News

Fraunhofer Procurement 4.0 Check

You want to determine where your procurement department is situated in terms of Industry 4.0 and which fields of activity are on their way to procurement 4.0?
The Fraunhofer Procurement 4.0 Check serves as a starting point for the implementation of Industry 4.0 within your procurement department and supports you in finding answers to your questions.

Evaluating both qualitative and quantitative success factors of your procurement department, the essential fields of activity regarding Industry 4.0 are identified by means of a gap analysis.
Furthermore, you will receive an evaluation of the most relevant KPIs as well as a determination of your progress level on the way to procurement 4.0.
Therefore, the Fraunhofer Procurement 4.0 Check serves as a foundation for the development of an individual roadmap to the implementation of Industry 4.0 in your procurement department.

Fraunhofer Procurement 4.0 Check

Procurement can assume a leading role

Fraunhofer IML and BME present new pilot study on the digitalisation of procurement

The digital structural change of industry will not be successful without the participation of procurement. However, opinions on its role vary greatly, ranging from “active driver” to “mere supporter”. Therefore, procurement has to intervene more actively in the discussion on Industry 4.0. As an innovation scout as well as an expert on technology and management, its voice will be heard. These are the central findings of the study “Procurement 4.0 – The Digitalisation of Procurement”, conducted by the Fraunhofer Institute for Material Flow and Logistics and the Association Supply Chain Management, Procurement and Logistics (BME). From august 2015 through april 2016, 25 procurement managers and CPOs of renowned industrial companies, as well as representatives of two universities were interviewed.

Key findings of the survey:

A strong internal and external connectivity is crucial, if Industry 4.0 is to be developed successfully. While the connectivity within the own company affects all departments equally, the procurement department is required particularly regarding external connectedness. It is the exchange of know-how with other companies and organisations which only makes it possible to benefit from the advantages of digitalisation. Procurement is the driver of this external connectivity and, as such, bears the full responsibility. It assumes a decisive role in the implementation of Industry 4.0: It has to bring innovations and technologies into the company, so that it can successfully master the fourth industrial revolution.

Procurement has to be able to react in real-time. This is only possible, if all its processes have largely been digitised before.

Procurement has to manage an increasingly digitalised purchasing portfolio. Not only the procurement processes, but also the products that are to be procured are subject to the change of digitalisation.

Operative procurement processes can be digitised almost entirely. They do not need to be handled by an employee, as new technologies and e-solutions will take over this part. The strategic procurement department only controls and oversees these processes from then on. As a consequence, an operative purchasing agent is a discontinued model.

The challenges and expectations of the strategic procurement are increasing and with it the demand for an increased value contribution.

The occupational profile of a buying agent is changing fundamentally. His traditional role is a thing of the past. He becomes a digital interface manager, both inward and outward.

Technologies create many new opportunities for companies, but they do not replace personal relations. Particularly in the procurement department, personal contacts to suppliers and internal customers remain as an important foundation.

Procurement does not bear the overall responsibility for the implementation of Industry 4.0 – but it plays a crucial role in it.

The current study is a starting point for proceeding, more detailed examinations of the topic Procurement 4.0. For this purpose, BME and the Fraunhofer IML have founded a think tank as a provider of experiences and ideas. The assignment of this body of experts is to gather practical experience values and to determine the challenges to procurement which arise from the advancing digitalisation of economy.

Business Case Calculator for innovative business models

Business Case Calculator
© Photo Fraunhofer IML

Business Case Calculator

Initiated by technological developments and research projects in recent years, a tremendous supply of Industry 4.0 applications emerged in Germany alone. Among other aspects, throughput times were reduced, productivity levels were increased and capacities were optimized. But do these innovative applications live up to their promises? Is an investment in them profitable? The implementation has proceeded only hesitantly until now. Especially the SME area exhibits a low degree of implementation of Industry 4.0 at the moment. There are many reasons for this reticence, primarily the question: What are the benefits of Industry 4.0 for my company?

So far, investment decisions have been made predominantly based on the monetary advantageousness of investment projects. The major challenge in terms of Industry 4.0 is the uncertain economic benefit in conjunction with the high investments. There exist little to no experience values regarding the costs or benefits. Statistical forecast procedures based on the past offer only limited valid results. Furthermore, uncertainty prevails regarding future developments and environmental conditions, especially on the quest for reliable figures. In times of disruptive innovations, more qualitatively strategic decision-making parameters (non-financials) should be used to safeguard investments.

Together with you, the Fraunhofer Business Case Calculator allows for a quick and simple business case validation from various perspectives. Taking into account both classic “financials”, and qualitative potential benefits (i.e. “non-financials”) as well as project risks of an innovative business model, you are able to protect yourself when making investment decisions.

Smart objects and smart finance approaches (SOFiA)

Sofia
© Photo Fraunhofer IML

Sofia

Kickoff for the research project “Planning and control of value networks by integration of smart objects and smart finance approaches (SOFiA)”

Dortmund, February 01st 2016.

 

Within a given value network, delays occur during the planning process of a sea freight shipment. The sea freight container will not reach the planned vessel in time. Replanning, rebooking and the corresponding payments have to take place on short notice. This scenario describes the classic and time-consuming daily life in the logistics and supply chain management. Via innovative smart objects and smart finance technologies, the container itself becomes the dispatcher. It recognizes delays, analyses action alternatives and chooses the best transportation route. Subsequently, it assigns a carrier (logistics service provider)   and handles the payment via mobile Business-to-Business (B2B) payment technologies in real-time. The logistical objects are equipped with all the logistical and financial information to allow for a completely autonomous decentralized decision and transaction. In addition to this transport case of application, the SOFiA-project also focuses on the fleet control of harvesting machines for the transport and storage of agricultural commodities.

Therefore, new industry 4.0-based management approaches regarding the self-control and self-organization of logistics, production and the appropriate tasks of payment transactions and supply chain finance are addressed by the SOFiA research project. It is part of the subsidy program “Service innovation by means of digitalisation” by the German federal department for education and research. The project’s objective is the improvement of the process handling within complex manufacturing and logistics networks through integration of smart objects and digital B2B smart finance approaches.

The project was initiated in November of 2015 and has a total duration of three years with the project consortium consisting of the agricultural machinery manufacturer CLAAS E-Systems KgaA mbH & Co KG, the logistics service provider Ekol Logistik GmbH, the financial IT solutions provider Wincor Nixdorf International GmbH and the Fraunhofer Institute for Material Flow and Logistics (IML).

The consortium partners’ subgoals, aligned with the project objective, are:

  • Development of management procedures for industry 4.0 based on decision-making methods for intelligent logistics objects for the autonomous logistical and financial control within complex value networks (Fraunhofer IML)
  • Intelligent machine fleet control by means of autonomous logistics objects from a manufacturer’s point of view (CLAAS)
  • Intelligent logistics control by means of autonomous logistics objects from a transport service provider’s point of view (Ekol)
  • Innovative, decentralized B2B payment methods for autonomously operating logistics units within value networks (Wincor Nixdorf)

On behalf of the consortium leader Fraunhofer IML, the project is headed by Prof. Dr. Michael Henke (Institute director) and the department heads Marco Motta (Supply Chain Engineering) and Dr. Axel T. Schulte (Procurement & Finance in Supply Chain Management). Additional information on the research project will be published at www.sofia-projekt.de.