The Status of Digitalisation in Procurement and Supply Chain Management – Improvement and Disruption

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By Thorsten Makowski, Heidi Gardner, and Hannes Beer

Digitalisation is changing procurement and supply chain management. It comes in three stages: cost reduction, value creation and business model transformation. Companies understand that digitalisation is important, but they perform poor and don’t exactly know what to do. Due to perceived risks, implementation comes slower than possible. When a first mover advantage is not existent, this is not a huge problem. When it exists, it can risk the whole company.

Digitalisation is changing the way businesses and their procurement, supply chain and operations operate. Sometimes it has a dramatic and disruptive impact. But oftentimes its impact is not as fast and dramatic as many people fear it could be.

Change driven by technology is nothing new. It all started with fires, beacons, smoke signals, drums and horns. For people, society and business, communication was always important. Around 3.500 B.C. writing was discovered; the Phoenician established the Alphabet around 800 B.C.; in 105 A.D. Tsai Lun invented paper; in 1440 Gutenberg developed the printing press; in 1830 the electronic telegraph was invented and started to rule the business world. In 1876 Bell patented the telephone. The next age of communication started in 1951 when computers were first sold commercially. In 1969 the first form of the Internet was created. 1973 the first Cellular Phone, 1974 brought the first Fax to market, 1981 saw the first Laptop, 1982 the (SMTP) email, 1990 the World Wide Web. Email has for a long time been the most important way of electronic communication, especially for business use. And now digitalisation is expected to transform businesses again.

It is the aim of this new edition of our global procurement and supply chain management study to find out the impact of the digitalisation on businesses today, For this, we have surveyed for the fifth time since 2009 Chief Procurement Officers, CEOs and other Top executives from 1,174 companies in 75 countries from all continents. Besides large corporations like IBM, Dow Chemical, Siemens and PepsiCo, numerous small and medium size enterprises were also represented.

The survey was made between March and August 2017. Our cooperation partner was the Harvard University. After analysing the data, multiple additional interviews were done to deeply understand what good performers do today and why.

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About the Authors

Dr. Thorsten Makowski is managing director of VALUNEER, a managing consulting company. He has over 17 years of consulting experience with a focus on procurement and SCM. He teaches procurement and SCM since 2009 at 24 Business Schools in 13 countries. These schools include Mannheim Business School, Cass London, Bath, Rutgers (US), HHL Leipzig, ESCP Europe and Indian Institute of Management Ahmedabad.

Dr. Heidi Gardner is the Distinguished Fellow in the Center of Legal Profession of Harvard Law School in Boston. Furthermore, she teaches for the Accelerated Leadership Program.

Hannes Beer is Senior Consultant with experience in the fields of strategy consulting and procurement.

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