10 June 2020

Digitization of B2B Sales

By DICC Institute

Many industrial suppliers continue to process orders by email and phone. Not only do they miss the signs of the times, they also leave behind sales and cost savings that come with digital order and processing management. With a fully digitized supply chain, the degree of automation and efficiency in companies increase.

E-commerce has been established in B2C for years. Many companies make a large part of their sales through new and own online sales channels. For customers, convenience increases when shopping: they no longer have to leave the house, can order with a click and have the goods delivered to their door.

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The situation is different in the supplier area: orders often still require a phone call or typing an email. This is often followed by very cumbersome communication if capacities or delivery times have yet to be found out by the responsible clerk. In particular, companies in less innovative industries or with employees who are not digitally savvy still rely on these processes: Around 85 percent of orders in the supplier area are made by phone or e-mail. Even companies that already have a digital platform report that only around 15 to 20 percent of orders are actually processed online. Most customers research online and still call to place the order.

But if you want to be well positioned in the future, you can’t go on like this forever. It makes sense to digitize your sales and order processes, because the expectations of convenient shopping are becoming increasingly noticeable in B2B too.

A change of generations is pending in many companies: long-established employees are retiring, digitally affine younger people are coming. You grew up with digital tools and expect more convenient ordering processes for deliveries too. Those who postpone the changes block potential customers who have already gone through the generation change. In addition, the pressure is rising from above: More and more customers expect a digital supply chain.

Those who oversleep digitization are at risk of an unpleasant awakening: Experts predict that 40 percent of the S&P 500, the largest companies in the United States, will no longer belong to it in ten years. And what applies to the large applies even more to the small and medium-sized companies.

All industries benefit from digitization

The digitization of the order channels is relevant for all industries that are geared towards supply – industrial suppliers of mechanical and small parts, pipes, pumps or metalwork. E-commerce can also be an interesting, additional mainstay for the food industry and food suppliers. The margins here are low – wholesalers can reach the end customer directly with an online shop. Digitization makes it possible.

In the automotive industry, almost 80 percent of suppliers are already digitized – they are based on the requirements of the groups, which usually require a digitized supply chain. These companies usually have only a few large customers and accordingly they have to respond to their wishes in order not to lose the core business. However, suppliers with a wide range of customers and customers are mostly not yet digitized.

Process optimization and new customers

Digitization of the supply chain goes hand in hand with process optimization. On the one hand, the customer can already get information online, research and try out the high number of configurations of the desired product, especially in the B2B area. In the best case, a shop therefore offers deep filter options and configurators. Via a platform you can immediately see whether the desired item is in stock – the ordering process is digital. By connecting the ERP, companies can digitally see what the inventory is and submit repeat orders to the supplier automatically.

On the other hand, new customers are opening up online. Companies often have the problem that customers with a small order volume of just a few tens of thousands of euros and only a few orders a year are not worthwhile because the costs for the order, including the efforts of the employees, exceed the profit. These customers can be served with an online solution at no additional cost. Ten or 20 smaller customers quickly add up to an additional half a million euros in sales each year. Otherwise it simply stays there. International customers are also easier to reach online. The digital acquisition is much cheaper than an on-site presence.

Important: An online shop alone does not make digitization. If all other processes continue to operate in the same way, and inventories are still checked manually, the chances of efficiency and cost savings are lost.

Digitization is initially associated with investment costs, since the measures run through the entire company and affect the entire value chain. From order to dispatch, the entire production must be digitally mapped: completed orders, stock levels, the status of production and the availability of the parts. Orders are automatically compared with the inventory and drawn through to the warehouse clerk. The status of the order is always transparent for customers, large customers can place orders directly via the ERP. This is done automatically via a digital connection. Invoicing is also automatic and no longer ties up manpower, since the system can map it.

Companies save costs and generate more sales. Personnel capacities are freed up by a higher degree of automation and can be used profitably elsewhere. Digitization thus makes a contribution to sustainability, since it represents a future-oriented investment with the aim of constantly optimizing the company and its processes.

Companies and customers benefit equally: digitization is a win-win for both sides: fewer errors occur and customer satisfaction increases. After all, the option of digital ordering saves the customer a lot of time.

Will and technology are equally prerequisites

The most important prerequisite for digitizing the ordering process is the will to change. This often triggers skepticism in the workforce – management has to get people on board and create openness and willingness. Because digital processes are nonsensical if they are not accepted. A line of communication can be to be able to offer secure jobs through the increase in expected sales. In addition, technical prerequisites are also necessary: ​​a certain degree of digitization with an ERP should already exist.

The actual digitization of the supply chain as a project takes around three to six months. Because companies are always individual with their own processes, systems and documentation systems. The technology should therefore be optimally tailored to customer requirements. A balance of internal standardization is ideal to keep project costs low and individualization necessary for optimal integration into the company structure.

Don’t just put digitalization on

If the tools are new territory for employees, they can retain more staff at the beginning than before and the desired efficiency is lost. That is why employee training is essential – it must not be digitized past people. Otherwise there is a risk that the new processes will not be used.

A change must not simply be imposed: Ideally, the central questions such as “where are the problems? What can get better? What is the solution needed for? ”Answered from all levels in the company. Because the experts with the deepest insights are the company’s employees.

Conclusion

The future is digital. If industrial suppliers do not want to be left behind by the competition and pushed out of the market, they should digitize their supply chains and ordering processes. With an experienced partner, automation can be achieved in less than half a year. It is important to integrate the workforce into the change process and take them with them.

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