How Procurement 4.0 can make your live easier
Everyone has heard of Industry 4.0. This is the digital transformation of industrial production. Using modern information and communication technology, the individual players – man, machine, plant, logistics, product – are digitally and intelligently networked with one another with the aim of achieving a holistically optimized value chain. The term 4.0 expresses the fourth industrial revolution, which follows the mechanization through steam engines, mass and assembly line production and the digital revolution.
However, while previous industrial revolutions have focused primarily on production issues and improvements in manufacturing, 4.0 does not stop at the door of the production hall, but has a direct impact on administrative tasks, too. We see Procurement 4.0 as an opportunity to streamline and optimize workflows through digitalization and automation of processes in procurement and purchasing and the networking of internal and external participants, so that throughput times are reduced and resources are freed up for value-adding activities. The possibilities and their purposeful conversion are as different thereby as each enterprise and each Procurement department.
Examples for Procurement 4.0
Every one of us knows it, almost everyone uses it: online shopping. Digital eProcurement systems have also already found their way into many companies. Requestors make their own purchases online from catalogs with defined conditions. Depending on the company and its specific needs, the system characteristics can vary greatly: They range from stand-alone standard programs and catalogs provided by service providers to ERP-integrated solutions with internally negotiated catalog content and complex approval workflows. In most cases, eProcurement systems are used for the processing of C-demands, but they also offer possibilities for the purchase of production material or services. By using electronic purchasing platforms, the Procurement department is relieved of operational activities, maverick buying and throughput times are reduced while transparency increases.
In the context of Procurement 4.0, the topic of sourcing moves increasingly into the spotlight. A typical example of this are eAuctions, in which the negotiation and allocation of requirements takes place via online auctions. However, this system requires a fundamental acceptance of both negotiating parties and therefore appears oversized and unfeasible for many decision makers. But even the selection of suppliers can be digitized by using a company’s own databases, or the tendering process as such, in which specifications, inquiries and offers are created with digital support and exchanged online between customer and supplier. By using standard templates, the tendering process is homogenized, and processing times are shortened by digital transmission.
In general, networking with suppliers plays an important role in Procurement 4.0. Not only inquiries and offers can be transmitted digitally. Companies are more and more making use of digital qualification tools as part of their supplier management. The contractual partners can register themselves independently, provide standardized information, transmit certificates as required and maintain their own master data such as address, contact person and bank details. The result is a supplier database that can in turn be accessed for the sourcing process. In connection with the networking to business partners, the use of EDI or other transmission formats of business documents can also facilitate the daily work. This offers the potential for automating work steps, such as the systematic comparison of invoice and order positions. So, the digital transmission of business documents reduces time and costs.
Your way to a digital future
Procurement 4.0 is no longer a dream of the future; we are right in the middle of it. This fact is also reflected in the Top Trending Procurement Topics we regularly survey, in which digitalization and process automation in purchasing have long been on a par with conservative purchasing topics such as cost optimization and supply security.
The examples above illustrate how different and individual the effects of Procurement 4.0 can be in individual cases. We are convinced: This is also an opportunity for you to optimize and facilitate your everyday work, so that you can increase your value contribution in the company. We would be happy to support you in finding the right digitization strategy for you and your company.
Consultant, ADCONIA GmbH