Not far ahead, purchasing is going to be much different from what it is today. With the coming of Industry 4.0 (do you read our monthly newsletter on this subject, Industree 4.0TM?) smart mills will be operated in a totally different way. As equipment self-diagnoses its ailments, it will order its own spare parts. No human intervention.
Then, when the parts arrive, the system will assess the success of installing them (was it a shorter or faster period of time than the last repair)? It will also predict how long the parts will last. The purchasing function will become one of executive decisions; that is, decisions that are above the daily mundane clerical tasks. If the top executives of a company do not become bone-headed and cut the purchasing staff to nothing, purchasing will have an opportunity to optimize procurement.
Decisions made in a quasi-industry 4.0 way are already having an effect. We know of one company that almost never rebuilds pumps now. They have enough data to show that it is far more economical to just replace pumps in total, forgoing the cost and imprecision of rebuilding them in the field. For the cost is not just for the parts, it is for the downtime, internal alignment, clearance settings and on and on. In the end, a completely new pump is a better overall economic choice.
Suppliers who are on the ball will quickly become attuned to Industry 4.0 ways of doing things. For if as a supplier, you are set up in the traditional way receiving phone calls and emails from your prospects and customers, you will be left behind. You will need to have systems that can talk to your customers' systems, creating orders, shipping information, invoices and so forth without any human intervention.
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We are starting to look at how this might affect our own supplier directory, for it is tuned toward humans looking at the offerings. What will it look like when the mills' Industry 4.0 systems want to "look" at it? We are not sure, but we want to be there when it happens, so our advertisers in it have full capabilities to create opportunities no matter the source of the inquiry.
Eventually, maybe as soon as ten years from now, nearly all of your procurement activities, including raw materials, will be handled this way. Far fetched-sounding, but certainly within the realm of possibilities; continuous drone surveys of forest lands will pick the patch of trees to be harvested for virgin fiber mills three months ahead of when the chips will be fed into the digester--and based on the anticipated orders for paper at that time.
People laughed when Amazon said they were shipping products to zip codes ahead of orders. This makes perfectly good sense. Once Amazon gathers the data for the typical daily purchase of laundry detergent in a zip code, it makes sense for them to anticipate the deliveries, waiting only for the specific orders from the specific households.
In fact, if you want to see the future of industrial purchasing, examine the Amazon model for retail purchasing. Their objective is to make purchasing as "frictionless" as possible. We can all agree that industrial purchasing is not "frictionless" and we have a long way to go.
For safety this week, the farther we can keep humans away from the machinery, the better chance we have of keeping them safe. What I have described here is a great move in that direction.
Be safe and we will talk next week.
