives a transparent basis, for achieving the likes of justified price increases, and Controlling can regularly compare the current purchase price with the optimum price.

Effects

  • Achieve the best price in the long term
  • Create long-term, strategic supplier relationships that are transparent and advantageous
  • Improved basis for determining product prices
  • Reduction in complexity caused by variant diversity
  • Automation of the strategic purchasing process
  • Reduction in strategic purchasing expenses
  • Immediate price reduction
  • Compensation of price disadvantages for peripheral ranges