How IoT and digitization affect procurement

1. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
FORUM
FOOD AND AUTOMOTIVE PROCUREMENT AND
LOGISTICS IN THE DANUBE REGION
Tuesday, 13.09.2016

2. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
INTERNET OF THINGS & BIG DATA
–
PROCUREMENT AS A KEY PLAYER
IN THE DIGITAL ENTERPRISE
Michael Klemen
Member of the Board
Federal Association of Purchasing, Materials-Management
and Logistics in Austria
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3. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
ESTIMATION: Robots replacing humans
in different jobs
99% Telephone sales person
87% Farm workers
57% Taxi and cab driver, chauffeur
20% Physical scientist
0.7% Psychologist
A study from Oxford University
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Europe‘s Gross Domestic
Product could gain one
trillion euro by developing
digitalisation or loose 600
billion euro if it lags behind
out of fear.
Senior EU official
Forum Alpbach Breakout Session 2016

4. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
AGAIN: We live in the middle of a
technology transition
In the evolution of the Internet
of Things (IoT),
smart workspaces can digitize
physical things and use
programmability of physical
environments to create a more
efficient work experience
Source: Gartner Aug 2016

5. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
© IoT40 SYSTEMS AG & INTERNET OF THINGS 40 SYSTEMS GMBH / COMPANY CONFIDENTIAL
IoT Consists of M2M, M2P and
P2P Connections
Machine-to-Machine (M2M/IoT)
• Data sent / received from
one machine (thing) to another
• Often called the “Internet of Things”
Machine-to-Person (M2P)
• Data sent / received from a
machine (thing) to a person
• Often called “data and analytics”
Person-to-Person (P2P)
• Data sent / received from
one person to another
• Often called “collaboration”
IoE Value 2013-2022
$7.4 Trillion
$4.6 Trillion
$7.0 Trillion

6. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
Three trends
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As technology becomes
more adaptive, the lines
between these three
groups will blur
Source: Gartner Aug 2016

7. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
© IoT40 SYSTEMS AG & INTERNET OF THINGS 40 SYSTEMS GMBH / COMPANY CONFIDENTIAL
EXAMPLE: How IoT works
Operators & Consumers
interact and monitor
Connectors continuously
see, feel, detect, …
CONNECT – DETECT - ACT
Rule 1
Rule 2
.
.
.
Rule X
Knowledge
Acquisition
Process Rules

8. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
NOW vs 4.0
PURCHASING NOW:
• Nr 1 Value creator in the company
• 70 % (an more) are future oriented
• 90-95 % of cost created in Construction
and Develeopment
CPO/PURCHASING:
Communicator between
customer wishes and
procurement market
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PURCHASING 4.0:
• PURCHASING leads Digitisation
• MANAGES Big Data Economy
CPObecomes
CONDUCTOR in the Internet of
Things

9. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
ADAPT to the CHANGES
PURCHASING 4.0 and "to be digital "will result in a fundamental change in the procurement process:
• brings a new understanding of/to the core tasks of purchasing
• of networking and cooperation within the company as well as with their suppliers, partners ….
The next paradigm shift is imminent or has already begun. After José Ignacio Lopez and "e-procurement",
which associated enhanced awareness of the strategic, result-effective importance of purchasing, and the first
"automation" of routine tasks now follows the complete transition to digitization:
• M:M for direct cooperation
• M:P for enhanced processes
• P:P for direct supplier-customer-supplier information
all along the entire value chain with all its consequences on
• Disposition
• Stock holding
• Production
• Strategic procurement planning
• New consumption models
• and as a consequence with far-reaching consequences for the contract policy of the company.
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10. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
CONCLUSION
Strict openness, transparency and immediate direct communication in the overall
value chain as well in all customer-supplier relationships will be necessary for
digitisation.
IoT and Industry 4.0 opens up the usage of an unprecedented level of data and
delivers data accuracy to identify weaknesses in existing value chains of enterprises as
Big Data analytics allows to improve the efficiency of the entire supply chain
operation.
Simultaneously digital connectivity allows to closely coordinate with all partners to
continuously monitor and analyze customer behavior and expectations to understand
and to recognize trends early and to deliver or hopefully not destroy value.
This leads to a new understanding and role:
CPO: The CONDUCTOR in the Internet of Things
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11. INTERNET OF THINGS & BIG DATA – PROCUREMENT AS A KEY PLAYER IN THE DIGITAL ENTERPRISE
13.09.2016
Thank you
Michael Klemen
+43 664 44 595 66
Klemen@IoT40Systems.at
Klemen@bmoe.at
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