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 Matthias Spanic, LL.M.

Matthias Spanic, LL.M.

Managing Director, scrappel GmbH

Digitization Why SMEs Can Benefit from Platforms

| Author / Editor: Matthias Spanic / Nicole Kareta

B2B platforms bring suppliers and customers together and minimize search and transaction costs. Matthias Spanic, Managing Director of scrappel GmbH provides an overview of how SMEs in particular can benefit from these advantages.

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A lack of specialist knowledge and personnel capacities as well as IT costs often impede the digitisation of companies.
A lack of specialist knowledge and personnel capacities as well as IT costs often impede the digitisation of companies.
(Source: Scrappel)

The digitization of the German industry has been an ongoing topic for years. The problem is that everyone is talking about it and most people don't really know what exactly needs to be done or can be done. As a result, it often remains a matter of "talking", which have different reasons. Obstacles that are particularly often mentioned are a lack of technical expertise and personnel capacities as well as IT costs. But also the concern to lose the personal contact to customers and partners are topics companies and especially SMEs deal with. This applies in particular to the metal recycling and metalworking industry: For this reason, business relationships between traders and buyers of secondary metal and scrap metal are still often conducted via phone, print tenders or personal contact. However, this is inefficient and, in view of digital possibilities, no longer up to date. Digital platforms can make it easier to get started and take the requirements of the industry into account.

Platform Economy - A Brief Classification

In platform economics, a fundamental distinction is made between two types of platforms: technical platforms used in IoT projects, for example, and market platforms. The latter use Internet-based software to bring suppliers and buyers together and ideally support necessary trading and settlement processes. These range from the procurement of information on offers and market participants through communication and negotiation to payment. The goal or added value that a platform should provide is to minimize the search and transaction costs of the processes. Usually, platforms also offer value-added services (VAS) from the credit, logistics or insurance sectors in order to further enhance the core service. This makes the process even easier, as the services can be used directly on the platform and the customer experience is not interrupted. Ideally, VAS can also be booked independently of a trading transaction.

Bundling of All Important Functions

In the case of trade in metals and recyclables, platforms initially provide an overview with which the players can orient themselves. Company profiles provide information about certificates, contact persons etc., so that the customer can gain a first impression. Platforms can also display information from third-party providers. Once a suitable partner has been found, communication is handled via the platform. Instead of getting bogged down in various emails, offers and conditions relating to the business as well as separate provisions can be individually negotiated and digitally recorded via chat. If an agreement is subsequently reached, the purchase contract can be concluded directly within the platform. Modern platforms have an integrated compliance-compliant document management system for this purpose. These allow the administration of invoices, orders and offers at a central location. This significantly reduces the "paper chaos". In addition, the documentation of the individual steps ensures that the trade is handled in accordance with the company's own compliance guidelines and that the process can be archived in a traceable manner.

Advantages for SMEs

The concerns of small and medium-sized enterprises described above are, of course, justified. But platforms offer decisive advantages here: they are cost-efficient, easy to use and keep IT infrastructure costs to a minimum. Companies should therefore consider the following aspects:

1. Cost Efficiency

First of all, platforms do not require the explicit purchase of software or hardware. Modern platforms can be used on computers or smartphones - in some cases even via Progressive Web Apps (PWA). These do not have to be downloaded from the app store and are independent of mobile operating systems. After login or registration, verification takes place on reputable platforms to prevent misuse by unauthorized third parties and to ensure that valid legal transactions are concluded on the platform. Afterwards, all employees of the company can use the platform by being assigned corresponding tasks/roles. This also results in efficiency gains: research, contacting and business processing can be significantly shortened and employees can concentrate more on their core tasks.

2. Handling

Most operators of digital platforms are well aware that not all employees of companies are highly digital affine. For this reason, care is often taken to ensure that elements are used in the user interface that users already know from private use. For example, user-friendly applications are based on chat programs or social media platforms in order to make getting started as easy as possible. In addition, professional providers take the needs of the target group into account and explicitly implement features that are requested by customers or users. Of course, this presupposes that the platform has a certain maturity and there operator is in contact with the target group. Here the comparison is worthwhile.

3. IT Infrastructure

When it comes to a change of IT systems in companies, usually the alarm bells go on. Integrations are often complex or not possible due to missing interfaces. Excel tables are stored decentrally on various computers and invoices are stored in file cabinets instead of in digital form. Platforms support the integration into existing business processes through their document management. These can initially be used in parallel to the previous system without affecting current. Documents such as tenders, invoices and process documentation are gradually transferred to the platform. In addition, CRM or ERP systems can be easily connected via API interfaces. Furthermore, platforms do not require any software, which often has to be centrally managed and updated. Thus, IT resources are drastically conserved and system administrators are relieved.

This article was first published by MM Maschinenmarkt.

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About the author

 Matthias Spanic, LL.M.

Matthias Spanic, LL.M.

Managing Director, scrappel GmbH