Yesterday, we took a trip through American history to chart the supply chain innovations of the first three Industrial Revolutions.
That brings us to the present, a time in which digital transformation is increasingly a cultural imperative within Procurement organizations. While it's tempting to dismiss buzzy terms like big data, cognitive procurement, robotic process automation, and the Internet of Things as empty speculation, it's evident that business leaders believe in what these advancements will provide. While the Deloitte Review paints a dismal picture of corporate preparedness, it also suggests that organizations are doing everything in their power to pick up the slack. 84% of CXOs, they report, are currently leveraging their full suite of resources to develop teams capable of leading them through the Fourth Industrial Revolution.
Procurement already straddles the lines between numerous business units. As these lines grow increasingly blurry, Procurement will enjoy even greater opportunity to drive change and bolster its value proposition. Supplementing their existing supply chain know-how with the power of advanced analytics, Procurement professionals can provide for more strategic purchasing, sourcing, and shipping decisions. As tools offering predictive and prescriptive data analytics grow more robust, they'll even succeed in identifying and acting on opportunities more proactively than ever. The sheer volume of data now available to Procurement foreshadows a new kind of purchasing function.
Procurement's decades-long strategic evolution has seen the department abandon its focus on cutting costs and adopt a number of more value-adding roles. Throughout the Fourth Industrial Revolution, supplier risk management promises to stand among the most essential. The global and interconnected nature of Industry 4.0 supply chains might promise more efficient communication and collaboration, but it also opens organizations to a new wave of risk factors. Organizations from HBO to the U.S. government have already learned the hard way that dedicated risk managers are a must-have. Already embedded within the supply chain, Procurement is the ideal function to take on this role. Soon, organizations hope, Procurement will employ big data analytics to assess enormous quantities of customer, financial, and external data to assess supply chain risks and select best-fit suppliers.
So far, IBM's 2015 acquisition of The Weather Company is perhaps the most notable example of an organization leveraging advanced data tools to assess and mitigate supply chain risks. Combining The Weather Company's global forecasting technology with the capabilities of Watson, IBM has managed to bring cognitive procurement closer to the mainstream.
Other Industry 4.0 innovations that are in their early stages include drone-based deliveries, 3D printing, and driver-less cars. While the headlines associated with these advancements often tend toward the skeptical (or outright scared), forecasts remain largely optimistic. 3D printing, for example, holds the potential to fundamentally alter direct sourcing. Sourcing Innovation's Michael Lamoureux describes its conceivable effect on new product development: ""Let's say you are collaborating with a supplier halfway around the world in the design and development of a new part . . . with 3-D printing, an almost exact replica of the part . . . can be printed locally from the CAD/CAM design files. And this can be done for a few dollars in a few hours." Even in its relative infancy, it seems, 3D printing empowers organizations to reduce costs while improving product quality. It can only grow more valuable from here.
As always, the looming shadow of increased automation has inspired fear in certain sectors of Supply Management. While the automation of operational tasks has gone on for decades, recent advancements to AI and machine learning have strategic professionals increasingly worried. Each new advancement, they fear, brings them one step closer to replacement and unemployment. Though these fears are supported by a century's worth of science fiction storytelling, there's little reason to believe they're warranted. Procurement's more prominent role within organizations means that its aptitude for driving negotiations and managing relationships is more essential than ever. No machine will take its seat at the table or fully supplant the human element across the supply chain.
No one knows how long it will take for the promise of Industry 4.0 to become a reality. It's already obvious, however, that Procurement is uniquely suited to harness whatever technologies await and provide a competitive advantage. The function's maturation and rise to prominence are far from over. Those organizations who keep their eyes on the horizon and staff their Procurement function with data-savvy, innovative professionals are poised to emerge victorious from the incoming "revolutionary war."