Prof. Dr. Holger Müller has held the Chair of Business Administration, in particular Supply Chain Management, at the University of Applied Sciences and Arts Leipzig (HTWK) since 2013. In recent years, the expert has played a leading role in numerous studies on Industry 4.0 and Purchasing 4.0. In 2004 he was awarded the BME Science Prize for his dissertation. In the new Newtron series “3 questions to”, Müller talks about the status of Purchasing 4.0 and the challenges of digitalization.
Industry 4.0 is the talk of the town. What exactly is the concept behind this term?
Prof. Dr. Holger Müller: The term Industry 4.0 is still interpreted in a wide variety of ways. In my opinion, however, there are primarily two directions in which we are currently moving: Digitalization and digital transformation. Digitalization refers to the continuous electronic support of traditional, centrally controlled processes and thus a continued increase in efficiency. This has been taking place in industry for decades now and tends to show an evolutionary character. I view the fourth industrial revolution as the digital transformation, which goes one step further. In this case, not only are the products, machines, containers, etc. involved in the production process connected with each other, but they also have a certain decision-making authority over rules and algorithms. This results in a decentralized, virtually autonomous steering of production processes. Thereby rendering traditional planning and control processes obsolete and allowing new business processes and models to emerge. What is crucial here is that elements can be simply logged on to the system in a ‘Plug&Play’ manner and can then work together. We already see this somewhat simplified in our household environment when we integrate internet-enabled devices into our home network without extensive manual configuration, which then become part of our “Smart Home”.
How will value chains evolve in light of this trend?
Prof. Dr. Müller: Even today it is already possible, for instance, to provide supply chain transparency with Clouds in connection with Big Data Analytics technologies. However, data security problems in particular still remain to be solved. 3D printing could also radically change at least some aspects of the value chain. In the near future, buyers will be able to identify bottlenecks in advance and not only when faced with almost empty storage racks. At the same time, responsiveness and flexibility will also increase. Digital transformation is, however, based on digitization. This means that basic processes, such as electronic catalog orders or calls for tenders, have to be mastered throughout. One difficulty I currently see in this regard is the many individual or individually configured systems that are used in implementation. Interface problems are the result. It is therefore advisable to use providers who know how to deal with this diversity and can provide a possible communication hub.
In which direction will the journey for Purchasing 4.0 or the purchaser go?
Prof. Dr. Müller: In my opinion, the journey has not really yet begun. Shopping 4.0 is in its infancy. At present, digitalization is still presents a lot of homework, even though it was already widely used in the 1990s with the advent of commercial Internet use. For example, our studies show that after more than 20 years, only 40 % to 50 % of companies in strategic purchasing have systems that digitally process auctions and/or calls for tenders. Within catalog-based procurement – as a precursor of this development – 70 % to 80 % of companies have corresponding applications, but these are hardly used to their full extent. SMEs in particular are still reluctant to make more extensive use of digital solutions. Digitalization and digital transformation are therefore apparently not processes which take place overnight. The traditional profession of purchasing will certainly change in this context. The focus is no longer on operational, but on strategic tasks. The buyer becomes an analyst and network manager who controls and monitors automated value chains. He is the one who designs the pension system and only intervenes operationally in the event of problems. But as said, it will take time to reach this stage.
Info: You are familiar with the interface challenges mentioned by Prof. Dr. Müller?
Working interfaces are the linchpin for the seamless interaction of diverse platforms. However, they are also a constant challenge, for example when it comes to connecting third-party systems to your own ERP systems. Newtron assesses the current situation in close collaboration with the customer, analyses the core processes and defines the target. We then develop the interface programming and implement the solution into the infrastructure. Do you have any questions? Get in touch with us.