Cyber-physical systems with autonomous machine-to-machine communication: Industry 4.0 and its particular potential for purchasing and supply management

Abstract

The number of publications on the fourth industrial revolution (Industry 4.0, short: I4.0) has increased exponentially. Likewise, significant investments by firms are planned. However, the link between purchasing and I4.0 is largely lacking even though procurement managers have high expectations. The fourth industrial revolution -which refers to the use of cyber-physical systems (CPSs) with autonomous machine-to-machine communication -could have several implications for purchasing processes. Support systems for purchasers are been developed, such as contract analysis software, and the possibility of digital negotiations has emerged and could revitalise e-marketplaces. Operative processes can act autonomously, with automated demand identification in CPSs. To support the development of I4.0 strategies in purchasing, this paper contributes by clearly defining I4.0, distinguishing it from the third industrial revolution, structuring the potential development paths of I4.0 in purchasing and by presenting the result of a project to develop a I4.0 maturity model for purchasing.

The Role and Meaning of the Digital Transformation As a Disruptive Innovation on Small and Medium Manufacturing Enterprises

“…In manufacturing companies, the integration of CPSs into production creates cyber-physical production systems (CPPS) ( Schiele and Torn, 2020 ). These systems become increasingly important in smart factories for creating connections along the entire supply chain (connection with suppliers – the company’s external environment) ( Roblek et al, 2020 ).…”

Smart Business and the Social Value of AI

“…Focussing on AI technology specifically, it has been shown to contribute to improved decision-making and overall firm performance (Bag, Gupta, Kumar, & Sivarajah, 2021) thanks to the ability to generate insights and knowledge from a variety of digital data sources such as for example social media information. Multiple studies have also discussed how AI can support buyer-seller exchanges in the sales process (Luo, Tong, Fang, & Qu, 2019;Paschen, Wilson, & Ferreira, 2020), contract negotiations (Schulze-Horn, Hueren, Scheffler, & Schiele, 2020), or throughout the purchasing process (Schiele & Torn, 2020). Gligor, Pillai, and Golgeci (2021) have recently discussed the potential dark side effects of AI on B2B relationships, such as exacerbated power asymmetries or reinforced organizational inertia.…”

“…New and publicly available data sources such as social media information, industry reports, or global news events can be used to provide additional information about supplier opportunities. Schiele and Torn (2020) consider how AI systems can be incorporated in procurement at all the stages of the purchasing process. For example, AI-based virtual interactive chatbots can facilitate suppliers in creating proposals, which then are being analysed and preselected using text mining.…”

Interpreting the industry 4.0 future: technology, business, society and people

“…Cyber-physical production systems and globally interconnected value chains, the smart inclusion of users and new kinds of products seem to extend our expectations regarding what industry is and can do. Distinguishing from the third industrial revolution (digitalization and roboticization), the fourth can be described as comprising the following elements: cyber-physical systems characterized by autonomy and machine-to-machine communication (Schiele and Torn, 2020).…”

“…As a consequence, focused competence-based models replace supply chain integrated business models. This combination could revitalize the idea of electronic marketplaces, which failed during the “dot.com hype” in the early 2000s, presumably because as long as a human-machine interface is required for entering demand into the system, an electronic marketplace could not offer much more than a more comfortable paper catalog with invoicing function (Schiele and Torn, 2020). However, if demand is generated automatically and cyber-negotiation takes place, then e-markets could have a new role, fulfilling promises made in the early 2000s, when the expectation was that e-marketplaces would become dominant.…”