Gomigo: What we do and why
Consider an example of a pharmaceutical company that has ~1000 different SKUs. Each SKU has about 8–10 items in the Bill of Materials (BoM), including the key API, 4–5 excipients, and key packaging material. The pharma company deals with >1,500 vendors to procure all these items, which range from SMEs to vendors with multi-million dollar turnovers.
The company’s procurement department initiates procurement by sending Request for Quotes (RFQs) to multiple suppliers. Based on their quotes, the company places orders to the desired suppliers, who then generate invoices and dispatch the orders. The orders get delivered, the company’s accounting department makes payments and the process gets completed. On the face of it, the process appears relatively straightforward. However, as we peel the onion, we see layers of complexity often not visible to the naked eye. There are several internal and external stakeholders that keep communicating with each other during the order lifecycle. In the example of the pharma company above, the stakeholder engagement would look something like this:
While most industrial companies today use ERP systems to manage their business operations internally, however, once the ERP establishes requirements and purchasing documents are generated, several buyers leave their ERP systems and rely on static/manual spreadsheets, emails, phone calls and messages to handle the rest. This causes inaccurate data in the system and lack of visibility into the order life cycle, which then leads to loss of productivity, errors in document processing, difficulty in forecasting deliveries and managing inventory.
Our conversations with 100+ industrial companies across various sizes and differing tech adoption levels reveal that procurement stakeholders spend anywhere between 30–60% of the time manually dealing with the following processes -
- Following up with vendors for order acknowledgment
- Following up with vendors for dispatches
- Managing hundreds of supporting documents and change control workflows
- Managing multiple applications for documents and communication
- Tracking invoice status and reconciling errors
- Tracking status of Quality Acceptance and Goods Receipt across numerous locations
What does the above complexity lead to?
It leads to opacity in the supply chain, where the information lies with multiple stakeholders in bits and pieces and across multiple channels.
What is the cost of this opacity?
- Companies lose points on their OTIF scores since delays are known dangerously close to actual delivery dates.
OR
- Maintain excess safety stock for critical raw material inputs
OR
- Manage a large team for ‘firefighting’ on the status of material POs
As a result, the total cost of operations per Purchase Order unnecessarily goes up by ~25–30%, with a significant loss in productivity and higher material costs.
However, can the above complexity be avoided? No.
Can delays in dispatches by vendors be avoided? Usually not.
But our conversations with industrial customers revealed that it’s not the delay per se that creates cost and productivity leakages.
The real culprit is information asymmetry between the buyers and suppliers, which happens because there is no single source of truth. Different stakeholders see different versions of the truth at any point in time and have a different idea of where an order is in its life cycle.
The above picture is true for manufacturing companies of all scales and sizes. Our market research revealed that Procurement Heads across the globe have tried solving this problem. Several companies have tried building in-house vendor portals. Others have experimented with legacy systems to solve the problem. Many of these solutions have been expensive to build, with long time to value, were cumbersome to maintain, and narrow to the point that they were often not scalable, with poor user-friendliness. Further, our conversations with several supplier side users of legacy systems revealed that poor user experience was a massive impediment to adoption.
For manufacturing companies, direct material spend forms anywhere between ~30–70% of revenue, and even a few percentage points of leakage in value creates a significant dent on gross margins — and material delays have a direct impact on production.
In India alone, the size of the direct material spend base is ~$500B. Globally, this spend base is ~$ 20 Trillion. Leakage of ~1–1.5% in this spend base amounts to ~$250B, which is the extent of the problem (TAM). Our conversations with several manufacturing companies in mature markets reveal very similar challenges to the India and SEA markets.
How do we solve the problem?
At Gomigo, we provide a single cloud-based platform for all the stakeholders that brings 100% visibility to RFX-Contract-PO Lifecycle.
Gomigo uses AI-based tools to automate repetitive tasks & make supplier collaboration easy & intuitive, flagging at-risk orders pre-emptively and saving hours of time managing multiple emails, messages & paper documents.
Gomigo’s API library allows connection with ERP and other systems like Inventory Management system, Transport Management system to create a unified interface which allows the buyers to view their entire inbound operations on a single unified platform.
The Gomigo platform has been built with supplier adoption in mind — we’ve done 100+ hours of UX research over the last 6 months, spoken to 50+ raw material suppliers ranging from SMEs to suppliers with multi-geography operations, to identify key user behaviors, biases and avoidable overheads.
What impact does it create for inbound material movement?
- Improve on-time and in-full (OTIF) delivery by 10–15%
- 30–40% increase in productivity within the buyer teams
- 0.5%-1.5% savings on invoices on account of faster Accounts Payable processing
- 5–10% potential savings on material cost
Our goal is to make enterprise procurement as easy and intuitive as ordering pizza. It’s a rather long road to travel, but we are at it. Doggedly.
Connect with us at hi@gomigo.io
Gomigo is operated by Riversys Technologies Pvt. Ltd.
