Digital transformation is leading a new industrial revolution. More and more, the list of 4.0 technologies such as big data, analytics, machine learning, business intelligence and cloud computing has given rise to a whole new range of opportunities for companies, by digitizing processes, bringing innovation to products and services, and enabling new business models and solutions for old problems.
The change, however, still advances at a slow pace. This is shown by a study of the National Confederation of Industry (CNI): “Opportunities for Industry 4.0: aspects of demand and supply in Brazil”. Such document mixes data on productivity, export and innovation rate of several Brazilian industrial sectors, and compares them with the performance of the 30 biggest economies in the globe, which together represent 86% of the world’s GDP.
The survey shows that 14 of the country’s 24 industrial sectors must adopt digitization strategies urgently, in order to become competitive on an international basis. According to the study, this effort toward technological advancement will impact business productivity directly.
As industries try to evolve in this direction, the number of companies that promise to offer certain technologies increases daily. “Having more information is important, but it must bear quality”, said Fabio Cerquinho, Production Engineer and PhD graduate at IESE Business School, and coordinator of a course called “Strategic Procurement Administration”, offered by FIA (Fundação Instituto de Administração).
For him, technology can help “extracting gold from tons of material” – such as machine learning, which decreases the required time to create accurate and reliable forecasts. Despite the significant impact on businesses’ planning ability and their resources, this is a difficult goal to achieve. “Sectors and companies must adapt themselves, but the pace and degree of advancement depend on characteristics that aren’t homogeneous”, said Mr. Cerquinho – mentioning the retail sector as an example, where developments usually happen more quickly.
The fourth generation of corporate procurement
In the procurement sector, technologies that seemed abstract things before are now being adopted, even if with some frugality. It’s then the start of the Procurement 4.0 era – a period that combines strategy and technology to drive corporate procurement and confirm the saying that each penny saved in procurement is an additional penny in profit. “Procurement will only monitor the transactional part, in order to focus on what adds more value: innovation and risk management”, exemplified Mr. Cerquinho.
In fact, the moment is decisive for many companies. On their side, industries must choose and implement new technologies. Then suppliers have to master modernization and adapt it to their customers. But there’s a problem: the market has valued more who only talks about these fads than those who actually create solutions based on new technologies.
Meanwhile, as explained by Mr. Cerquinho, companies with low levels of procurement maturity predominate in Brazil. “They overuse and misuse roles, e-mails and phone calls, with little planning and much improvisation. Everything is expensive and inefficient”, he said. “Increasing automation is vital, but it must be well planned and executed”.
For him, this movement is crucial, so the country can be more competitive. Consequently, people will be freed from routine, low value-added tasks”. However, Mr. Cerquinho warns that there is no point investing in technology without qualified people in management. “There are companies that spend millions on technology but don’t invest in people. It’s a cultural issue and problem”.
Mr. Cerquinho believes that, to solve this issue, it will be necessary to join the experience of senior professionals to the driving force of young people – but qualifying people is the key factor. “There is a global gap of qualified people in the procurement area, capable of seeing to strategic aspects, as well as to new demands in handling data and technologies. Unfortunately, few investments are being made to develop people with the skills to ‘design and pilot’ these new technologies; hiring consultancies only won’t solve these issues”.
21st century procurement value
Businesses must consider how the digital approach will change not only the way they work, but also procurement value proposition for suppliers, customers, and partners of internal processes. “We must rely on technology service platforms with good user bases and proven value delivery”, said Mr. Cerquinho.
Considering that the new scenario on the horizon is a strong increase in process automation, including negotiations and professionals more focused on strategies, hiring services and external solutions will be more and more important and challenging, “for there will be new specification parameters that aren’t well known yet”.
Soon, we will see this new panorama of Procurement 4.0 in Brazil more clearly, involving areas of supply value proposition, digital categories & service procurement, digital supply chain & supplier management, procurement data innovation, processes, and digital, sustainable tools, along with digital risk management.