The rise of technological innovations changes routines and the operation of companies, with transformations related to products, processes and people. In addition, it is necessary to consider the economic scenario in the country and in the world, which requires special attention to avoid damages that put profitability and business maintenance at risk.
In this text, we will show the applications of the Opex and Capex concepts, considering the 4.0 Industry era. Read and find out the best way for finance in your organization.
Opex and Capex
Opex and Capex are acronyms that mean Operational Expenditure and Capital Expenditure – and they are widely used when planning an organizations finances.
Capex is an expense related to investments and acquisitions of capital goods, while Opex focuses on the expenses and costs of maintenance of equipment and resources related to activities and services of the company.
The purchase of a printer to print catalogs, for example, is Capex. The hiring of a printer to print these materials is Opex. In the first case, the payment is made at the time of purchase and the tax discounts occur from the depreciation of the asset, while in the second the expenses occur only when there is need for service and the tax deduction occurs in the current year.
Opex and Capex in Industry 4.0
In view of the rapid technological advance – a characteristic inherent to Industry 4.0, which has already reached its second wave – Opex has taken on a leading role in organizations. And there are good arguments in favor of that.
The rhythm of discoveries and technological innovations that make outdated technologies faster, as well as the possibility of outsourcing services and reducing burdens, make Opex offer an excellent cost-benefit ratio for business.
Thus, instead of employing a high investment in the acquisition of computers, for example, it is possible to rent the equipment. Besides the capital savings, the company:
- doesn’t have to worry about maintenance, which is already included in the rent;
- avoids depreciation, since every product or equipment loses value as soon as it leaves the store;
- can more easily replace the equipment with more modern ones whenever necessary – you can even change the supplier at the end of the contract;
- does not need to decapitalize, keeping the cash on hand or using it for whatever it thinks is most interesting.
We must not forget, however, that Capex expenses are incorporated as assets in the company’s balance sheet. These tangible assets are responsible for demonstrating the asset value of the organization, making it more valuable in the market.
Other examples of the replacement of Capex by Opex are:
- renting a commercial property (Opex), instead of buying it;
- signing applications using the software as a service model (SaaS), instead of the final acquisition (Capex).
In the next topic, learn more about these two perspectives, their advantages and disadvantages, in view of the current phase of the world industry and how they should be analyzed to generate benefits to the activities.
Capex and Opex: what is ideal in Industry 4.0?
To start answering that question, check out the main advantages and disadvantages of Opex and Capex:
- Advantages – Opex: it is easier to approve expenditures (which is usually lower when compared to the other modality); greater flexibility of costs, without resorting to decapitalization; deduction in the taxation of the current year;
- Disadvantages – Opex: values are understood as expenses (and not investments); there is the possibility of high costs in the long term;
- Advantages – Capex: value spent is understood as investment; it gives long term return; it increases the assets cash flow;
- Disadvantages – Capex: high costs in the short term; greater difficulty in approving expenditures, usually higher in Opex; depreciation of assets acquired.
Deciding whether to use Capex or Opex therefore depends on an assessment that identifies the best option for organizational results, and a careful study is essential to compare the costs of: manufacturing equipment, acquisition or provision of services, taxes, revenues and return on investment time for each option (Capex and Opex).
But, as we said, it is undeniable that Opex offers the agility and flexibility necessary for companies to remain competitive in a market that is constantly changing, making use of the most modern products and services and generating savings for the organization.
In fact, the current market moment has even gained its own name. It is the VUCA moment, an acronym that describes four resources very present in our daily lives: volatility, uncertainty, complexity and ambiguity – learn more by reading this Forbes article.
Having subsidies to define Capex and Opex will ensure the best benefits for your company. And, speaking of advantages, take the opportunity to know Soluparts differentials by reading this article about our value proposition.
For some time now, companies have been investing in creating a purchasing industry that uses resources such as automation technology and cloud computing for greater efficiency.
Digital maturity of the purchasing sector
In a recent study, Forrester Consult interviewed 417 purchasing leaders from North America and Europe to identify the degree of digital maturity in the area, noting that 65% of organizations said they were at an advanced stage in this regard.
However, the same survey showed that they are further away from a 4.0 Purchasing sector than they had imagined, with only 16% of companies at an advanced level of maturity – meaning they make intelligent use of the technological innovation available and are programmed to keep up with all the evolution that technological resources will bring in the coming years.
Another highlight of this study concerns the poor technological choices that companies have made. The result is that 82% of them have changed (or are thinking of changing) their digital provider, mainly due to the lack of integration between the implemented solutions (30%) and the difficulty of use of the tools by users (27%).
The conclusion of the researchers is that the vast majority of the companies interviewed still adopt a digital approach that simplifies processes and improves the efficiency of the purchasing sector, but this is not close to the transformation provided by Purchasing 4.0.
And the first step in this direction is up to the purchasing manager: to realistically assess the digital maturity in which the sector currently finds itself and, together with the Information Technology department, to outline the best strategy towards a planned and continuous transformation journey that will provide real competitive advantage for the company.
Organizations that do not adopt a smart approach to purchasing will risk losing space to the competition with digital knowledge, since the current business environment is one of extremely rapid change.
The Purchasing Team in Industry 4.0
Purchasing managers are still reticent about implementing new technologies, such as Artificial Intelligence, Robotic Automation or Blockchain in the industry routine.
This is the conclusion of a survey conducted by Deloitte – an American business consulting firm based in several countries around the world, including Brazil – pointing out that 51% of the managers interviewed are hesitant because they understand that their teams do not yet have enough resources to execute a digital purchasing strategy.
It is clear, therefore, that Purchasing 4.0 managers need to find new talent and also prepare the employees already hired, forming a multifunctional team with training to face the digital transformation.
Another essential factor to obtain the best possible performance from the purchasing team is to establish metrics that make it possible to evaluate all the collective and individual work. This analysis will allow us to know the team’s weak and strong points, investing in improvement actions.
And, of course, we must not forget that the purchasing manager himself must adapt to the new times, acquiring fundamental skills for the digital era.
Using modern tools correctly, the area will be able to capture, analyze and act from updated data in real time, creating agile connections with the entire organization, optimizing processes and increasing purchasing efficiency.
Purchasing 4.0 raises the sector’s value proposition
According to the German Henrik von Scheel, creator of the expression and fundamentals of Industry 4.0, we entered the second wave of Industry 4.0, characterized by the connection between advanced technologies and the use that humans can make of them, aiming at the improvement of organizational processes.
The purchasing sector has the opportunity to take advantage of this phase to increase its value proposition within the company, uniting its strategic knowledge about the market and its wide experience in purchasing with the opportunities brought by technological transformation.
This is the case, for example, with the use of bots. Considered a kind of assistant with Artificial Intelligence, it can provide updated information on purchasing processes and also generate automated demand. Through sensors placed in the stocked materials (making use of systems based on intelligence of things, IoT), the bot can identify the decrease in the stock of products and issue, autonomously, the purchase order before the item finishes and interferes in the organizational routine.
One of the great advantages of bots is that they can be implemented quickly, with little change in the process already used. That doesn’t eliminate the need for constant monitoring, by a properly trained professional, to ensure control over the resource – IT specialists recommend that the monitoring takes place on a daily basis, to ensure that the bots are running, and that there is a deeper performance assessment, on a monthly basis and whenever system changes occur.
Bots are already a reality in organizations, providing vendor management, purchase order creation, order and payment processing. But there is much to explore in this resource, and it is important that organizations reflect on operational details and impacts before the bots are deployed in the area.
In our blog, we’ve already covered other technologies that are influencing purchasing in Industry 4.0. Therefore, to complement your knowledge on the subject, we recommend reading from:
Soluparts can also collaborate for greater efficiency in the purchasing area, offering benefits such as better prices and agility to its customers. Get to know Soluparts differentials and values and take the opportunity to quote with our experts.
Industry 4.0 is a term that echoes in our minds and, although it is relatively new, it is already changing. It is the so-called second wave of Industry 4.0 – the subject of this article. Keep up with us!
The concept of Industry 4.0 through the eyes of its creator
A “simple” explanation for the term is to say that it is the fusion of the digital, physical and virtual worlds. The definition is from the creator of Industry 4.0 – or “Fourth Industrial Revolution” – Henrik von Scheel, named by the Financial Times as one of the world’s leading authorities on strategy and competitiveness. According to him, these three realities have come together to promote the greatest structural change in the last 250 years.
Scheel developed Germany’s ‘Digital Agenda‘ in 2008 at a time when the country was experiencing productivity difficulties and its economic growth was slowing down. The strategy was to bring together industry, universities and government and to draw up a roadmap for the economy, which would focus on increasing efficiency in all manufacturing sectors – you can find more details in the article of the author himself.
The intention was to increase Germany’s productivity and Gross Domestic Product (GDP) through greater efficiency in all sectors, based on technologies and applications that already existed at the time or that were becoming more successful. It worked. And it was the beginning of the Fourth Industrial Revolution.
For the considered “father” of the new industry, among the main results of the fusion of digital, physical and virtual realities are:
- An unparalleled growth in efficiency and productivity;
- A redefinition of the competitive landscape on a scale never seen before;
- The introduction of smart products and new service models;
- The creation of the next generation of operational excellence;
- Intelligent automation, complete connectivity and true alignment across the value chain.
The first wave of Industry 4.0 began in 2009. It was configured in the meeting of emerging technologies, involving digitalization, the Internet of Things, robotics and systems such as Advance Analytics and Cloud Computing – check out our article on technologies that are changing global trade.
However, since 2016, we already started living the second wave…
The second and current wave of Industry 4.0
The second and current wave of the new industry, on the other hand, goes even further. According to Henrik von Scheel – whose linkedin profile you can acess, it is focused on solutions such as, and mainly, Artificial Intelligence (AI) – in addition to Blockchain (asset-based), Intelligent Automation, 6G Communication, as well as new energy sources.
This phase of Industry 4.0 also brings a new era of operational excellence to industrial processes – that is, it transforms manufacturing, operations, product services, production systems and even design.
In this sense, parts, machines and human beings, well-connected – by advanced technological and digital solutions such as Artificial Intelligence, Intelligent Automation and 6 G Communication – will have the possibility to make production systems faster and more efficient and thus reach a level never seen before.
The leader in strategies and competitiveness states that the changes proposed by Industry 4.0 require managers to search for changes in their competitive model, increasing the ability to supply products at lower prices throughout the supply chain.
Scheel points out that “manufacturers need to rethink the entire value chain” and also “need to apply different thoughts and tool sets“. Henrik von Scheel also points out that there are only six different ways to model his manufacturing operations. These are: revenue, value, cost, performance, service, and operational model.
The human being at the centre of change
The authority on strategy and competitiveness makes another important observation: it is the human being, and not technology (as most people think), that is at the heart of the fourth industrial revolution.
“And while technology is certainly the main driver of the second wave, what may be the most fascinating thing about change happening today is the ability of AI technologies to put humans at the center of everything they strive to achieve. This sets it apart from the industrial revolutions of the past,” emphasizes Henrik von Scheel.
He points out that companies cannot delay the advance of their digital AI journeys because if they do, they fall behind their competitors who already adopt these competitive advantages – causing the gap between leaders and laggards to grow rapidly.
It is worth noting that a third wave of the 4.0 Industry is already being projected – this one, starting in 2025. It will involve Quantum Computing, Cybersecurity, Neurotechnology, Nanotechnology and Bioinformatics.
Now – knowing a little better about this redefinition of the competitive scenario – it is not difficult to conclude that the search for new equipment, parts, products and services (modern, updated and of the highest efficiency) is a necessity for the evolution of the industrial process. The company that wants to grow needs to be ahead of the competition.
Soluparts – a global company with offices in Brazil, Germany, Portugal, Hong Kong and the United States – can connect you to the most relevant manufacturers around the world.
We specialize in purchasing all types of industrial materials and have access to thousands of products and suppliers from around the world – learn more about our company!
To better understand how Soluparts can help your business connect with the fourth industrial revolution, contact our team of experts!
Knowing the challenges and market trends is essential so that the purchasing department does not run the risk of becoming obsolete and losing value within the organizational structure.
In this post we will address these two aspects, that are essential for the industry to be in line with the major market changes resulting from Industry 4.0, by acting strategically and generating greater competitive advantage for the company.
We will also focus on the role of the purchasing team in this process, as well as the technologies that are already being used to make the industry and the supply chain more effective.
The Age of Post-Digital Transformation
Since the expansion of computing and the emergence of the Internet, we have experienced a real revolution in personal life and within organizations.
The adoption of technology has become essential for companies of all sizes and segments, changing the way they operate. According to IDC (International Data Corporation), companies have been investing more and more in technological resources – of course, each one of them is on a different level, due to the investment capacity and the understanding of the subject by their managers – and they closed the year 2019 with an investment of US$ 1.25 trillion in digital transformation.
But just investing in technology is not enough. According to experts, we have reached the age of Post-Digital Transformation, also known as the second wave of Industry 4.0.
In this phase, machines and human beings connected by advanced technologies such as 6G Communication and Intelligent Automation have the chance to make production systems even more agile and efficient.
In other words, more will be required from managers than simply the implementation of technological solutions. It will take a skilled team to deal with all these resources, to plan their acquisition and to turn them into competitive differentials for the purchasing department and for the company itself.
Purchasing Challenges in Industry 4.0
The report, 2019 Key Issues Study, by the The Hackett Group, states that digital transformation is a critical goal for many purchasing departments. This is because, of the purchasing professionals interviewed, 90% believe that Industry 4.0 will change a lot the way the area works – but there is still a lot to be done for this change to reach the sector and generate the desired advantages.
Continuing the information from the study, the gap between companies that have already adopted digital transformation in their purchasing processes and those that have not will increase more and more.
As a result – and because managers will increasingly perceive the need and potential of the digital transformation for work efficiency in this area – by 2021, an increase in the adoption of new technologies in the purchasing department is expected.
Some of them are already being directed to the supply chain, helping in the planning and control of the purchasing process and resulting in benefits such as greater efficiency, lower costs and improved services.
By making use of modern elements such as RFID (Radio Frequency Identification), robots and process integration, many are the benefits of an intelligent supply chain, which can be implemented in any company.
Nevertheless, for Accenture the technology is still neglected or outdated in the purchasing sector. The consulting agency believes that as the digital transformation takes place in a structured way in the purchasing department, there will be an evolution in processes that are already automated – or partially automated.
This is because it is not enough to have technologies, but to integrate them into a more comprehensive strategy. By being able to gather information and process it – adopting tools such as analytics, artificial intelligence – the purchasing department will further improve its performance.
The Purchasing Manager in times of Industry 4.0
According to the recruitment consulting agency Michael Page, in 2019 the position of purchasing manager was one of the most sought after positions in middle and senior management in Brazilian companies, which shows the increasingly strategic role this professional has.
In general terms, companies seek people who, among other knowledge, master technology and use it to automate processes, minimize errors and, as a consequence, reduce costs and improve productivity.
Therefore, purchasing professionals need to have a good understand of the solutions available in the market, using them to obtain better results for companies, if they want to be seen differently.
Following this line, The Hackett Group study also investigated the role of purchasing executives, concluding that managers with the capacity to analyze the data offered by technological tools, using them to make more assertive decisions and to reduce costs, will have a seat at the companies’ strategy table.
It also concludes that the impact of advanced analyses on the purchasing department should triple by 2021, rising from 20% to 60%, which makes professionals who have this ability stand out – and those who do not, prepare themselves to acquire it.
The purchasing managers themselves agree with this data, since 4 out of every 5 executives in the area have pointed out the domain of analytical capacity and functional reports as extremely important for the development of their tasks.
This increase is fully justified, since previous HG surveys also found that analytically driven organizations have twice as much chance of improving their financial performance and five times as much chance of making quick, positive decisions.
Thus, analytical capacity and also critical analysis and creativity have become indispensable characteristics for 4.0 purchasing professionals. The good news is that these essential skills of the purchasing manager in the 4.0 industry can be developed – or enhanced – by following the tips of our experts.
And counting on these differentials is urgent. For The Hackett Group there will be an increase to 73% in the use of industry spending analysis, as well as from 16% to 35% in the use of Artificial Intelligence and Internet of Things (IoT).
For example, devices connected to IoT to track deliveries and help teams evaluate the performance of each vendor – in addition to IoT, other technologies are already changing global commerce and must be known by the professional who wants to keep pace with digital transformations.
Learn about 8 trends in the 4.0 Purchasing Department
We have researched the main publications – such as Gartner, The Hackett Group, Levvel Research and ProcuramentIQ – to compile a list of the main trends for the purchasing department in the coming years. And you can check the results down below!
1. The Purchasing Department generating value
One of the world’s most renowned consulting companies, Gartner, has produced a technical document entitled Procurement 2020: Your Action Plan to Prepare Now, which indicates a redesign in the purchasing department.
The document shows that, so far, the sector has mainly sought to reduce costs and risks. However, with the use of advanced technologies in procurement, an inevitable change will occur, making it possible to obtain information about the supply market, the organization’s purchasing behavior and the supplier’s performance.
With these insights it will be possible to leverage the perception over spending, the market and suppliers, which helps to identify new ways to generate value and puts the purchasing department on a much more strategic level within companies.
2. Purchasing consultants emerge
The role of purchasing managers will shift from “the simple expenditure control to strategic execution of purchasing functions that support the company’s financial and operational decisions, protect its results and mitigate the risk of the company’s competitive advantage,” says the Levvel Resarch report.
Instead of buyers, consultants with much more knowledge will emerge, leading to a transition within the industry, which will function as a center of excellence that is able to make the right decisions for the whole company.
3. Scarce talent in the sector
Experts from ProcurementIQ, a company that operates in the United States and Canada offering information on the purchasing area, believe that a major trend for the coming years will be the difficulty in finding talent to work in a more modern purchasing department, due to the incorporation of new technologies.
In addition to the change in profile, which requires more ingenious, creative and technologically savvy purchasing consultants, another factor that makes it difficult to attract qualified professionals to work in the 4.0 purchasing department is the false perception that careers in purchasing are uninteresting and that the job is more suited to experienced and mature people.
In this scenario, the sector risks having a staff with less than ideal qualifications, which increases the workload required to perform the job and generates more costs for the company.
One of the solutions to avoid this significant talent gap due to a shortage of qualified candidates is investing in internal development programs that is still currently very timid.
ProcurementIQ highlights that 75% of organizations spent less than 2% on training programs in 2019 and that companies will need to invest in order to attract and train professionals, without forgetting to retain the talent that is already part of the team, by creating an environment where they can feel stimulated to collaborate and grow, offering benefits that are interesting to people with this profile.
In this sense, it is worth highlighting two trends on the rise, both focused on professional training. These are the two trends:
- Upskilling: The ability to acquire new skills so that the employee can keep up to date in his/her role, as changes require new skills;
- Reskilling: The requalification or the achievement of new knowledge, allowing the collaborator to develop activities different from the one he was used to performing.
Both processes add training, which improves the performance of employees, raises the quality level of work and reduces the time to perform tasks – and, of course, avoids professional stagnation.
Finally, another important point – and one that deserves to be reinforced – is that professionals with analytical skills demand a higher remuneration. But, of course, this is a very positive investment for the company.
4. Need for greater digital protection
One of the biggest risks to the purchasing sector in the years to come, according to ProcurementIQ, is cybercrime, which is expected to generate losses of more than $5 trillion worldwide by 2020 alone. And unfortunately, the purchasing department is not immune to this problem.
The more digital solutions are incorporated into the industry, the greater the risks of vulnerabilities and attacks, which requires an effort to keep information secure.
In this context, it is recommended to follow the organization’s cyber-security protocols, by training and making the entire team aware of the need to comply with the standards.
Another important point is to be careful with vendor protection features, since most digital attacks in companies were the result of inadequate protection in third party environments, including vendors.
5. Better contract management
Contracts closed by the purchasing department are important documents, but in general, after they are signed, they are filed and forgotten.
The international marketing company, Aberdeen Group, asked purchasing managers how they managed the company’s contracts and the answers were surprising. Two-thirds said they no longer knew where the documents were, much less managed them.
One reason for the contract management process to be so disorganized is because 81% of organizations do not use any tools for this task. As a result, they face problems such as lack of consistency between contracts (53%) or supply chain discontinuity (36%).
Considering this, the trend is for companies to move their process and contract management to cloud computing. Built, stored and maintained in a centralized data repository, organizations can manage these documents, mitigating risk and reducing costs.
Automating contract management will provide organizations with a variety of facilities:
- All documents will be in a cloud database and can be accessed from anywhere by authorized users – even via a smartphone;
- Automated notifications, triggering alerts to highlight renewal dates and chances for renegotiation;
- Monitoring vendor performance, tracking delivery time, price fluctuations, whether agreed-upon terms are being met, etc.
6. Environmental and social responsibility on the rise
The number of large companies opting for partners who take nature care and social responsibility seriously is increasing each day.
And consumers are adopting the same criteria, no longer buying from organizations that do not show this same consideration for both topics or that have in their list of suppliers companies that harm the environment or, for example, exploit some group to have access to very cheap labor.
Therefore, one of the purchasing department’s trends is to make sure that its entire network of partners is made up of organizations that are trustworthy and committed to the environment and to building a fairer society.
In our blog we have some articles about this important subject for the new era. Take a look:
7. Change in the relationship with suppliers
International trade is slowing down and one of the reasons is that technological evolution has leveled products and services, making it easier for consumers to find what they need in a place close to their location – we suggest reading the article How Slowbalisation affects the supply chain to learn more about the subject.
However, even with this significant change, the guarantee and reliability of supply remains one of the basic premises for the good performance of the purchasing department. In order to have greater security in procurement, strengthening the relationship with suppliers is an increasingly strong trend.
Create consistent communication channels, increase transparency in transactions. In return, the best prices and delivery times are expected.
8. Greater transparency in the purchasing department
Purchasing trend number 8 is having as much transparency as possible in the purchasing process. And this can be achieved by following these steps:
- Define and implement policies for the sector;
- Monitor and document each phase of the procurement process;
- Manage a list of approved suppliers or hire a Trading Company;
- Establish purchasing contracts, archiving them appropriately to better manage them;
- Perform frequent audits;
- Use technological solutions to make the industry process more practical, agile, effective and… transparent!
Purchasing 4.0: facilitating processes
The purchasing process is complex and presents critical points:.
- Long or unclear requisition or approval procedures;
- Imprecision of data in orders;
- Part of the processes is still manual;
- Purchasing systems are not integrated;
- Outdated or inadequate technology.
It demands the ability to research, qualify and manage suppliers, as well as dealing with the pressure of getting the best possible deal and ensuring that the material arrives on time – even when the order is received in the purchasing department with little time to purchase or, worse, when the material is already out of stock.
For a more efficient industry, Business Intelligence (BI) is one of the great bets to help in the intelligent control of information. Founded in 1958 by the German Hans Peter Luhn, BI gained a new meaning in 1989 when Howard Dresner defined it as “a set of concepts and methods to improve decision making through data analysis systems.
In short, it is the collection and interpretation of large volumes of data in order to support decisions and organizational strategies. For that, BI uses technological solutions – Artificial Intelligence (AI) and Machine Learning are part of the options – to provide total visibility of the company.
With this 360o vision, the manager can identify expenditures, evaluate performance and detect risks, making more assertive and faster decisions.
Within the purchasing industry, BI can, for example, cross-reference a vendor’s data by category, geography, or seasonality. It can also identify problems such as delivery delays or product quality.
Take a look at our article about the best ways to measure your department’s performance.
Purchasing Department: preparing for the future
Every day new things are being announced, which requires adaptation, but offers the possibility of a new way of acting. Much more practical, fast and efficient.
And since the pace of technological transformation will not slow down – quite the opposite, it will become more and more accelerated – professionals need to be attentive to follow this growth, using it as a strategic element in the development of the area and the organization.
They must also prepare themselves to share knowledge. Developing the potential of the entire purchasing team will allow the sector to gain a broader and more fundamental participation within the organizational structure.
In this article we seek to show how the purchasing department has been changing and offer tips that deserve to be analyzed to increase the sector’s visibility – among them, counting on experienced partners such as Soluparts.
We are specialized in the purchase and delivery of industrial materials, with offices in Brazil, Germany, Portugal, Hong Kong and the United States.
With our experienced team, we can find any product, regardless of brand, that your company needs. This is because we work with reliable suppliers in all segments, allowing us to decrease the number of registered suppliers and, as a consequence, also decreasing the risks of relating with several different manufacturers.
For more information, we suggest reading the article Benefits of a Trading Company for the purchasing department. It will show you how to improve the efficiency of your purchasing department.
Our goal is to make your purchasing process much more practical, agile and reliable, allowing you to have more time for the strategic issues that the purchasing department currently requires and that it will require more and more, as we’ve seen.
For more information about our performance, please contact us.
With globalization – even as it is slowing down – and the digital transformation, the supply chain is becoming increasingly complex, increasing the pressures for a more modern and efficient process.
Therefore, it is essential to have an intelligent supply chain that exploits the digital and technological resources available today. Understand this scenario better with the following article.
Supply chain challenges in digital transformation
The spread of Industry 4.0 technologies has revolutionized supply chains that are already using the Internet of Things (IoT), automation, artificial intelligence and real-time analysis to optimize, accelerate and predict their operations.
In this scenario, many companies are already rethinking their logistics, taking advantage of digital technologies – and new rules, such as Incoterms 2020 – to keep pace with change and improve their operational capabilities.
Moving from a traditional supply chain to implementing a digital, intelligent format requires a major transformation.
To prepare for this moment, get to know the technological elements that are at your disposal.
Elements of a smart supply chain
Much has been said about using Bots, Artificial Intelligence and Machine Learning to make the supply chain more efficient – about this subject, we wrote an article that shows 4 technologies that are revolutionizing global trade.
All of them are very important indeed. But there are other resources available, like the ones we highlight below.
1. RFID – Radio Frequency Identification
The RFID system consists of an antenna, a transceiver (which reads the signal and transfers the information to a reader device) and an RF (radio frequency) tag, which contains the information to be transmitted – these tags may be present on products, parts, equipment, etc.
It works like this: the antenna emits a signal from the integrated circuit and transmits the information to the reader. It in turn converts the RFID radio waves into digital information, which can be read by a computer, storing this data.
Thus, it ensures professionals can control everything that enters and leaves the factory, which in turn guarantees the updated control of the stock – in real time – and makes tracking the materials a lot easier.
2. Smart sensors
As they are an excellent support for an intelligent supply chain, the sensors make it possible to monitor machines in real time, sending alerts to a control center if any part is defective and needs to be replaced – or even when the production period for any part is coming to an end.
This way, it allows the realization of predictive maintenance, indicating the right time for the acquisition of parts and products. In addition to cost reduction, it increases production efficiency, since it reduces the risks of having to stop the machines for maintenance.
It may sound complex, but tests are already being done using drones for delivery. Besides delivering orders to the buyer’s house, another possibility is the distribution from a truck which, upon arrival at a certain point of its route, releases several drones to deliver orders to places close to the stop.
Using a drone equipped with a camera to scan the items from a stock is also a possible way to improve controls and processes.
Repetitive tasks such as moving products from one area to another from a warehouse can be done with the help of robots, increasing efficiency and freeing up employees for more strategic work.
Amazon Robotics invested in this feature, reducing errors and costs (before, it was common for products and materials to be stored in the wrong place, leading to unnecessary purchase of items already in stock) in addition to improving efficiency – learn about the Kiva system that allowed the use of robotics in the company’s warehouses.
5. Process Integration
An intelligent supply chain needs to integrate steps and teams, creating a real-time communication that can be used by everyone in the production process.
This integration will promote improved communication, anticipation of problems, greater agility in detecting and solving failures. It also favors access to essential data to define strategies and control demands more effectively.
The market offers several options that need to be evaluated according to the needs and particularities of each organization. With Business Intelligence, information from systems in all areas and technologies – such as the Internet of Things – goes to the same dashboard, generating graphs and tables and allowing linked teams to follow the entire process together in real time – in the case of the supply chain, maintenance, purchasing and logistics would share the information in the same dashboard.
Implementing a smart supply chain in your company
The acquisition of new technologies requires good planning, avoiding risks such as acquiring items that do not offer a positive cost-benefit ratio or that are not really necessary for the reality of the business.
And although your journey towards a digital supply chain may require the best and most advanced technologies, remember that much of the success of this operation is connected to people. Companies need to take their employees with them at each stage, preparing their workforce for this new supply chain, through training, for example.
With these precautions, it’ll be possible to see many benefits in the supply chain, some of them being:
- Greater efficiency: better use of productive process time, minimized errors.
- Transparency: an intelligent supply chain allows information to be shared with all stakeholders in real time;
- Properly distributed resources: adequate quantity of parts, avoiding inactive stock or material shortages.
An intelligent supply chain can, for example, integrate data from sensors connected in warehouses and warehouses with information that shows the use of parts, allowing a purchase planning that leads to cost reduction and higher quality throughout the purchasing process.