Non-digitalized purchasing vs. Industry 4.0

Manufacturing sectors are changing towards Industry 4.0. That is linked with heavy spending on equipment, software and network working under Internet of Things umbrella. Today capital expenditures in new production equipment include full remote monitoring and preventive maintenance service packages. Assembly cells are very often fully automatized and equipped with a communication mesh. Humans are assisted by collaborative robots (cobots). Overall labor work intensity gradually shifts from “doing the things” toward “showing to and programing” machines to manufacture. All these decisions and investments improve factory efficiency and effectiveness. Artificial Intelligence deals well with foreseen events which may impact production process excellence. That’s the upside of automation and IoT.

Factory of the future depends on AI boosted interdependent processes and requires well managed, stable environment outside our organization. Here we see a gap which mid-term can significantly reduce ROI in automation. Management decisions, which overlooked digitalization of purchasing and supply chain, in company’s Industry 4.0 journey to excellence may very quickly lead to unprecedented losses related to line stops and interruptions which human can cope with but machine not that well yet. Thanks to constant connectivity digitalized factory work on instant feedback.

Lagging or slower pace in communication with external world may put all benefits at risk. If your sourcing is still in era of tools like: Excel, PDF, Mail and online files sharing, then it puts Industry 4.0 implementation at risk:

  • when buyer or category manager leaves your company, their knowledge is gone, data vanished with their Inbox and you cannot harvest from data analytics. Many companies rotate buyers portfolios each two, three years to get “fresh view” on portfolio and to generate new ideas and savings. That’s reasonable but what about data? Instant data access should be available to all, the art is in interpreting it and using it with “fresh blood” approach. 
  • when supplier gets bankrupt, ownership succession fails or cash flow collapses and you suddenly get no shipments additionally you have no instant access to previous sourcing projects and must take decisions  based on subjective criteria as you are under time pressure. 
  • when evaluating risk and financial situation of suppliers many companies rely today on external reports or sources of data. That is fine however, such data may be lagging even a few months especially for family own businesses.

By having digitalized collaboration platform with suppliers you can instantly check:

  • which suppliers quoted critical components over last couple of years and how the technical dialogue was
  • which specification revision was used at each sourcing project and what TCO parameters were important that time
  • based on segmentation matrix and suppliers performance assessment system can notify you which components should be evaluated again to have a backup and up to date information
  • communication with external business partners is quick and you get instant feedback

Those are, among other, functionalities of ESSA collaboration platform. More you can find on