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How has Covid Accelerated Digitization in Industrial Procurement?
Naman Shah is the Founder and CEO of Now Purchase. He was instrumental in conceptualizing and scaling Now Purchase, and as a CEO, he is primarily responsible for the company’s growth and expansion. Naman Shah set out on the entrepreneurship journey armed with a bachelor’s degree in Economics from the National University of Singapore and completed his schooling from St. Xavier’s Collegiate School, Kolkata. He started his career with Ernst & Young, and then worked as a Business Development Manager at FreshMentors (Silicon Valley based edtech startup), and then as the Director of Asia Pacific Region at BizEquity (US based fintech startup), where he led the company’s expansion in Asia.
Q: What is driving the interest in a technology-driven procurement platform?
Technology-driven procurement has been spoken about for a while now – beginning with the introduction of mainstream computers to the shift to ERP, auctioning sites, and e-commerce marketplaces. Rapid advancements in digital technologies, such as low-cost computing and data storage, have enabled mobile technology and the cloud. Constant connectivity and sensors, which bring devices and machines to life on the Internet of Things, are remaking business supply chains and are poised to transform how procurement function delivers value.
Digital procurement solutions enable this future by providing access to previously unavailable data or bringing order to massive, unstructured data sets, driving more complex analysis and better supplier strategies, and enabling more efficient operations. We are now more likely to witness a progression toward fully autonomous procurement. On the B2C side, there has been a significant increase in technological adoption in terms of individual procurement of goods and services. The same trend has accelerated in industrial and B2B procurement too.
Q: What are the challenges in the industry when it comes to industrial procurement?
Industrial procurement is extremely complex and has a different side when compared to an individual. It is much more than purchasing goods to produce others. Majority of challenges revolve around quality, delivery, timeliness, and to a lesser extent, price. Timeliness is of extremely high value. Although the price must be lower, this is of little importance without assurances around quality and delivery.
The quality of the parts and raw materials makes all the difference to the finished products. By ensuring that specific quality in terms of physical description, metal/chemical composition, proper measurements, and performance specifications are maintained, the procurement team also assures the quality of the finished goods.
With the increase in supply chain integrations and lower inventory levels, on-time delivery is another crucial factor that has become increasingly critical for success. To ensure on-time delivery, large inventories and production capacities were traditionally required. However, integrated supply chains no longer require large, expensive inventory buffers to respond to unexpected events and variations in demand, thanks to advanced information systems, deregulation, agile manufacturing organizations with flexible equipment and tooling, and sophisticated logistics systems.
Costs have always been important, and in today’s increasingly global economy, it is not uncommon for SMEs to discover sudden gaps between price disparities. This is due to the convergence of improved high-speed communications, reduced transportation costs, and universal access to technology and effective management practices.
Another important challenge is that when dealing with businesses, a lot of trade or industrial credit is given out, which is very different from dealing with individuals. Furthermore, the goods procured are highly technical, and many of them are purchased from various suppliers, some of whom are organized while some are not.
To put it simply, supply variance and quality of supply, credit piece, and finally delivery and timeliness are of utmost importance.
Q: What changes has the pandemic brought in, in terms of procurement?
The pandemic has accelerated the adoption of technology in general. In fact, the pandemic has compelled more businesses to embrace digital transformation than demonetization could. Various core sectors, such as health-tech, ed-tech, fintech, OTT, and food-tech, experienced rapid growth in the digital startup ecosystem. Another notable change was a complete shift in how entrepreneurs viewed success. Indian startups have streamlined revenues and innovations, and as they continue to deal with challenges, Indian startups are playing the role of a catalyst in reviving the country’s economy.
In response to the COVID-19 pandemic, individuals and companies worldwide have been forced to accelerate the adoption of emerging technologies to mitigate its impact. We have seen students and professionals continue studies through blended learning offered by ed-tech platforms, office meets through Zoom, Google meets, and the emergence of multiple e-commerce platforms owing to the pandemic. Even in terms of business procurement, we have seen industry professionals become more open to exploring tech adoption. Another significant change is that people have started to take the digital procurement space more seriously and recognize that this is the way of the future.
Q: What problem is NowPurchase solving in the current procurement scenario? How is NowPurchase technology helping metal manufacturers with procurement?
At NowPurchase, we are extremely obsessed with transforming industrial procurement and building a trustworthy, autonomous platform that helps metal manufacturers procure. We are dealing with the metal manufacturing industry, which is worth $140 billion. This could include iron and steel, non-ferrous metals, as well as the foundry and castings industries. We believe that procurement has become extremely inefficient due to the purchase and production departments working in silos. The purchase and production managers are in two different buckets, which is where a lot of money is lost, and it is this gap that NowPurchase is attempting to close.
As a procurement solution, we recommend and deliver the appropriate raw material, depending on the manufacturing process. We have our own WhatsApp bot to provide pricing transparency and proprietary software called MetalCloud that optimizes the production process.
In terms of technology, we have seen widespread adoption of WhatsApp. Currently, 80% of our users use this medium to view prices, track deliveries, raise quotations, and communicate with their account manager, among other things. Also, people now have begun to recognize that technology is the future, which has resulted in a strong adoption of our MetalCloud software. Factories are using our proprietary algorithm to optimize the production process. They take current inputs, different parameters, plugging data into the software, and determine the most optimal way to make that end alloy.