Procurement & Finance in Supply Chain Management

The contribution "Smart Contracts and Smart Payment in Farming 4.0" was awarded the "Best Paper Award" at a conference of the BMBF-funded project "Digivation" from 03/20 - 03/21 2018 in Aachen. The planned publication contains company-specific applications of various digital innovations. Marco Motta from Fraunhofer IML accepted the award on behalf of the team of authors led by Dominik Sparer and Philipp Sprenger.

With a trip to China, our Procurement 4.0 theme has gained further momentum: Axel T. Schulte and Natalia Broza-Abut were on the road with the new customer Zber in Beijing, Nanjing and Shanghai at the end of September 2017. The Chinese company is a provider of solutions for global procurement and supply chain management. Chief consultant Yi Zhu first became aware of our preliminary study "Procurement 4.0 - Digitisation in Procurement". In the spring of 2017, Yi Zhu visited the IML together with his team. Zber then placed several orders with the IML.

At the 16th International Sourcing Fair Shanghai, Axel and Natalia presented the topic Industry 4.0 and digitization of procurement, as well as our Fraunhofer Procurement 4.0 Check. The trade fair organisers also appointed Axel to the International Sourcing Expert Panel. Also on the agenda was a visit to the company eventown.com, which carried out the Fraunhofer Procurement 4.0 check for the first time in Asia. Eventown is China's first and largest booking platform for the conference industry. The company was voted as one of the most successful Chinese start-ups by the business magazine Forbes in 2015. The Chinese business partners were also very interested in the potential of blockchain technology in the context of SCM and procurement.

High expectations are being placed in Procurement 4.0 today - and the Fraunhofer IML makes it possible for companies to set standards here. With the "Procurement 4.0 Check" - a development from the Procurement and Finance Department in Supply Chain Management - companies have the opportunity to identify individual needs for action and potential for Industry 4.0 in Procurement.

Commerzbank press release July 4^th 2017

Commerzbank and the Fraunhofer Institute for Material Flow and Logistics IML in Dortmund have agreed on a cooperation. At the heart of this cooperation, scenarios for the supply chains of the future are to be developed. The institute supports the bank in orchestrating these processes and at the same time provides the latest findings on supply chain management and the possible use of blockchain technologies in this area. The blockchain, or distributed ledger technology, is a decentralized data structure and, for example, the basis for intelligent electronic contracts, so-called "Smart Contracts", which focus on the automated processing of business transactions.

Many digitisation approaches of banks, companies and scientific institutions are currently focussing on international trade transactions and the related commodity and financial flows. Increasing global competition, changing customer expectations and shorter product lifecycles make the associated international supply chains increasingly important for operational decision makers. With further digitization along supply chains, many process improvements and opportunities will arise from optimized management and faster availability of data. “Talking” containers, for example, will then become commonplace in global foreign trade.

Greater networking of functions can also create completely new areas of application across companies. This applies in particular to modern applications in the field of Internet of things, i.e. for networked objects that connect themselves independently via the internet and carry out tasks, as well as for Smart Contracts. This can result in new trading systems and trade financing concepts, faster transaction procedures and ultimately new solutions in working capital management. These are the focus of the new cooperation.

“Our core competencies, 'Moving money safely', 'Financing trade' and 'Assuming risks' will also be highly relevant for our customers in the age of digitalisation. The integration of the Fraunhofer Institute for Material Flow and Logistics IML ensures the best possible insight into the currently very diverse digitization approaches along the logistics and material flow processes of our customers", said Dr. Bernd Laber, Member of the Board of Managing Directors responsible for Trade Finance & Cash Management for corporate customers at Commerzbank. “In numerous projects and consortia, we are also working with other international banks on the digitization of products and services, as well as on applications for blockchain technologies. The clear focus on the future supply chains of our customers, which we will develop together with the Fraunhofer IML, is very important to us as a corporate customer bank", continued Dr. Laber.

“Digitalization approaches in supply chain management, such as the development of smart containers that are able to route themselves, commission logistics service providers and pay for them independently, will enable completely new business models for banks in the areas of financing, risk management and transactions", explained Prof. Dr. Michael Henke, head of the Fraunhofer IML institute. “I am convinced that technologies such as block chains and smart contracts are key enablers for linking physical and financial supply chains. With Commerzbank as an innovative cooperation partner, we will develop new, safe and fast solutions for the supply chain of the future.”

The Procurement 4.0 Check, developed by the Fraunhofer IML, was presented to an expert audience at the 51^st BME symposium on purchase and logistics in Berlin. Many procurement representatives from various industries visited the Fraunhofer IML booth to test the new Fraunhofer Procurement 4.0 Check app. Their response indicates clearly: Companies are searching for orientation and answers for a proper alignment of their procurement organization in times of digitalisation.

Procurement as part of industry 4.0 has to face many new challenges. Networking, innovations, data analytics and not least new business models, are only some of the topics that procurement has to confront. In doing so, and in the meantime finding the right answers, procurement has a unique chance in digitalisation to answer the call for a more strategic role within the company. A conclusion supported by the preliminary study „Digitalisation of Purchase – Procurement 4.0“, conducted by the Fraunhofer IML in cooperation with the BME. The results of this joint effort were also the foundation for the Fraunhofer Procurement 4.0 Check and the corresponding app.

During the execution of the check, qualitative and quantitative success factors of procurement are questioned systematically. By means of a gap analysis the substantial fields of activity regarding industry 4.0 are identified and made transparent. At the same time, the most relevant key performance indicators for procurement are examined. The result is a visualized complete overview, as well as the specific fields of action for the future development of procurement. Therefore, the Fraunhofer Procurement 4.0 Check serves as the basis for establishing an individual roadmap for the implementation of industry 4.0 in procurement.

For more detailed information on the Fraunhofer Procurement 4.0 Check, please contact
Dr. Axel T. Schulte.

√ Identify strengths and weaknesses

√ Successfully determine potentials

√ Match your current digitalisation strategy

√ Receive new innovation impulses

√ Lay the foundation for your digitalisation roadmap