Sustainable Salmon Farming and the Future of Digital Procurement
It’s no exaggeration to say that the people at Evonik Industries are committed to innovation, whether it involves sustainable salmon farming, helping to develop COVID-19 vaccines at record speed, or making tires more fuel efficient. As a leading specialty chemicals company in Germany, innovation is fundamental to Evonik Industries’ growth.
“We want to make life better day in and day out. We create products with characteristics that make the final consumer product really special,” said Thomas Meinel, senior vice president and head of Indirect Procurement at Evonik Industries. “We’re farming salmons with a more sustainable feeding alternative for the climate and our environment. We supported the development and production of the first mRNA vaccines against COVID-19 by supplying the lipid nanoparticles that transport these gene-based vaccines to the right target site in the human body.”
Digital Is Foundation of Business Resilience
After hearing Meinel speak at the recent SAP International Conference for Chemicals in Madrid, Spain, I reached out to Dr. Marko Lange, product manager for SAP Chemicals, for his thoughts on industry modernization.
In a disrupted world rocked by geopolitical conflicts and resultant soaring prices and shortages, he said that Evonik Industries stands out for its foresight in business modernization, bringing in SAP S/4HANA and other SAP solutions.
“ERP is a hot topic again in the chemical industry because an ERP platform supports business resiliency across supply chains and operations in turbulent times like these,” said Dr. Lange. “A next-generation ERP system provides insights, simulations, and decision support to help you understand disruptive impacts on your business and effectively respond. It is a real companion to operating your business, detailing granular, real-time information about what’s happening and the consequences.”
Procurement Is Strategic Business Partner
Digitalization has transformed how every department at Evonik Industries operates. At the conference, Meinel shared how procurement was the next step in his company’s digital journey.
“In a rapidly changing world with new business models, procurement is increasingly part of make or buy decisions to take advantage of greater opportunities,” said Meinel. “Sourcing managers still need classic procurement skills because they are responsible for a company’s global strategy. But they also need to work from anywhere, interacting effectively with teams on collaborative platforms with internal colleagues and external suppliers. Cloud-based platforms provide many more scouting possibilities to discover future suppliers.”
Managing the procurement experience in a digitalized word requires different capabilities from people as they assume new responsibilities. Meinel said that sourcing managers at Evonik Industries were strategic relationship managers who continually innovated, not just on elements like pricing, but working as part of a team to negotiate and strengthen supplier relationships.
“Digitalization will change what procurement does and how we do it,” said Meinel. “We are buying more digital products along with products that have been digitally enhanced. For example, the pumps we purchase use significantly more digital data, which changes how people work, what skill sets they need, their capabilities, and managerial expectations.”
Connected Procurement Data Boosts Efficiencies
Similar to organizations in many industries that are deeply impacted by mergers and acquisitions, Evonik Industries needed real-time data visibility into contract management for daily activities, as well as accurate auditing.
“Everything we do has to be connected, which is the objective of going digital, to make process efficiencies end-to-end,” said Meinel. “With SAP Ariba solutions and SAP Analytics Cloud, we can transform procurement, integrating data across systems as we create, sign, store, and manage contracts that often travel between departments and locations around the world.”
People Are as Strong as Their Network
Meinel said that digitalization is profoundly changing how the company’s procurement professionals function on a daily basis. Robotics speed up purchase order creation and artificial intelligence (AI)-fueled algorithms produce forecasts, while people apply human judgment to handle exceptions and contribute to other higher value tasks. Instead of working in isolation, procurement teams are analyzing and using data to build a stronger global network of decision-making. After implementing SAP Ariba solutions, Meinel said that Evonik Industries gained significant employee productivity efficiencies and met objectives for cash flow savings. Automating tedious, repetitive tasks frees up procurement to stay on top of fast-changing market conditions, including finding new suppliers in case of unexpected disruptions.
“I’m convinced the future of procurement will be one of constant change,” said Meinel. “Lifelong learning needs to be part of the culture beyond designated trainings. People don’t care what system they use. They want efficient processes and to be seamlessly connected. What matters is the user experience. Our digital business core is SAP S/4HANA, helping us become an agile, intelligent network able to manage constant change.”