“You can get anything you want at Alexa’s restaurant”

This is an excerpt of the original article. It was written for the September-October 2017 edition of Supply Chain Management Review. The full article is available to current subscribers.

September-October 2017

When it comes to the next generation of supply chain management, the future just may be now. That’s one of the conclusions reached by Greg Gorbach, an analyst at the research firm ARC Advisory Group, after surveying supply chain executives, including subscribers to Supply Chain Management Review, on the digitization of their supply chains. In “The Great Digitization of Industry,” Gorbach notes that while it may take years for the widespread adoption of new technologies such as machine learning, additive manufacturing, smart factories and advanced analytics to become commonplace, digitization across verticals is happening faster than many of us…

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“You can get anything you want at Alice’s restaurant,” the opening line of Arlo Guthrie’s Alice’s Restaurant Masacree, really had nothing to do with Alice’s restaurant or unlimited potential; however, today’s emerging digital technologies, of which Amazon’s Alexa is but one example, do foreshadow a future where you can “get anything you want.”

The emergence of procurement 4.0

In the last 25 years, procurement has undergone a steady and dramatic transformation in both processes and scope. Procurement 1.0 (transactional era) focused purely on the transactional execution of requests. Procurement 2.0 (strategic sourcing era) introduced the globalization of supply, calling for more sophisticated approaches to managing third party relationships, and more sophisticated approaches to procurement (e.g., 7-step sourcing). The dawn of the 21st century revealed Procurement 3.0 (“e” era), with the emergence of software tools designed to computerize one or multiple functions such as eAuctions and eRFPs. With software tools facilitating the creation, storage and processing of procurement related data, strategic sourcing took on additional power and the role of procurement, while still largely focused on cost management, began to elevate.

Today’s new technologies herald the arrival of the 4th Industrial Revolution and the emergence of Procurement 4.0, the digital era. This era will be characterized by data-driven optimization of cross-domain/value chain interactions enabled by analytics and artificial intelligence. Down-stream/transactional procurement activities will be rapidly transformed by Robotic Process Automation (RPA) and other automation tools that drastically improve efficiencies. In this era, procurement takes a central role in value creation by connecting the organization with a network of external partners to innovate new business models.

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