Chemical companies have worked hard in recent years to rethink their procurement functions, especially during the pandemic which accelerated the adoption of innovation-led technologies. New digital tools are transforming the ability of companies to aggregate, organize, and analyze complex data, so purchasing teams can identify opportunities more quickly and make smarter decisions at every stage of the procurement process.

The first edition of “ChemConnect 2022”, a logistics and supply chain event, organized by Indian Chemical News (ICN) on September 21, 2022 at The Lalit, Mumbai, featured a fireside chat with Sanjay Gupta, Head-Procurement, GHCL and Ashu Garg, Director, Moglix.

The session titled” Process Efficiency & Transparency through Digitization in Procurement” witnessed a highly interactive discussion on digitization within procurement departments in the chemical industry. It was moderated by Pravin Prashant, Editor, Indian Chemical News.

“The logistics is an unorganized sector and requires our attention. Close to 70% contribution of the carbon footprint to the economy is because of logistics. That is where we should be putting most of our efforts. To begin with, the most important task related to procurement is 5R which is the right product, right place, right price, right quality and right quality. But the biggest R we miss is the right supplier. When we identify the right supplier, all other things are taken care of.  We need to reorganize ourselves in a way that we put our efforts in the right direction. 80% of the business comes from 20% of the vendors and we should focus on those high ticket vendors. The rest of the 80% vendors who hardly contribute to less than 5% bossiness could be taken care of by our aggregators,” said Sanjay Gupta, Head - Procurement, GHCL.

“Digitization has played a key role in offering us solutions. There are two ways to address issues. One to change the traditional way of procurement and also bring a change in mindset. We have done away with the L1 kind of system and encouraged the buyers to take the total cost rather than the price part of it. Second is that initially we were having too many vendors and a lot of time went into engaging with 10% vendors who were contributing less than 10% value. We handed over the same to the aggregators and got time to implement other ideas,” informed Gupta.

“While implementing the projects in various companies, the first step was to convert the data in harm form into soft form. Second was the change in mindset while shifting to digital format. The third is implementation. We gather our ideas through discussion and use technology to implement them. Our higher goal is to make the life of our buyers simpler. Transparency is a major problem faced by the procurement departments, be it internal or external audits. We improved a lot through transparent digital green procurement. Our clients bear a testimony of our improved procurement system,” Gupta added further.

“There is a challenge in data quality which in itself brings process inefficiency and also a lot of lack of transparency in the system. Then it is improper bandwidth allocation and if the spend is 5%, only 5% bandwidth should go into procurement, which means if we have 50 hours in a week, we should spend only 2.5 hours in procurement of an MRO material. However, ideally we see that 2.5 hours in go into taking review meetings itself every week which puts the process efficiency and transparency out of the picture. The change management for any digitization process is a very difficult thing. The purchase department is one of the most audited one yet highly under-appreciated. It might do thousands of purchases perfectly and just one process going wrong and all the fingers are pointed to it,” said Ashu Garg, Director, Moglix.

“Digitization brings in more transparency and for data quality we can have a catalogue. Right now when we analyze the data in many B2B companies, we find that specifications are not matching the description. The cataloging and seamless integration could help. The repeat purchases every month must be digitized rather than a tedious approval system. The solutions have to be customized as per customer requirements. We serve a large number of chemical companies and when we look at the engineering spares, they are almost the same. They are using valves, pumps, gaskets, valves, bearings, they are all the same as only brand will change or the size will change. Companies in a cluster like Dahej can come together to store their engineering spare parts at a common place. Rather than having individual inventories, they can have a common space. It will help them to save the costs,” added Garg.

The conference themed as ‘Creating a Robust Ecosystem’ has lined up the country’s top industry captains for the most comprehensive dialogue on the various key topics. The event has been supported by platinum partner- Netradyne; gold partners-Carbanio and Moglix; tech partner- Ezbiz Technologies and the media partner- Indian Pharma Post.