Every department and every area in the company is in demand for digitization. Many companies are currently considering increasing the degree of automation in purchasing. Processes should run completely autonomously. Blockchain technology with smart contracts or artificial intelligence can help here. In any case, data and secure data exchange play a decisive role. Our expert Tobias Rösner has listed the ten most important steps towards Purchasing 4.0.
1) Development towards Purchasing 4.0
There is a change to purchasing with a high degree of automation. Processes are mapped via e-procurement software and the increasing data volumes are utilized via modern analytical tools. Suppliers are integrated into the company on a cloud basis and contract models are designed digitally and reliably (e.g. via blockchain). Purchasing 4.0 is the move away from manual activities or the isolated use of software in the everyday life of a purchasing department to a fully integrated approach in the digital corporate structure.
2) Three framework conditions for implementing purchasing 4.0.
There are three framework conditions for a Purchasing 4.0. Real-time communication – Large amounts of data from the corporate environment are collected and processed in the shortest possible time, linking – Machines, products and people are in part connected across organizations and interact together and the third framework condition, Intelligent systems – Systems learn by processing data and control themselves independently.
3) Fundamental change of processes in the context of purchasing 4.0.
Due to the digital linking of elements within the system boundaries of a company and the company environment, the needs of purchasing are changing. New products and commodity groups are being added, which must be embedded in the digital environment. Ordering processes can be triggered automatically as soon as a need for a particular material is identified. Market analysis can be optimized by processing large amounts of data, with more accurate forecasting methods and (partially) automated decision-making processes revolutionizing everyday life. Supplier evaluations and developments can be supported by Big Data Analytics and decisions in this regard can be made more fact-based. Support for the development of commodity group strategies or negotiation management is also conceivable.
4) Purchasing 4.0 strategy
Purchasing needs a strategy that fits the organization’s digitization strategy. The strategic thrust of purchasing must be designed in such a way that digitization projects with the greatest leverage are prioritized. A roadmap is useful for implementation.
5) Organizational adaptation for the digital transformation.
Responsibilities, tasks and competencies must be clearly defined for the digitization task. A matrix organization ensures cross-functional coordination with adjacent interface areas to holistically align diverse digitization projects with organizational goals. But innovation and digitization require freedom. Therefore, resources must be allocated in such a way that digitization can take place in parallel with day-to-day operations at the necessary speed.
6) Automation of purchasing processes
The goal of digitization is to automate operational as well as tactical and strategic processes. Ordering processes can be triggered autonomously on the basis of automatic demand forecasts. In supplier selection, analysis methods can be used in targeted bundling and forecasts of costs or risks.
7) Linking with the internal and external environment
In order to digitize operational, tactical and strategic processes, a link to systems in the corporate environment is required (e.g., production data, supplier data, market data).
Suppliers must be integrated into the corporate network in such a way that the data required for autonomous process control can be collected. Communication in this regard can take place via digital platforms. For this purpose, common standards must be defined between the data-processing company and the supplier landscape.
8) Management and control principles in purchasing 4.0
Data protection, compliance and sustainability are core aspects that Purchasing 4.0 must address. Digitization projects must be brought into line with the company’s code of conduct as well as generally applicable guidelines and laws. Key figures regarding compliance and sustainability goals can be evaluated in real time via Big Data Analytics.
9) HR development for digitalized purchasing
The personnel structure is changing. Increasingly, data analytic skills are expected in addition to the original requirements for technical expertise. The buyer needs a trained eye for the interrelationships of data in an increasingly digitized corporate context. Timely training or recruitment of data- and IT-savvy personnel will be necessary.
10) Technology requirements
The process map must be defined along with the tasks and responsibilities, as well as the necessary inputs and resulting outputs. These processes must be mapped on the system side without media breaks. In addition, external data sources must be connected. Artificial intelligence can pick up on this point and contribute added value in analysis and decision-making.
Purchasing 4.0 or digitalized purchasing required interdisciplinary collaboration. Ideally, you incorporate an interface with research in the field from the very beginning. Tobias Rösner is a doctoral scholar in the Graduate School of Logistics and brings his scientific findings directly into the sponsoring company. In this way, an agile and interdisciplinary team could grow.
Our Expert:
Tobias Rösner
Scholar of GSofLog in cooperation with thyssenkrupp