USIMINAS

In the last 3 years a series of international events have highlighted how risky it is to have a very long supply chain and made people rethink global procurement policies that, until then, were considered dogma.

First, the Covid-19 Pandemic generated a huge demand and supply imbalance, then the war between Russia and Ukraine excluding from the market two very important supply sources for various manufacturing sectors, and finally, the China-USA crisis that could undermine the concept itself, of global markets in its foundations.

All this has made many procurement directors reflect on the need to have better control of their supply chain. They have started shortening it and/or placing it in more reliable countries by implementing the recently called "nearshoring" or "friendshoring", the practice of relocating supply chains to countries where the risk of disruption from political chaos is low.

The impact and the challenges for the purchasing function have been considerable; having to redesign structures, define new priorities, and change the purchasing strategies. All the above while maintaining the satisfaction of its stakeholders unchanged.

“The impact and the challenges for the purchasing function have been considerable; having to redesign structures, define new priorities, and change the purchasing strategies. All the above while maintaining the satisfaction of its stakeholders unchanged.”

From one side the need to dedicate resources to launch structured SRM programs which aim to develop a mutually beneficial relationship between the organization and its suppliers, especially those deemed most strategic to the organization's brand, to seek not just cost savings, but to maximize the value of suppliers to gain a competitive advantage in the marketplace having a secure and under control supply chain.

From the other side, the necessity to find resources without affecting the total annual cost of procurement functions.

The “magic solution” was just in front of us: to apply a bunch of technological solutions which became available for the purchasing department (some even at reduced cost), capable of bringing a great leap of efficiency.

The first step (for those companies that hadn't done it yet), was to equip themselves with a solid "backbone" on which to build their own operating model that can be easily integrated with other solutions/applications. We are talking about a procurement platform, better if cloud-based, that provides spend management and supply chain services creating a unique network between buyers and suppliers.

On top of it, the operating model was then integrated with the use of applications, mostly developed by small companies, capable of combining technical knowledge and solutions available at low cost with the needs of each customer.

The efficiency of the Purchase Order Process has thus drastically improved by almost completely automating it with the massive use of Procurement Catalogs and Marketplaces, the development of RPAs capable of automatically accompanying the entire Spot PO process including offers negotiation received with the use of solutions that exploit AI.

Other labor consuming processes have also had large productivity gains. Think of algorithms capable of reorganizing material catalogs by reducing errors and reprocessing. Suppliers onboarding platforms are capable of mitigating risks, reducing third parties’ certifications, and documents verification time through automated manner. System integrations between PPE Vending Machines in the plant and the company records of Personal Protective Equipment automating the registration process and reducing to zero the procurement and delivery flows. Process mining to model, analyze, and optimize business processes discovering inefficiencies.

Clearly, new competences, skills and expertise are required for this transition to Procurement 4.0, and even for this a new learning approach has been developed using interactive platforms capable of adjusting the study programs with the student’s current knowledge and the position he occupies in the company.

It’s an amazing journey we are experiencing nowadays: those able to surf the wave of the huge technological transformation in front of us, will be the leaders for many years to come.