Industry 4.0 for procurement
Industry 4.0 is revolutionising the procurement profession that will allow organisations to make a real impact.
What is procurement 4.0?
There have been three significant industrial revolutions.
- The first industrial revolution involved mechanical production including water and steam power.
- The second was a shift to mass production, assembly lines and engine and electrical power.
- The third was a move to electronics, computers and automated production.
- The fourth, which is happening right now, is a move to autonomous communications, big data, and machine to machine communications. These digital technologies help us to make a real impact on our market positions, helps to meet customer needs and drive out waste throughout the whole supply chain.
What could industry 4.0 mean for the procurement profession?
Industry 4.0 offers the procurement profession access to information and technology needed to manage risks and increase opportunities in increasingly dynamic supply chains. Access to real time information and digital tools turn data into valuable insights, helping to reduce costs, improve efficiency and increase customer satisfaction. Take a look below at what industry 4.0 could mean for the procurement profession.
- Transparency:
A holistic view of the whole supply chain - Communication:
Real time information readily available to the whole supply chain - Collaboration:
Enabling organisations to see opportunities for collaboration - Flexibility:
Relevant, accurate information which can respond to change - Responsiveness:
Allows accurate real-time decision making with a single point of truth that is stored
What are the benefits of industry 4.0 for procurement?
Industry 4.0 is set to revolutionise the procurement profession, driving value and increasing new opportunities. Here are just some of the key benefits that your organisation will achieve when adopting new digital technologies.
- Access to new technology at affordable cost enhances organisational capability and productivity
- Increased profitability through increased organisational productivity and cost efficiency
- Manufacturing and aftersales support/maintenance becomes predictive instead of reactive
- Increasing efficiency through error reduction and process automisation and optimisation
- Removal of non-value-added activities
- Access to new data sources to improve decision making and to identify new sources of value
- Potential Industrial labour reductions
- The procurement and supply chain function can re-invest cost savings in new 4.0 technologies for added value to the business
- Big data and sophisticated analytics are likely to enable dynamic value driven procurement and supply chain decisions, improve supply chain agility, increase the capacity to customise, and enhance value delivery to the end customer
What are the challenges of industry 4.0 for procurement?
Industry 4.0 implementation will change the structure and responsibilities of procurement and supply chain professionals. As automation increases with the help of technologies, procurement professionals will need to take on a more strategic role, using key skills that are lacked by machines such as creativity, complex problem solving and emotional intelligence. Some of the other key challenges of industry 4.0 are:
- A shortage of digital skills
- Ensuring cyber security measures are in placed to protect against cyber threats
- Finding the right supply partners
- Lack of awareness of new technical solutions
- Initial investment costs
- The organisations unwillingness to adopt new technology for fear of change
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