How Procurement Digitalization is Creating Value in the Construction Industry
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The document discusses digitalization in the construction procurement process. It describes how procurement digitalization can create value by (1) saving money through improved contract compliance and negotiation, (2) increasing control and compliance over purchasing, and (3) driving efficiency. Two case studies of companies that digitalized procurement processes - Ramirent and Sato - found successes like higher contract compliance, stronger negotiation power, and overall process improvements. Both companies outlined next steps like increasing automation and developing all key supplier partnerships into digital processes from start to finish.
How Procurement Digitalization is Creating Value in the Construction Industry
- 1. Creating value in the construction industry How Procurement Digitalization is…
- 2. CONTENTS Introductions The future vs the present The choice to digitalize Source-to-pay in construction Lessons learned
- 3. INTRODUCTIONS Yaron Nadbornik, CPO, Sato Oyj Rowan Lemley, Head of Product Marketing, OpusCapita Peter Andréas, Sourcing & Trade Manager, Ramirent
- 4. OPUSCAPITA BY THE NUMBERS Established 1984 ~350 Employees 65m € Revenue 2018 3000 Customers with users in over 100 Countries Over 1 Million Suppliers and 100,000,000 eTransactions Over 40,000,000 products and services bought & sold Over 130 Billion € in payments annually
- 5. GLOBAL PAYMENTS PAYABLES AUTOMATION SOURCING & SUPPLIER ENGAGEMENT RECEIVABLES AUTOMATION OPERATIONAL PROCUREMENT CASH MANAGEMENT Comprehensive supplier information management and agile sourcing for goods and services. Improve your cash inflows and reduce the time spent matching payments to invoices. Create a centralized product catalog with a modern guided buying experience with full mobility. Consolidate and optimize your in- house bank and liquidity management functions. Enable control and compliance over AP while dramatically lowering transactional costs. Connect directly to over 200 banks, SWIFT certified for global payment coverage. OpusCapita is a platform that combines source-to- pay & cash management, enabling full source-to-cash process optimization. HOW WE SUPPORT YOU CONNECT, TRANSACT AND GROW ON THE OPUSCAPITA BUSINESS NETWORK
- 6. Ramirent – equipment rental company Turnover 2018: 711 MEuro SALES BY CUSTOMER SECTOR Q4 18 market position in 9 segments ~300 locations ~3,200 co-workers, ~150,000 customers ~25,000 equipment types Sweden 38% Finland 27% Eastern Europe 17% Norway 18% SALES BY SEGMENT Q4 18 Construction 57%Other 25% Industrial 18% #1 #1 #1 #1 6 Ramirent Group 18/09/2019 #1
- 7. SATO IN BRIEF 7th May 2019 HEADLINE 2019 7 In thriving cities people enjoy a high level of well-being. • SATO homes 25,800 • Number of personnel 221 • Fair value of investment property €4 billion • Operating area • H e l s i n k i M A, Tampere, Turku, Jyväskylä, Oulu in Finland • St. Petersburg in Russia • Number of residents ~48,000 • Strategic development programs • Customer focus • Digital development • Diversified housing solutions
- 8. The future vs the present (a contrast)
- 9. DIGITAL OPTIMIZATION The process of using digital technology to improve existing operating processes and/or business models. DIGITAL TRANSFORMATION The process of exploiting the latest digital technologies and practices to create a new sustainable digital business model. THE PATH TO BECOMING A DIGITAL BUSINESS Gartner, Digital Business Transformation: Closing the Gap Between Ambition and Reality, Ian Cox, Kristin Moyer, 18 June 2018.
- 10. Key Challenges: History of local business (local purchasing) Conservatism A general skepticism towards central agreements Low contract compliance Lack of basic computer skills Poor/old IT systems and lack of integrations Too much manual IT work The State of Digitalization
- 11. The choice to digitalize
- 12. Save Money Contract compliance, improved negotiation leverage Control & Compliance Purchasing budget control, sourcing policy compliance, individual accountability Drive efficiency 3-way matching, pre-coding invoices, improved visibility during requisitioning (price/delivery time) The Choice to Digitalize: Goals
- 13. Procurement Finance Corporate Strategy The Choice to Digitalize: Who Leads? Inputs Timing Starting point Outputs Adjustments
- 15. Ramirent: Money & time saved Very high contract compliance Strong negotiation power Quality data in our systems Overall process improvements Ramirent (next steps): 3-way matching Automated ordering Assortment optimization Sato: From price optimization to cost optimization High usage rate of procurement systems Leading & decision making with data Sato (next steps): Higher degree of automation and robotics in supplier base Developing all key partnerships into digital flow from beginning to end Leading & decision making with data Success and next steps
- 16. LESSONS LEARNED Yaron Nadbornik, CPO, Sato Oyj Peter Andréas, Sourcing & Trade Manager, Ramirent
- 17. Digitalizing global trade One customer at a time What we do. How we do it.
Editor's Notes
- #5: Founded 1984, approximately 400 employees, 65m€ in 2017
- #7: Ramirent Group’s reportable segments as of October 1, 2018 are: Sweden, Finland, Eastern Europe, Norway. On December 3, 2018, Ramirent announced that it had signed an agreement to divest its Danish equipment rental business. The divested Danish operations will be reported as discontinued operations in the fourth quarter 2018 onwards.
- #14: Making the choice to digitalize is based on what input? Also, where do you start and how long is your planning. What adjustments have you had to make along the way
- #17: Don't underestimate the need of resources needed for keeping the data up to date Go live with the system/supplier batches first when it is 100% done Make sure the suppliers are committed Price/product updates Order confirmations etc. Have integrations in place before golive reduce double keyentry Leave or postpone categories which are challenging or too complicated for your organisation