Some call it “digital transformation” or “digitalization,” some call it “smart manufacturing,” and others call it “the next industrial revolution” or “Industry 4.0.” Whatever term you use, a combination of new technologies — from big data analytics, Blockchain to 3D printing — is revolutionizing companies’ operational and administrative processes and creating innovative digital products and services.
The speed of the emerging and spreading effect throughout the manufacturing environment is inevitable in virtually every industry. Technology will enable a new manufacturing model, customers will compel its adoption. Revolution is on its way and these developments will influence the procurement role and processes, but also, it offers opportunities to enhance the value that procurement can deliver. Within the next 5 to 10 years, companies in all industries will find themselves in a race to efficiently produce products at the point of demand — that is, where their customers are — and to deliver these items when their customers want them, personalized to their customers’ individual needs. Defining and setting goals, developing a roadmap for digitalization and evaluating results will be a new challenge for Procurement leaders within organizations.
Purspective is the global thought leader for learning & development in Procurement and Supply Management. As an agile and innovative partner we help organizations to advance the function of procurement by building the right competences through assessments, formal and informal learning and through the development of tailor made programs.
Gartner – “Digital business transformation is about doing things differently – creating new business designs by using digital technologies in combination to blur the boundary between the physical and the virtual worlds. It’s not just about automating or inserting technology into an existing process. Nor is it about replacing paper or people.”
Aware of the correlation between stronger leadership capabilities, higher spend on training and enhanced performance?
Are you aware of the capabilities in your teams to drive innovation in the procurement strategy? 51% of procurement leaders do not believe that they have the capability in their teams to deliver their procurement strategy. A clear imperative for procurement leaders at high performing organisations is to lead the procurement, business, supplier and digital agenda. They see a need to shift the traditional talent models and practices in procurement and at suppliers, wand fill leadership capability gaps that exist in innovation, positive disruption and digital transformation. In general modern technology usage is low, with only one-third of procurement leaders using technologies such as predictive analytics and collaboration networks.
Why not using low costs Robots?
Interested in 60-80 % cost saving by using low costs robots? The advent of robotics and artificial intelligence presents major opportunities to process both complex and repetitive transactional tasks in a more efficient and cost-effective manner. The media is filled with examples of the dawn of these disruptive technologies, and a growing share of jobs will soon be affected by robotization. The next generation of robots, expected to arrive in the next three to five years, will take process automation to the next level. The transformation to “cognitive automation”, as it is known, is being catalyzed by developments in artificial intelligence combined with available big data.
Prioritizing investments in the procurement digital transformation?
It requires the right insights to make a breakthrough that extends beyond the usual tactics and strategies. Predictive KPIs and Big Data are on top the list of areas where companies want to invest. With regard to more advanced technologies, such as blockchain, robotic process automation, and digital assistants/ chatbots in particular, the results show that companies are still rather reluctant to implement them. From an efficiency standpoint, the technologies that can have a high potential are SRM, eProcurement, and eSourcing. All three are at the core of Procurement activities and set the ground for the most critical activities like category management and supplier development: from defining strategies (analytics, eSourcing), to definition (SRM) and execution (eProcurement and eSourcing). It follows, therefore, that boosting these areas will also enhance performance. From an effectiveness standpoint, the technologies that are probably the most promising and that would have the greatest impact are Big Data analysis, SRM, Procurement, and eSourcing , and Predictive Analytics.
What is your innovation mission?
Procurement holds enormous innovation leverage, especially for boosting the cost efficiency of new products. Under the same conditions, procurement can achieve more with innovations than sales can (known as purchasing multiplier in procurement and materials management). This is particularly the case when cost-saving programs are not implemented perforce, ad hoc and under acute cost pressure, but rather continuously, in a targeted and innovative manner. Innovations come mainly from procurement. Those who have all the data at their fingertips and manage a broad network of suppliers and partners are more likely to find innovative patterns in the data cloud. The procurement function facilitates the innovation process; it connects the relevant business partners to the process on demand.
Can you adapt to the organizational changes a 21 st century approach requires?
An interesting framework for Procurement 4.0 within the Digital Revolution. Interesting to use as base for an interactive team session. Rethinking the value added by Procurement within the company. In industries across the board, however, companies need to consider the way digital innovation will disrupt not only the way their organizations work today, but the entire value proposition of procurement to their suppliers, customers, and internal process partners.