Industry 4.0, as it has been called, is the next phase of manufacturing. By its namesake, it is the fourth industrial revolution representing not just the digitization and automation of manufacturing (Industry 3.0), but the linking of physical assets with digital tracking systems and systems of record; and the integration of systems to create a “system of systems,” like manufacturing and logistics networks, “smart factories,” and even “lights-out manufacturing.”
There’s a lot to Industry 4.0, much of which the procurement world has already begun to apply to its own systems and processes, and which I covered in last week’s article. But what about the other aspects of Industry 4.0? Is it a bridge too far for procurement? Hardly.
- 3D Printing. Procurement teams can rely on 3D printing as a way to have product/component prototypes built in-house as a more cost-effective and efficient way of testing designs and materials. If Chief Procurement Officers and other business leaders think of 3D printing not just as a manufacturing method, but as a way to reduce sunk costs associated with research and development, it could help procurement reduce indirect spend.
- Augmented Reality — it’s not just for gamers. Procurement teams can use AR in a couple of distinct ways: First, as a way to transport themselves to supplier sites and points of origin (like mines or farms) to inspect the supplier/supplier site and the product or production method. They can layer in all sorts of supplier, product, market, enterprise, and customer data into a “head’s up display” available via headsets or on dashboards that, combined, present a literal reality that is augmented by data. Second, they can apply this display in a more conventional method by using it to build out dashboards from being one-dimensional to even two- or three-dimensional. Either by using headsets or desktop dashboards, they can visualize and interact with data for a variety of purposes – from sourcing to contracting to procurement to supplier management.
- Blockchain Distributed Digital Ledgers are on everyone’s mind these days, in part because I write a monthly tech round-up dedicated to Blockchain and supply chain applications. But what about Blockchain for procurement? Beyond supply chain track-and-trace (which is more operations and logistics, but lends itself nicely to supply risk management), procurement could adopt Blockchain as the basis for peer-to-peer business transactions, and even the creation of larger business networks comprised of trusted business partners. It could also be adopted it as the basis for so-called “smart contracts,” which issue invoicing and payment when certain conditions are met. It is a secure computing infrastructure (mostly), making it a superb way to ensure that payment is issued upon completion of service or delivery of product.
- Connected Devices/IoT go hand-in-glove with Blockchain and Cloud-based infrastructures because they are what connect the physical and the digital — the physical supply chain with digital tracking and recording systems. They are sensors and transmitters that are attached to or embedded within shipping containers, pallets, and parcels, and “ping” the Cloud as they make their way across the supply chain. Procurement can use them in maintenance, repair, and operations (MRO) to monitor systems on factory floors, in appliances, in delivery vehicles, in warehouses, and myriad other assets to get ahead of expected service, repairs, replenishment, and any associated (and costly) downtime.
Final Thoughts
Admittedly, I’m just scratching the surface here; these are some fairly obvious examples of how procurement can borrow Industry 4.0 technologies from manufacturing and apply them to its own operations and processes. If in fact “Anything that can be imagined is an image of the truth,” then there are more innovative Industry 4.0 applications for procurement out there waiting to be discovered, applied, and perfected.
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