PROCUREMENT MANAGEMENT

REPORT TITLE – Digitalization to enhance

procurement
SUBMITTED TO – Prof. Navin Verma
SUBMISSION DATE – 09th May 2021
WORD COUNT – 1320

Student Name: Pankaj Singh Tomar

Roll Number: 42424
MBA-Executive 2019-22

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Declaration of originality

I confirm that this assignment is my own work and that I have not sought or used inadmissible help of third
parties to produce this work and that I have clearly referenced all sources used in the work.

Name -Pankaj Singh Tomar

Roll Number- 42424

Executive summary

Several technologies drive digital trends and bring about transformation in SCM. They include AI and
robotics, cloud computing, 3D printing, advanced analytics, block chain, AR, RFID, IoT, and cloud
technology. These technologies are changing the face of the industry, changing many aspects of business
models, supply chains, products, sales, and services. This report highlights the importance of these
technologies for supply chains and logistics, examines their trends and challenges in supporting digital
supply chain performance, and discovers the implementation and executive challenges of creating a new
integrated model of the digital supply chain. Digital technologies transform the way processes and operations
are completed. Industries and organizations are forced to adapt, or risk being left behind. Digitization is
transforming the way organizations function and is unleashing global opportunities for value creation in
industries. Digitalization creates greater benefits to a wide range of companies and has received much
attention from enterprises all over the world. Digitization has brought many benefits to the industrial sector,
particularly in processing and manufacturing, yet enormous untapped potential remains. Advances in
automation, intelligent machines, big data and analytics, and the Internet of Things (IoT) have created
opportunities for significant gains along the entire industry value chain.

Table of Contents

1 Introduction 3

1.1 Trends in Supply Chain 3

2 Integrated Operations 4

3 Challenges 4

4 Digital technology enablers 5

4.1 Internet of Things 5

4.2 Virtual Reality (VR) and Augmented Reality (AR) 6

4.3 RFID 6

5 Summary and conclusions 7

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Introduction
Maruti Suzuki India Limited is a subsidiary of Suzuki Motor Corporation, Japan and is India’s leading
passenger car manufacturer, accounting for nearly 50 percent of the total industry sales. The company has
two own manufacturing facilities in Manesar and Gurgaon, India and one in Mehsana, Gujrat which is owned
Suzuki Motor Gujrat another subsidiary of SMC, Japan.

Key procurement objectives and concerns

Supply Chain Management (SCM) is an indispensable part of every business entity. It incorporates the
planning, design, implementation, and control of the logistics activities of a firm including, procurement,
warehousing, inventory control, manufacturing, distribution, and order fulfilment. The unending sequence of
growing supply chain costs impacts the bottom line of all players involved. The savings in transportation,
inventory carrying costs, and overall management of the supply chain could be substantial if companies
strive to increase supply chain efficiencies. Cost reduction is a vital factor in today’s global supply chain
competitiveness. Manufacturers, retailers, and distributors have identified supply chain cost reduction as a
critical issue to address. Additionally, excellent supply chain performance has a strategic value that could
lead to fast financial payback, improvements in productivity and profits, and advances in critical global
competitive edge

Fragmentation
The traditional supply chain acts as a network between different companies for the production and
distribution of products or services. In the 1960 s, various functions of SCM, including transportation,
warehousing, purchasing were fragmented. Over the years, tremendous progress has been made in traditional
supply chains. Companies and supply chain leaders have unified different functions of the supply chains and
made many improvements that contributed to enterprise agility and productivity. They reduced a number of
suppliers, deployed information systems to track the flow of goods and services and strengthen and
centralized procurement policies

Integrated operations
Over the past ten years, supply chains have undergone tremendous change – from a purely operational
function to an independent supply chain management function. The emphasis of the supply chain
management function has shifted to advanced planning processes such as analytical demand planning, which
ensures integrated operations from customers to suppliers. Moreover, the focus of supply chain management
is also concentrated on support and trust between partners. Collaboration in the supply chain can be observed
in 8 key processes that include Customer Relationship Management (CRM), Customer Service Management
(CSM), Demand Management, Order Fulfilment, Manufacturing Flow Management, Supplier Relationship
Management, Product Development and Commercialization. Results show information sharing on stock level
or transport and warehouse capacity availability, in real-time, to many supply chain partners could result in
gaining competitive advantage.

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 Evolution of supply chain management
Challenges
The following trends are creating disruptions and require companies to rethink the way they design their
supply chain.

● Continuing growth of the rural areas and pressure to serve regions that have not been served before

● Increasing customer demand for individualization, customization, and better service

● Disruptive technologies that are altering traditional ways of working

● The sheer amount of data being created throughout the world

● Secure online access to a multitude of options regarding where to shop and what to buy

● A decline in the size of the available workforce due to changing demographics

● The continuation of changing consumer behavior, fueled by new technologies

Digital technology enablers

To fight these challenges, the managers of supply chains will need to compensate with automation that can
support workers and increase productivity. Over the years, several technologies have played a significant role
in digital supply chains to unify information and processes, and monitor real-time inventory levels and
customer communications with the product. They include GPS tracking, radio frequency identification
(RFID), barcodes, smart labels, location-based data, wireless sensor networks, and cloud technologies.
Global retailers such as Amazon and Alibaba have invested in robotics for goods handling and drones for
deliveries. BMW is working on implementing a fully digitalized factory and creating a more dynamic, data
analytics-driven supply chain segmentation for inbound parts.

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IoT-transforming supply chains
The Internet of Things (IoT) is the concept of connecting any device to the Internet or each other. Devices
range from cellphones, wearable devices, industrial equipment, appliances, and anything else that collects
and transmits data via the Internet. The concept is based on a general rule that ‘Anything that can be
connected will be connected’. IoT emerges as a rapidly evolving technology that more and more industries
are willing to adopt to improve their efficiency. IoT provides several great ways to help SCM and could have
a broad and profound impact on the supply chain in areas such as improved asset utilization and higher
uptime, improved end-to-end supply chain performance, supply chain visibility, and reliability. IoT provides
visibility into field operations, supply chain, and remote or outsourced operations. IoT devices can
immediately track where a product is located along the supply chain, showing handling history from
provenance to delivery. Tagged parts can be tracked throughout the manufacturing process along the
production line and throughout the assembly process. Companies are using cameras along production lines to
measure the number of components in bins. A Just-In-Time (JIT) inventory management system
automatically places supply orders to refill the containers. Manufacturers use sensors to improve machines’
performance, extending their lives, and learn how they could be redesigned to do even more.

IoT in supply chains

Immersive technologies and supply chains

Virtual Reality (VR) and Augmented Reality (AR) are among the fastest-growing technologies, and they
both will be part of our daily lives. These two technologies are fading the boundaries between the digital and
physical worlds. They are adding layer upon layer of digitized overlaid information to the world around us,
making it rich, meaningful, and interactive. Consumers are eager to use AR and VR technology for shopping
purposes. Retail offers several commercial applications of VR. For example, VR heat mapping technology
tracks a shopper’s movement in the store. The information provides a detailed pattern of which areas or
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products attract customer attention. This information helps retailers to test and refine store displays and
layout to optimize customer experience and spending. Retailers are also using AR technology to provide an
amazing and exciting shopping experience for their customers. The Amazon AR app let customers view a
virtual version of hundreds of real-world products and visualize what they would look like in their home.
Similarly, Ikea app called Ikea Place allows customers to see what Ikea furniture would look like at home.
Additionally, Ikea VR called Ikea Steam helps customers discover kitchen features. It allows users to walk
around and interact with objects in a virtual kitchen. The ability of AR and VR to display data in 3D displays
offers detailed and engaging data visualization techniques. Using the virtualized platforms, users can view,
analyze, and work collaboratively on their data in their own virtual space. AR can assist workers in
manufacturing by providing real-time information on machinery malfunctions, maintenance issues, and
safety warnings. AR and VR allow supply chain businesses to enhance employee and customer digital
experience. These include enhanced repair and maintenance capabilities in manufacturing, warehousing, and
logistics. These immersive technologies also will help provide better product visualization for customers, and
better store layout and planning for retailers.

RFID
RFID uses single-chip radios and provides the tagging of physical objects – people, places, and things so
they can interface with computers. RFID can provide more information than bar-coding. This information
can be used to improve inventory management at the retail store and along the supply chain. RFID can
revolutionize the way the supply chain meets customer expectations by offering direct insight into
consumers’ buying habits and increasing efficiency and accuracy within the supply. The technology could
dramatically improve supply chain performance by reducing inventory levels, lead times, stock- outs, and
shrinkage rates. It can also increase throughput, inventory visibility, inventory record accuracy, order
accuracy, customer service, quality, and collaboration among supply chain members. In general, RFID
technology could generate business value at three levels for any SCM.

(1) Immediate: RFID readers can read multiple tags simultaneously, without requiring line of sight or human
involvement. This can cut checkout, inventory control, and loss prevention costs

(2) Short-Term: RFID can improve supply chain performance through asset tracking, product origin tracing,
and product recall.

(3) Long -Term: Collaborative use of RFID information can help supply chain partners put the right item in
the right place at the right time and for the right price. And demand-driven, product fulfilment systems can
link consumer behavior back into inventory planning and logistics.

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 Supply chain management processes and RFID benefits

Summary and conclusions

Companies around the world consider ways to improve supply chain performance as a means to reduce
operating costs, improve margins, retain and increase market share, and increase responsiveness to
customers. Companies wishing to improve their current supply chain performance have to rely on technology
to deliver a higher level of performance in satisfying consumer needs. In the last few years, several
technologies have emerged that are altering traditional supply chain operations. This study discussed a range
of existing and emerging digital solutions available for real-time inventory management, transportation, and
asset transference monitoring. This report revealed the significance of several enabling technologies to the
digitization process. The findings indicate that digitization of supply chains and procurement process can
yield several benefits including greater transparency and better SCM decisions, increased SCM flexibility,
improved asset utilization and higher uptime, lower warehousing and inventory costs, lower supply chain
risk, more efficient delivery, reduced number of freight miles needed for transportation, and more efficient
inbound supply chain. Moreover, advanced analytics and notification systems offer high accuracy and
valuable insights and allow for smoother implementation of supply chain management improvements

References
1. Mohsen Attaran (2020): Digital technology enablers and their implications for supply chain management,
Supply Chain

2. Attaran, M. 2017b. “The Internet of Things: Limitless Opportunities for Business and Society.” Journal of
Strategic Innovation and Sustainability 12 (1): 10–29. Fall

3. Deloitte, 2017, “Digital Procurement New Capabilities form Disruptive Technologies,

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