In the interview with Michael Rösch, Senior Vice President Global Professional Services at JAGGAER

The procurement of raw materials or components, which is increasingly handled for all types of products or services via so-called "Source to Pay" systems, is gaining importance year after year. Many companies, especially in the mid-market segment, have now switched to paying suppliers via S2P systems. JAGGAER has built a strong reputation in this field over the last few years and, as an independent Source-to-Pay company, has become indispensable for many buyers and sellers through a global network with locations in North and South America, APAC, Asia and EMEA. The company develops and offers extensive SaaS-based procurement solutions that cover the entire Source-to-Settle process, including spend management, category management, supplier management, sourcing, contract management, eProcurement, invoice processing, supply chain management and inventory management. All of these core procurement processes are located on a single platform, JAGGAER ONE. Due to current global supply bottlenecks, we therefore spoke with Michael Rösch, Senior Vice President Global Professional Services at JAGGAER, about supply chain disruptions, strategic supplier management, forecasting and capacity management.

DIGITAL FUTUREmag: Mr. Rösch, at the moment, extreme delivery delays are emerging across almost all sectors. This ranges from plastics for sockets to computer chips. In your opinion, what is the reason for this?

Michael Rösch: This is the result of the interplay of several factors. On the one hand, the coronavirus pandemic led to the closure of factories, affecting raw material suppliers all the way through to the manufacturer of the final product. On the other hand, the problem lies with human resources, as many employees at various suppliers along the supply chain have been or still are on short-time work. These developments have also led to strategic changes at many manufacturers, so that they are now relying on local suppliers and greater sustainability to reduce risk for the future. Added to this are the disruptions in supply chains that occur independently of the pandemic, such as the incident in the Suez Canal. These developments have led to a domino effect that has resulted in global delivery delays across all industries and company sizes.

DIGITAL FUTUREmag: JAGGAER has been a pioneer in spend management solutions for more than 25 years. What drives you personally?

Michael Rösch: I have spent my entire life trying to optimize things. This started at school and university with effort versus grades and has continued in my professional life. Every day, I enjoy working with customers and employees to make improvements and optimizations. This drives me and gives me a sense of inner satisfaction when it succeeds and we achieve continuous improvements.
SaaS solutions are particularly efficient in this context. Thanks to very short implementation times, customers can benefit from a best-practice solution like JAGGAER and generate added value at short notice. That is true customer success!

DIGITAL FUTUREmag: If we return to supply chain disruptions, the question arises as to how an S2P system can provide a remedy. What advantages does the use of your system offer?

Michael Rösch: I would almost rephrase the question: What aspect of an S2P solution would not provide an advantage here? That would be easier to answer. But now seriously: In general, three major fields of action can be identified that, in our view, deliver the greatest added value:

• Supplier management
• Category management
• Supply chain collaboration

Supplier management helps efficiently manage and connect data from all suppliers with other data sources. By linking internal data with external information (e.g., risk data, sustainability data, credit reports, sanctions lists, embargo lists), a vital data pool is quickly created, enabling better decision-making (e.g., reduced purchasing prices, improved quality, sustainability). A relatively new area in supplier management is supply chain mapping. This involves analyzing not only direct suppliers in critical product categories but also further levels of the supply chain to ultimately achieve full transparency in risk management.

In category management, local and global strategies can be mapped and rolled out as guidelines within your own company. Changing strategies can thus be evaluated, defined, and implemented rapidly. Without digital tools, this is only possible via email and PowerPoint, which in practice significantly prolongs change management and jeopardizes the application of new strategies.

Last but not least, the digital integration of suppliers in the supply chain is a cornerstone for efficient procurement. Integrating business partners into your own processes is essential to make real-time decisions and, if necessary, revise them.

DIGITAL FUTUREmag: This naturally leads us to the topic of supplier management. What tips do you have for our readers who may be dealing with strategic supplier management for the first time?

Michael Rösch: Supplier management is the heart of procurement. The clear goal here is: more efficient processes for better collaboration and relationships with suppliers. Why? Take the example of an automotive manufacturer: 30 years ago, the average value contribution from suppliers was 56%. Even then, there was a certain dependency. Today, the value contribution is around 82%. This shows that well-functioning and coordinated supplier management is key to economic efficiency and business success.

Effectiveness in purchasing always includes suppliers. Solid supplier relationship management ensures a stable logistics chain, planning security, and innovative supplier involvement. Management should be aware of the importance of holistic supplier management. Leaders must be involved in selecting the right strategies to align supplier management with company goals. At the same time, it must be ensured that the procurement team is equipped with the technologies, partners, and employees to implement these strategies.

DIGITAL FUTUREmag: Right now, at a time when many companies are feeling at their own production processes how important transparency and coordination with suppliers are, the question of optimal forecasting and capacity management naturally arises. How does an S2P system support your own company and suppliers in remaining 100 % capable of delivery even in times of crisis?

Michael Rösch: How well collaboration along the supply chain works even during crises depends on three key factors: First, collaboration is crucial, because optimal capacity management only works through good and close cooperation with suppliers. Automated supply chain processes run very collaboratively between customers, suppliers, and third-party providers. Second, the degree of digitalization is decisive, and whether this enables seamless electronic document and data exchange between buyers and suppliers from order to invoice. And lastly, seamless integration into standard or customer-specific system environments, enriched with 3rd party services and artificial intelligence, is a key factor for increasing on-time delivery, minimizing error rates, improving quality management, and saving process costs, resources, etc.

DIGITAL FUTUREmag: What are the most important steps companies need to consider when introducing a Source-to-Pay process?

Michael Rösch: We recommend that our customers proceed in iterative steps. Fifteen years ago, people tried to invest money once and then implement the perfect solution. When the expected results did not materialize, the disappointment was great. Today, we approach these topics in a much more agile way and try to quickly have a functional solution in use from which we can learn together with and from our suppliers. These insights are then implemented and rolled out in optimization loops. This is done strictly according to priority.
And to all critics, I can say that even for agile projects, you can define clean contracts and budgets. In such a setup, budgets are spent much more purposefully and with a focus on the most important priorities. This creates maximum added value!

DIGITAL FUTUREmag: You must have experience with the introduction of such processes. How do you support companies in this and what should they pay particular attention to?

Michael Rösch: At a presentation by the CPO of BASF many years ago, I saw an interesting formula that I would like to quote here: PP + NT = EPP
This means: Poor Processes + New Technology = Expensive Poor Processes
The essence of this “formula” is what we, as a solution provider, try to convey to our customers on a daily basis: Only mature processes can be mapped efficiently and bring benefits. However, if the processes are lacking, you cannot expect software to solve that. This is where we need to start earlier, and that’s why we have developed solutions together with our partners that help our customers establish and digitalize state-of-the-art processes. And that’s where our 25+ years of experience comes into play, which our business partners value so much about us.

DIGITAL FUTUREmag: Thank you very much for the valuable insights, tips, and your time for this interesting interview.