All You Need to Know About Procurement 4.0
With the advent of Industry 4.0, revolutionizing operational and administrative processes across organizations with innovative digital services/products the additional concept of Procurement 4.0. has also seen recent emergence.
How overarching is the impact of this on organizations one may ask, which leads to the fact that the underlying effect of cutting-edge technologies and data management on strategic/operational procurement has brought with it new considerations for companies, regarding how digital innovation will disrupt traditional procurement methods for organizations, bringing about a complete overhaul to the value proposition of procurement to their suppliers/internal process partners and customers.
Hence, to understand the implications that Procurement 4.0 holds for the future of Supply Chains, we are going to take a look at the possibilities that it entails:
New Value Proposition and Service Procurement:
With Procurement 4.0, the procurement division can increase its value proposition within the company by seizing new opportunities and creating new business models to move from a cost-center to a profit-center. Since procurement possesses the necessary strategic knowledge about suppliers and their markets and has an expertise about the procured goods/services along with the alternatives/emerging market innovations; all this know-how has tremendous value in the market today. In addition to this, procurement can also leverage its valuable customer data for the efficient management of transportation flows, quality inspection, inventory, warehousing etc. eventually leading to better design of cost/function efficient products.
Digital Supply Chain/Supply Management and Innovative Data Utilization:
Ushering in an era of digital integration that will not only optimize the end-to-end supply chain but change supplier management as well, we are now looking at integrating ERP, execution systems, manufacturing/logistics data from all the key players in the value chain; getting us closer to every manufacturer’s dream, of integration of all data from customers/distributors/suppliers and captive production in real time.
The employment of data analytics will also help facilitate efficient supplier management and be crucial to several key aspects, like risk management, predicting market trends etc. by looking at ginormous quantities of customer, finances, suppliers, machine/product failures, external factors etc. ensuring an agile system.
Organizations and Their Capabilities:
Having talked above about the key elements of the framework, there is a tremendous potential for change which will need a total overhaul of how we think about organization and capabilities. Businesses will have to create new job profiles e.g. buyers for upcoming categories, experts on intellectual property, data scientists etc. To this end, new talent sources will have to be unlocked and facilitation of proper resources to existing talents will also have to be considered. Digitization will not only expand globalization but will also push organizations to become truly global to benefit from the opportunities that this new wave presents.
Procurement 4.0 brings with it the opportunity of reshaping procurement organization by developing new value propositions, integrating data and looking at new business needs. What do you think about this ongoing global digital revolution? tell us more in the comments section below.