We often say here at Ardent Partners that it is an exciting time to work in procurement – not just because of procurement’s mission and value proposition, but because technology is changing the game of procurement and supply management as a whole. For the past two decades, procurement practitioners and leaders, like Chief Procurement Officers (CPOs), have been on the long and steady march towards digital transformation and process automation. There have been some significant technological developments over the years, like digitization, automation, the rise of solution suites, the proliferation of mobile devices and applications, and IT’s migration to the cloud. But now, twenty years later, we are riding a wave of innovation into the future of procurement; and the future is now.
Let’s discuss a concept that’s been at play in the manufacturing industry recently: Industry 4.0. Industry 4.0 technologies are a level step above what is known as digital, automated technologies; they go beyond process automation and process linkage to effectively make the world smaller. They connect users from point to point; they drive visibility and control into supply chains; they consolidate data and information right in front of us; and they bring us closer to the source — of commodities, data, information, and even talent. Here are three Industry 4.0 technologies that are beginning to make the world smaller for CPOs and procurement teams.
- Blockchain digital ledgers, which are all the rage today, are the backbone of crypto/digital currency trading, but have been applied to more than just currency trading. Fairly recently, enterprising solution providers discovered that Blockchain ledgers can connect trading partners around the world and automatically and irreversibly record every transaction they make. When applied to procurement and supply chain, Blockchains can enable end users to track and trace goods in transit, which can build trust within relationships, shine light onto potentially dark or shady practices, and help to make supply chains more transparent, ethical, and compliant. Blockchain partnerships are popping up seemingly every week between tech heavy weights and niche solution providers. Blockchain is unquestionably hot these days.
- Connected devices, the so-called Internet of Things or the Industrial Internet of Things, are, thanks to advances in microprocessors and transmitters, everywhere. They are collecting or transmitting data from point to point and enabling everyday devices and objects, like appliances, factories, warehouses, and shipping containers, to be “smart” technologies. They can provide users with an enormous amount of insight into the use and “health” of these devices, like the need for service, inventory replenishment, or greater enforcement / compliance of internal policies. The Industrial Internet of Things can link a network of smart devices from across a region (and the world) and funnel business intelligence into ERP, MRO, SCM, and SRM systems to give supply chain, procurement, and operations users a header-level view of the business with drill-down capabilities.
- And augmented reality features are bringing data, inputs, and even locations closer to the end user than ever before. Innovative technologies, like Google Glass and Apple’s forthcoming smart glasses are fusing a variety of structured and unstructured data right onto the lenses of end users, allowing them to see a host of pertinent sourcing, procurement, and risk information right in front of them as they execute their tasks. They can also virtually “transport” the user to other locations, like supplier sites, in-person meetings, or commodity points of origin, using video feeds piped directly onto their lenses, with text overlays for greater context. Indeed, AR-enabled technologies can give business users their own “heads-up display,” akin to the helmet-mounted sights of modern-day fighter pilots.
After two decades of incremental digital transformation, Industry 4.0, and now Procurement 4.0 technologies are giving supply management a long-needed shot in the arm. And they are driving more insight, oversight, and control into the hands of CPOs, procurement teams, and line-of-business users as the speed of business continues to accelerate, the business risks expand, and the stakes increase.
Want to learn more? Download my newest report, The State of Procurement Technology in 2018: The Future is Now, sponsored by Zycus. Click to download.