By Andy Beth Miller
You could cheekily say that Austin Dittrich—via his role in Purchasing, In-Car IT & Innovation at Volkswagen Group of America—drives a hard bargain. He also knows what it takes to succeed. As we sit down for our interview, Dittrich quickly points me toward the subject of digital transformation, which I soon realize is a treasure trove of useful technologies that will help as we all make our ways, attempting to navigate this seemingly narrow path the best way possible.
“Digital transformation is adopting new technologies to do work more efficiently and effectively,” Dittrich declares, roaring with enthusiasm straight out of the gate like one of his company’s most elite models. “Companies need to make these changes in order to reduce costs and remain competitive in a constantly changing landscape.”
My mind then instantly gravitated to the popular saying, “Out with the old and in with the new,” and when asked whether or not this mentality aligns with his own individual perspective on digital’s role in procurement today, Dittrich offers a definite—and emphatic—affirmative: “Absolutely. I see this saying jiving with digital’s role in procurement. Historically RFPs and negotiations have been a very manual process. Now, we have cloud based tools to conduct RFPs and negotiation with suppliers autonomously. Companies that continue using traditional processes and tools are only creating extra work for their employees.”
Dittrich follows his assertion with a real world example of how he saw this digital evolution “at work”… at work: “I saw this at my previous company, Cummins Inc., and [at my] current company, Volkswagen. Our purchasing departments have upgraded systems that allow greater visibility into reporting and streamlining processes. As these systems improve, purchasing organizations need to adapt and evolve.”
Its is clear by Dittrich’s definitive statements that focusing on the importance of adapting and evolving in order to stay relevant and continue to be able to “keep up” in the ever-changing procurement world is no joke. However, I had to pose the question: “Change—which is really what adaptation and evolution are—is hard and scary to face for many people much less embrace. So, how you would put their minds at ease and explain to them the great benefits of digital transformation?”
Taking a moment to collect his thoughts, Dittrich nods with obvious empathy for such individuals, then offers this sage advice and encouragement: “Change is scary. To people who are resistant to change, I would say digital transformation will make most people’s jobs more enjoyable.” How? He explains, pointing out a plethora of ways: “The focus will go away from the low-value purchases and be rerouted to high-spend tasks. Better purchasing systems and AI will give businesses better visibility into their spend and enable buyers to make better decisions.”
Chuckling good-naturedly, Dittrich then brings his own experience into the mix, admitting a particular pet peeve: “If anyone else is like me— they find themselves spending a lot of time unsuccessfully looking up information in our Contract Management and purchasing systems that should be easily available. It [especially] frustrates me when I can’t find a start and end date for a contract in our CMS. Digital transformation can help remove these annoying tasks from our days.”
Sounds good to me, as annoying anything is definitely on my list to avoid. However, with so much evolution (read: change) going on in the procurement industry, many people in the field hear about these modern procurement concepts (digitalization especially), and immediately worry about job security and the like, completely misunderstanding what it’s really all about. As I bring up this kink in the process toward procurement professionals embracing such evolution, I have to ask how Dittrich would best put their minds at ease, specifically regarding where—and how—human workers can fit in all of this moving forward into the future.
“Great question,” Dittrich replies instantly, clearly undaunted by tackling the inquiry. He then explains, “With the adoption of new tools, procurement professionals can refocus their time on important tasks without being bogged down by time-consuming low value processes.”
Seeing my head nod, clearly following his line of thinking, he then continues to elaborate, “For most, if not all companies, the top 1% of purchase orders make up a disproportionate amount of total spend. These high value purchases are typically very complex and not processes that can be replaced with automation. Procurement professionals can focus on cross-company purchasing collaborations and bundling on the top 1% of purchases. Buyers will have more time to focus on saving money on those high value purchases, which will have the largest impact on a company’s bottom line.”
This also sounds good to me. Very good. But I still want to be sure I have a real clear and concise picture of what exactly digital transformation looks like IRL (in real life), so I request of Dit-trich a “dumbed down” version for yours truly, suggesting he could perhaps provide us with a bullet point list of real world examples that would help readers (okay, me particularly) wrap our minds around all of this. We decided to title it simply “Digital Transformation at Work,” and after reading this short list, I soon “see” that digital transformation not only sounds good, but it looks good, too.
As painted by Dittrich, the “pretty” picture of digital transformation at work is undeniably attractive, and the following “beauty marks,” according to Dittrich, are just of few of the its best features:
Low value negotiations are being automated and streamlined
AI is enabling better visibility into contracts and spend
Reduced risk with better processes
Time to complete sourcing processes are drastically shortened
It’s clear that digital transformation is all the rage and absolutely en vogue in 2020, and when asked how he sees this phenomenon fleshing itself out in the next five—ten—fifteen—years, Dittrich uses his answer to expound upon his aforementioned insights: “To build on my previous answers, in regards to procurement, I [predict] the low value purchases and negotiations will become more and more automated.” What else? “Procurement departments will focus on the largest dollar value and most complex buys,” he states.
Directly following my admittedly opaque query for Dittrich to basically predict the future, as if he had a magical crystal ball (which he proverbially “consulted” quite well, I might add), I angle the questioning to a much more tangible arena by asking him how he first became interested in the procurement field.
The way Dittrich describes it, his journey in procurement began as pure happenstance: “Prior to college, procurement was never a profession that crossed my radar. When I was in my second year at Miami University of Ohio, I randomly took a Global Sourcing course. My professor made the subject seem interesting and exciting, so I decided to find an internship in the field.” From that initial internship, a seed was planted, which grew to a passion for what many of us find fascinating, making deals. We even have a beloved game show, adored by millions across the globe, centering around this exact premise.
When expounding upon his ardor for this “Let’s Make a Deal Mentality,” Dittrich describes what he loves most about negotiating in procurement, “We’re not just sitting in the office crunching numbers on Excel all day. There is a strategic and social aspect of the field that suits my personality well and aligns with my strengths.”
Alongside being a stellar negotiator, Dittrich’s other strengths are numerous, among which in-cludes his tenacity to not back down from a challenge. When asked about what he sees as some of the current obstacles facing digital transformation’s continuing evolution, and how he personally tackles each, Dittrich immediately rattles off a rapid-fire list of the top offenders:
Outdated processes deterring change
General employee fear and resistance to change
Limited budget, especially with the corona virus crisis currently happening
Lack of expertise to lead digitalization initiatives
Digital transformation not being a part of core strategy
So how do we deal with such criminal lacks of forward motion? According to Dittrich, the answer is simple: Innovation. “A large portion of my role at Volkswagen Group of America consists of scouting out innovations. Volkswagen has a big push—from the top down—for the company to change from a traditional automotive OEM into a technology company.”
They are clearly on the right track, but Dittrich is careful to be honest with us, divulging that even such a well-established company meets a few roadblocks along the way. “While this transformation is a core part of our strategy, there are still legacy processes in place that really slow down the speed of business.”
He continues, “I think heading into the digitalized age, businesses need to take a look at their existing processes and think about if they fit in with their digital initiatives. In order for the digital initiatives to succeed. It is important for these initiatives to be part of employee’s KPIs to help them buy into change.”
As I nod my head, while furiously scribbling notes, Dittrich keeps going: “As for overcoming not having a budget, many digital tools pay for themselves and even offer an ROI. I’ve received pushback for not having a budget when trying to implement an innovation. In some cases, I’ve been able to put a business case together and show cost and time savings.”
And it is just this spirit of soldiering on and keeping that eagle-eye focus on forward motion and innovation that continues to drive Dittrich… well… forward. After calling my attention to a well-known saying, “The only constant is change,” Dittrich gently reminds, “With digital transformation, changes are happening faster than ever.”
He then summons that proverbial crystal ball again, divining, “Digital transformation is going to decrease costs. Whether it’s automating tasks and negotiations, or using artificial intelligence to provide business insights, digital transformation in procurement is going decrease the bottom line.” And when that bottom line is reached, we all want to make sure we are on the right side of it, operating in the black.