Tag: procurement

The global shipping crisis and procurement: Why automate purchase order confirmations?

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The global shipping crisis and procurement: why automate order confirmations?

The two-week closure of China’s Ningbo-Zhoushan Port south of Shanghai in August, following a dock worker’s positive test for COVID-19, has exacerbated the global shipping crisis. The pressures caused by this supply chain disruption have been relentless and, in procurement, it’s quickly being defined by significant delays and a subsequent backlog of purchase order confirmations that need to be processed. In Europe, businesses are reporting a dramatic increase in order confirmations as the ongoing disruption is forcing suppliers to provide multiple order confirmations for each purchase order. This challenge presents an opportunity for businesses to build long-term and sustainable resilience within their purchasing processes. By automating order confirmations with the Netfira Platform, businesses are able to ensure end-to-end transparency and allow employees to focus on value-adding tasks.

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Procurement and the uncertain new world

COVID-19 has caused unprecedented global disruption to businesses and consumers alike. The pandemic led to a drastic shift in consumer demand for certain goods. This demand was met with widespread lockdowns, causing many workers to remain at home, and has resulted in a massive shipping backlog and a global shortage of key materials and components. In May 2021, container ships were estimated to be spending an average of 33 hours anchored due to port congestion, up from only 8 hours in May 2019. This disruption has been felt by businesses across the globe, regardless of size. In September, for example, Toyota announced a 40% reduction in car manufacturing in light of a computer chip shortage. However, the pandemic alone is not to blame for the current global shipping crisis. In March 2021, a 400-meter-long container ship was blown off course by strong winds and caused a 6-day blockage of the Suez Canal, a vital passage linking Europe and Asia. The Suez Canal blockage is estimated to have cost $9 billion per day and highlights the need for business leaders to future-proof their processes against disruption in an uncertain and interconnected world.

What makes purchase order confirmations so important?

Purchase orders are legally binding contracts between the supplier and the buyer, but that legal protection is not valid until the purchase order confirmation is issued. If the purchase order is not confirmed and accepted by the supplier, it is not a contract. Moreover, without the purchase order confirmation, it is impossible to know whether or not a supplier actually received the order and is in the process of fulfillment. As soon as the supplier confirms the purchase order, the buyer receives a confirmation number by e-mail he or she can reference in the event that there is an issue with the order. Purchase order confirmations are also vital because the confirmed date will be taken into account when the system checks the material availability. Consequently, purchase order confirmations serve a legal as well as an operational function ensuring smooth procurement activities.

Why purchase orders and purchase order confirmations need to be compared

Documents that do not match perfectly represent different expectations for buyer and supplier and expose both to the risk of litigation. In addition, important details such as delivery dates are confirmed in a purchase order confirmation, making this transaction crucial to smooth business operations. Therefore, it is important that the buyer checks the confirmation against the purchase order, and contacts the business partner in case any discrepancy is found. 

Automated order confirmations in response to new challenges in an uncertain world

Manually processing, comparing and checking purchase order confirmations has always been time-consuming and error-prone. But with the COVID-19 pandemic exacerbating the global shipping crisis and leading to a significant shortage of materials, the workload has increased excessively. Buyers are confronted with an increasing backlog of purchase order confirmations. Today, it is not uncommon for up to 10 purchase order confirmations per purchase order to be generated due to changing situations and circumstances.

Supply chain disruptions mean businesses are receiving multiple order confirmations per purchase order

Whenever the price, quantity or delivery date changes because of unforeseen events or backlogs, a new purchase order confirmation must be created. The buyers, in turn, need to check and compare the new order confirmation against the purchase order. That is why purchasing needs to implement intelligent solutions allowing automated processing of order confirmations.

How the Netfira Platform automates purchase order confirmations

The Netfira Platform automates operational processes and the data and document exchange. For purchase order confirmations without deviances, the Netfira Platform offers fully automated processing thus completely erasing the need of manual work. In case the Platform finds a discrepancy, the system offers the buyers a guided standardised process. That way, buyers can process a high volume of order confirmations quickly, efficiently and correctly.

Future-proof processes through the automation of order confirmations

COVID-19, the shipping crisis, and the global shortage of key materials and components have significantly disrupted the supply chain. Purchasing must deal with an unprecedented level of uncertainty. Since uncertainty is inevitable and will always be a part of procurement managers’ lives, purchasing departments need to optimise and future-proof their operational processes to meet the challenges of an uncertain world and to deal with supply bottlenecks quickly and efficiently. By automating mundane work like processing purchase order confirmations, businesses can increase the reliability of their processes and achieve a competitive advantage. The Netfira Platform relieves buyers quickly and reliably, reduces manual workload and future-proofs procurement for present and future challenges.

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October 14, 2021
The global shipping crisis and procurement: Why automate purchase order confirmations?

Trending articles

The global shipping crisis and procurement: why automate order confirmations?

The two-week closure of China’s Ningbo-Zhoushan Port south of Shanghai in August, following a dock worker’s positive test for COVID-19, has exacerbated the global shipping crisis. The pressures caused by this supply chain disruption have been relentless and, in procurement, it’s quickly being defined by significant delays and a subsequent backlog of purchase order confirmations that need to be processed. In Europe, businesses are reporting a dramatic increase in order confirmations as the ongoing disruption is forcing suppliers to provide multiple order confirmations for each purchase order. This challenge presents an opportunity for businesses to build long-term and sustainable resilience within their purchasing processes. By automating order confirmations with the Netfira Platform, businesses are able to ensure end-to-end transparency and allow employees to focus on value-adding tasks.

Share:

Procurement and the uncertain new world

COVID-19 has caused unprecedented global disruption to businesses and consumers alike. The pandemic led to a drastic shift in consumer demand for certain goods. This demand was met with widespread lockdowns, causing many workers to remain at home, and has resulted in a massive shipping backlog and a global shortage of key materials and components. In May 2021, container ships were estimated to be spending an average of 33 hours anchored due to port congestion, up from only 8 hours in May 2019. This disruption has been felt by businesses across the globe, regardless of size. In September, for example, Toyota announced a 40% reduction in car manufacturing in light of a computer chip shortage. However, the pandemic alone is not to blame for the current global shipping crisis. In March 2021, a 400-meter-long container ship was blown off course by strong winds and caused a 6-day blockage of the Suez Canal, a vital passage linking Europe and Asia. The Suez Canal blockage is estimated to have cost $9 billion per day and highlights the need for business leaders to future-proof their processes against disruption in an uncertain and interconnected world.

What makes purchase order confirmations so important?

Purchase orders are legally binding contracts between the supplier and the buyer, but that legal protection is not valid until the purchase order confirmation is issued. If the purchase order is not confirmed and accepted by the supplier, it is not a contract. Moreover, without the purchase order confirmation, it is impossible to know whether or not a supplier actually received the order and is in the process of fulfillment. As soon as the supplier confirms the purchase order, the buyer receives a confirmation number by e-mail he or she can reference in the event that there is an issue with the order. Purchase order confirmations are also vital because the confirmed date will be taken into account when the system checks the material availability. Consequently, purchase order confirmations serve a legal as well as an operational function ensuring smooth procurement activities.

Why purchase orders and purchase order confirmations need to be compared

Documents that do not match perfectly represent different expectations for buyer and supplier and expose both to the risk of litigation. In addition, important details such as delivery dates are confirmed in a purchase order confirmation, making this transaction crucial to smooth business operations. Therefore, it is important that the buyer checks the confirmation against the purchase order, and contacts the business partner in case any discrepancy is found. 

Automated order confirmations in response to new challenges in an uncertain world

Manually processing, comparing and checking purchase order confirmations has always been time-consuming and error-prone. But with the COVID-19 pandemic exacerbating the global shipping crisis and leading to a significant shortage of materials, the workload has increased excessively. Buyers are confronted with an increasing backlog of purchase order confirmations. Today, it is not uncommon for up to 10 purchase order confirmations per purchase order to be generated due to changing situations and circumstances.

Supply chain disruptions mean businesses are receiving multiple order confirmations per purchase order

Whenever the price, quantity or delivery date changes because of unforeseen events or backlogs, a new purchase order confirmation must be created. The buyers, in turn, need to check and compare the new order confirmation against the purchase order. That is why purchasing needs to implement intelligent solutions allowing automated processing of order confirmations.

How the Netfira Platform automates purchase order confirmations

The Netfira Platform automates operational processes and the data and document exchange. For purchase order confirmations without deviances, the Netfira Platform offers fully automated processing thus completely erasing the need of manual work. In case the Platform finds a discrepancy, the system offers the buyers a guided standardised process. That way, buyers can process a high volume of order confirmations quickly, efficiently and correctly.

Future-proof processes through the automation of order confirmations

COVID-19, the shipping crisis, and the global shortage of key materials and components have significantly disrupted the supply chain. Purchasing must deal with an unprecedented level of uncertainty. Since uncertainty is inevitable and will always be a part of procurement managers’ lives, purchasing departments need to optimise and future-proof their operational processes to meet the challenges of an uncertain world and to deal with supply bottlenecks quickly and efficiently. By automating mundane work like processing purchase order confirmations, businesses can increase the reliability of their processes and achieve a competitive advantage. The Netfira Platform relieves buyers quickly and reliably, reduces manual workload and future-proofs procurement for present and future challenges.

Webinar: Auftragsbestätigung-en automatisieren

Video ansehen

Pfleiderer Case Study

Learn how Pfleiderer successfully digitised its procurement through process automation.

Watch the video

Return to blog

October 14, 2021
Why process automation in procurement leads to success in Industry 4.0

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Why process automation in procurement leads to success in Industry 4.0

Industry 4.0, the comprehensive digitisation of industrial production, leads to increasingly complex digitised business processes and an enormous data volume. Procurement should focus on process automation through digital automation tools to be a successful part of Industry 4.0. Innovative cloud-based software solutions like the Netfira Platform automate and streamline processes through automated document exchange and Artificial Intelligence while increasing data quality.

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What is Industry 4.0.?

Digitalisation, automation and optimisation have increasingly become disruptors in today’s industry. As a result, a new technological age, which many consider to be the 4th industrial revolution, has dawned. Experts refer to this development as Industry 4.0. Industry 4.0 means the comprehensive digitisation of industrial production and the intelligent networking of machines, systems and processes. Consequently, businesses must adapt their processes, approaches and business models to remain future-proof and competitive in the modern technological business world.

What does Industry 4.0 mean for procurement?

The 4th industrial revolution and digital transformation are of great importance for purchasing teams. The future complexity of digitised business processes and the resulting data volume require intelligent approaches. Initially, digitisation meant the conversion of analog formats into digital data to be processed with the aid of computers. Today, digitisation also means the digital networking of processes and products in real-time with the growing size and complexity of data structures. This data offers the potential for new business models. For Industry 4.0, process automation through digital automation tools is the key to successful modern procurement.

Process automation in procurement through automated document exchange

Outdated ways of working often characterise purchasing departments. The duties of buyers include manually requesting, checking and comparing documents such as purchase order confirmations and invoices. These activities are time-consuming, error-prone and prevent them from focusing on more important or urgent tasks. This is where the Netfira Platform brings noticeable relief. The cloud-based platform automates document processing and enables a digital bidirectional exchange of documents and data between purchasing and its business partners without media disruptions. At the same time, Netfira allows an uncomplicated and fast electronic supplier connection.

Artificial Intelligence as the basis for process automation in procurement

AI is another vital factor for automating processes and workflows in procurement. Read more on how AI revolutionises operational procurement. Used correctly, AI brings enormous added value – because it leads to automation, simplification and acceleration in B2B communication. It can support the exchange of information and relate content at the same time. During processing, it imitates the human behaviour of those involved in the process. In operational purchasing, this applies to the extraction of data, the validation of information, the comparison of data and information, and the further processing or transfer of the correct information to the downstream company systems. The Netfira Platform, which works with innovative AI and state-of-the-art app technologies, offers intelligent approaches to setting up and expanding digitised business processes and managing large amounts of data. For example, orders, order confirmations, delivery schedules, invoices, and other documents can be automatically exchanged and processed with AI by procurement and its business partners.

Process automation in procurement for better data quality

Clean data is an essential prerequisite for the successful digitisation of business processes. Despite this, many procurement teams are held back by poor data quality. The Netfira Platform solves this problem by automating the manual processes where data originates. Automated document processing with the cloud-hosted Netfira Platform leads to an increased quality of master data. Thanks to Netfira, the automation and standardisation of business processes and the cleaning of master data go hand in hand. Find out more how the automation of document processing increases data quality for a competitive edge in procurement.

Conclusion

For purchasing, Industry 4.0 means driving forward the digitisation and automation of processes and workflows. The Netfira Platform enables a quick and uncomplicated entry into the automation of B2B document exchange processes. AI and automated document processing allow purchasing to automate its workflows and to improve its data quality. Only then can purchasing benefit from Big Data and new digital business models.

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August 20, 2021
How to increase data quality for a competitive edge in procurement

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How to increase data quality for a competitive edge in procurement

Any company can increase its data quality in purchasing through the automation of document processing. AI and Big Data are undoubtedly game-changers for establishing new digitised business models. Although good data quality is crucial for successful operational processes, purchasing departments struggle with poor data quality. The Netfira Platform can solve this problem by automating the manual processes where data originates.

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What is data quality?

Data quality is the key to the digitisation of processes and workflows in companies. In this context, data quality is the evaluation of data stocks concerning their suitability for fulfilling a specific purpose. The criteria to evaluate data quality include: correctness, relevance, reliability and its suitability for various systems.

The role of data quality in purchasing

Good data quality is crucial for successful operational processes. The increase in productivity of purchasing teams thanks to good data quality has become a decisive competitive factor. Moreover, clean data helps to make informed decisions and increases the accuracy of forecasting.

Reasons for poor data quality

Too often procurement teams are held back by poor data quality. In many cases, suppliers identify product data quality as an unnecessary cost factor and afford it a low priority. On the other hand, the manual input and comparison of data in operational procurement leads to slow and error-prone processes.

Obstacles to benefitting from Big Data

Procurement departments collect vast amounts of data every day. However, having Big Data at their disposal does not necessarily mean that they are able to use it profitably. Benefits of Big Data include gaining deep insights and a basis for decision-making and process automation. That is why it is necessary to start where data originates.

The Netfira Platform increases data quality in purchasing

The stream of data can be made controllable and usable by replacing the laborious and error-prone manual interface at the data creation process with an automated one. The Netfira Platform can capture, correlate, validate and process the typically unstructured data from suppliers with almost one hundred per cent accuracy and turn it into structured data.The automation of manual document processing with the cloud-hosted Netfira Platform also leads to a cleansing of master data. For purchasing, this means a high level of accuracy, a considerable increase in speed, and thus more time for value-creating activities. These are all prerequisites for purchasing to position itself for the future within the framework of Industry 4.0.

Conclusion

Data quality is a vital competitive factor. The structuring of data is crucial to overcome poor data quality issues in purchasing and benefit from the vast amount of data collected every day. The Netfira Platform remedies the problem of unstructured data as automating document processing goes hand in hand with cleaning data. The automation of operational processes, which leads to drastically reduced manual, time-consuming and error-prone work, has to be a priority. With this, data quality will automatically increase and only then can Big Data be used profitably.
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July 22, 2021
Pfleiderer case study

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Modern Operational Purchasing at Pfleiderer

Pfleiderer – a specialist in wood-based materials – now generates around 1 billion euros per year despite a turbulent history. Digitisation of business processes has backed Pfleiderer’s recent focus on value-adding product categories. As part of this digitisation, it was necessary to modernise the operational purchasing accordingly. Since 2018, the Netfira Platform has afforded the purchasing team at Pfleiderer tremendous freedom and supported strategic processes. Flexible document recognition through solution modules, automated document flows, and digital supplier connectivity are just some of the benefits afforded by the Netfira Platform.

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July 8, 2021
Zentis case study

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How Zentis automates the processing of purchase orders

Zentis GmbH & Co. KG, which celebrated its 125th anniversary in 2018, was once again able to prove its role as an innovative driving force for natural and enjoyable nutrition in 2020. Procurement establishes itself as an innovation driver by using Netfira’s software solution to automate operational procurement quickly and easily. The two cornerstones of the automation project are the simple digital supplier connection and automated processing of purchase order confirmations.

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The initial situation

At Zentis, the purchasing department in Germany works with more than 1,150 suppliers. In 2019, more than 24,000 purchase orders with over 54,000 order items were created. Of these, 18% of suppliers account for around 80% of orders. Procurement is increasingly facing challenges: “In the past years, the general conditions for us in procurement have changed and this trend will have an even greater impact in the coming years,” says Marcel Hilgert, Deputy Head of Indirect Procurement. A decisive factor is the continuously growing complexity. Customer requirements are becoming more and more specialised, which requires an increasing number of raw materials and materials. Global sourcing is indispensable and demands the management of complex supply chains. In response to the changes in the framework conditions and the resulting challenges for purchasing, potential for improvement was identified along the Purchase2Pay process. Zentis quickly realised that partial steps of this process needed to be automated.

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Objectives of Zentis

Zentis chose order confirmations as the first module to be automated. The efficiency of this sub-process was previously hampered, among other things, by the fact that there were four different purchasing areas within the company. Some of these areas had different processes as well as no uniform specifications for suppliers. The digitalisation of the processes should reduce the need for manual data entry and allow the Zentis team to use its time more efficiently. The Zentis procurement team prioritised a simple and efficient supplier connection that would not disrupt their business partners. The suppliers were not to incur any costs or have to change their usual processes. In addition, the automated processing of order confirmations should take place within the familiar SAP® environment and the software used should have a straightforward and user-friendly interface.

The Netfira Platform

Following a comprehensive selection process, Zentis opted to proceed with the software solution from Netfira. “The accuracy and future viability provided by Netfira’s AI-supported software were decisive factors for us in taking the next steps towards digitisation in our procurement department,” explains Patrick Tydex, Team Leader Operational Procurement. And there are further reasons for choosing the Netfira solution:

“As a SaaS platform, it is characterised by flexibility and simplicity. The effort for internal IT is extremely low and the software can be seamlessly integrated into the existing ERP system environment,” Tydex continues.

Short project time and uncomplicated supplier connection

The digitalisation project was completed after only a few months. The flexibility of the Netfira delivery team allowed the project to be resumed quickly following a delay due to a change in personnel in the Zentis IT team. Zentis and Netfira achieved one hundred percent automatic processing for order confirmations where there is no deviation. If there is a deviation, the user is alerted and a variety of processing options are offered directly in the portal. In the two months following, Zentis connected 30 suppliers. A significant advantage of the platform is that suppliers are not required to make any changes to their existing processes.

For the Zentis procurement team, the onboarding of a new supplier takes between 20 and 25 minutes. The process of connecting a new supplier starts by checking the last order confirmations for special features. Then the procurement team selects at least three representative order confirmations and one associated order. The order confirmations are used to train the Netfira Onboarding App before being checked and, if necessary, modified by the Netfira customer support. The time saved in operational procurement is significant. The processes are more uniform and transparent. Furthermore, there is now a standardised process in the four purchasing areas. Manual checks of documents and items are no longer necessary which greatly reduces the manual workload. As a result, the procurement department has more time to concentrate on more essential and value-adding tasks.

Global potential for the future

Zentis has taken an important step towards digitalised procurement with the automation of order confirmations. In 2021, more than 200 additional suppliers are to be connected and then further document types will be automated with the Netfira solution. Moreover, the digitalisation potential in the international subsidiaries of Zentis could lead to the global rollout of the Netfira system.

About Zentis

Founded in Aachen in 1893, Zentis GmbH & Co. KG today employs over 2100 people and posted a turnover of 670 million euros in 2019. Zentis is known, among other things, for its chocolate and marzipan specialities for the processing industry and retail trade, as well as for quality jams, jellies and sweet creams. The company is active in the business areas of fruit preparations, confectionery and sweet spreads. As a global presence, the family-owned company has sites in Poland,
Hungary, Russia and the USA in addition to its headquarters in Aachen.
www.zentis.de/

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April 21, 2021