Implementation of Procurement 4.0
Technologies
-A systematic content analysis on implementation factors
Abstract
Procurement 4.0 is the integration of Industry 4.0 related technologies into the procurement process, making tasks automated, information gathering and communication more effective, while establishing interconnected networks. After noticing a lack of studies done on the implementation of Procurement 4.0, the purpose of this article became to close the theoretical gap and extend the understanding of the implementation of Procurement 4.0. The study is done as a systematic content analysis, with the basis in a systematic literature review. Two areas of interest were studied and evaluated, identified effects on the procurement process by implementing Procurement 4.0, and identified Industry 4.0 implementation factors.
Altogether, 14 studies were analyzed and evaluated and later put against each other to conclude Procurement 4.0 implementation factors. This study identified the need for managerial support and interaction with the employees, as an important part of the
Table of content
Abstract 2 Table of content 3 1.0 Introduction 5 1.1 Background 5 1.2 Problem discussion 6 1.3 Purpose 7 1.4 Research Questions 71.4.1 Justification for the choice of research questions 8
2.0 Conceptual Framework 9
3.0 Methodology 13
3.1 Research approach 13
3.1.2 Content analysis 13
3.1.3 Systematic literature review 14
3.1.4 Combining content analysis with a systematic review 15
3.2 Aim of the study 15
3.2.1 Pilot search 15
3.2.2 Deciding the Purpose and Research Questions 15
3.3 Sample and unit of analysis 16
3.3.1 Locating studies 16
3.4 Data collection method 18
3.4.1 Study selection and evaluation 19
3.5 Analysis & Synthesis 21
3.6 Reporting the results 22
4.0 Results 23
4.1 Technologies’ effect on the procurement process 23
4.1.1 Task automatization 25
4.1.2 More effective communication & information handling 25 4.1.3 Summary of technologies’ effect on the procurement process 26
4.2 Implementation of Industry 4.0 Technologies 28
4.2.1 Organizational 29
4.2.2 Employee 30
4.2.3 Technology 31
4.2.3 Financial 32
4.3 Procurement 4.0 Implementation Factors 32
5.0 Discussion 36
6.0 Conclusion 38
6.1 Managerial applications 38
6.2 Theoretical applications 39
References 41
Literature 41
Articles 41
Figures 45
Appendix 46
1.0 Introduction
1.1 Background
In an ever-evolving international market, the ability to stay relative and competitive becomes tougher and tougher. To maintain their position on the market companies nowadays compete through supply chain efficiency, mainly by finding ways to reduce costs, but also lead-times and risk. One area of operation where an organization can work on staying up to date with the market, is purchasing or procurement. Procurement is a large area within many businesses and stands for more than 10% of global GDP. There is a lot of value-creating potential within the procurement area which signifies that every organization with a procurement function should work with the development of its process. A well-functioning procurement process could increase value and savings, improve reputation, reduce risk-taking and the area of procurement is nowadays often mentioned as a key component for innovation. (Monczka, Handfield, Giunipero & Patterson, 2016; Muñoz-Garcia & Vila, 2019; Rezaei et al. 2020). This ever-evolving international market could result in changing customer behaviors and needs, and thereby the competitive pressure on the organization to evolve and become better, increases. The increased complexity of the supply chain this causes, has made the integration of different technologies into the procurement process an important step towards gaining the benefits of an effective procurement process. Typical ways of developing the procurement process have been to address the challenges most buyers face, which includes lot-sizing, selection of suppliers and trying to streamline the complex networks they operate within. Even though these things still are of importance, there is a limitation of what companies can do without the use of digital tools. Digitalization is part of this development and is on the agenda for many organizations. The possibilities in regard to global digital transformation of organization’s is driven by newly introduced technologies, or at least new technologies in the field of supply chain. (Bienhaus & Haddud, 2018; Bag, Wood, Mangla & Luthra, 2020; Rezaei et al. 2020; Muñoz-Garcia & Vila, 2019)
based upon the integration and usage of technologies that turn the supply chain system automated, including strategic decision making (Tripathi & Gupta, 2020). Procurement 4.0 is the integration of Industry 4.0 technologies and tools into the procurement process, making it automated and more interconnected with the rest of the Supply Chain. The technologies used allow for higher information process capabilities that enhance reviewing and collecting of important and relevant data to be used in strategic decision making. The access to real-time data becomes easier and more accurate which results in more efficient external and internal information exchange. In other words, effective communication. (Bag et al., 2020)
While doing another study earlier this year about procurement, the term Procurement 4.0 was discovered by looking into certain aspects of Industry 4.0. Curious about gathering more information on the subject, the search for academic literature revealed a lack of studies on different subjects/ aspects related to Procurement 4.0. After doing a pilot search an even greater interest regarding the subject and its possibilities arose. The theoretical area both shows potential on an academic level, and due to the impact it has on companies, on a work-related level as well. This peaked the interest and pushed the study towards its current direction.
1.2 Problem discussion
Digital changes usually indicate the integration of new technologies into the company. When technology develops, new digital opportunities are presented. This could result in new
business models, or the reshaping of old ones and the consequences of the digitalization is not always clear (Alvesson, 2019). The digitalization of businesses could result in the reshaping of not just business models, but management aspects, processes and activities, and the whole Supply Chain. (Horváth & Szabó, 2019)
Generally, when discussing digitalization, and newer technologies being used in companies, the implementation phase is usually brought up, and the technologies associated with Procurement 4.0 are no exception. The integration of technologies from Industry 4.0, the company and its suppliers would need to undertake investments, changes to the business and strategy. New physical and digital infrastructure could be needed, new systems, development of the supply chain and more (Da Silva, Kovaleski, Pagani, Silva & Corsi, 2020). Since the purpose with the Industry 4.0 technologies is for the processes to be automated and to interconnect between involved supply chain members, the members need to be up to date, and know how to use the technologies. (Da Silva et al. 2020; Sony & Naik, 2020)
While doing research in the subject, the lack of studies done in the implementation of Procurement 4.0 was identified. Many studies have been done on the implementation of Industry 4.0, but not specifically on the procurement process, or on the concept that is Procurement 4.0. A lot of studies discuss the benefits of using Procurement 4.0 and how it will affect the procurement process, but not the hardships behind it. After acknowledging this lack of studies done on the implementation of Procurement 4.0, the aim of this study then became to extend the understanding of the implementation of Procurement 4.0.
1.3 Purpose
The purpose of this study is to close the theoretical gap and extend the understanding of the implementation of Procurement 4.0.
1.4 Research Questions
RQ 1: Are there any implementation factors resulting from the effects of implementing Procurement 4.0?
1.4.1 Justification for the choice of research questions
The motivation for the first research question is that in contrast to Industry 4.0, Procurement 4.0 focuses on a process, and not an entire company. The existing procurement process will be affected by the implementation of these technologies. The interest this has for this study, lies in how the process will change and if these changes will result in any implementation factors.
2.0 Conceptual Framework
Industry 4.0 is a term used to describe the fourth industrial revolution. In this case, it is the integration of different technologies that are supposed to make the supply chain “Smart” by interconnection and automatization. The concept functions as a steady flow of information, in and out of the business, to all involved parties, and where the aim is to generate more value through efficient processes. Technologies usually associated with Industry 4.0 are Internet of Things (IoT), Big Data Analytics, AI, Automatic Robotics and more. (Alejandro Germán, Dalenogare & Néstor Fabián, 2019; Da Silva, Vander Luiz et al., 2020)
One area within the supply chain that is affected by Industry 4.0 is the procurement process. Procurement is the process of acquiring different goods or services within a set time frame. Activities included could be purchasing, specifications, documentation and notification of said order. Since a lot of businesses need the supply of material to either produce or work, the procurement process has a noteworthy influence over the success of the business (Al-Fedaghi & Al-Otaibi, 2018). Weele & Arbin (2019) states that procurement, or purchasing, can be defined as the control and management of the company's external resources in a way that makes it possible to supply the necessary resources needed to run, maintain and manage the company's activities. Tripathi & Gupta (2020) described procurement as a process that transformed from an activity related to material acquisition, to a more holistic operational function with the aim of increasing profitability with more focus on supplier relationship management. Antvik (2016) describes the procurement process as the process that acquires the necessary resources from external suppliers that are required for the company or project. The combination of Industry 4.0 technologies, and the procurement process, have
accumulated in the term Procurement 4.0.
Procurement 4.0 is the development of earlier procurement structures which has evolved through time due to technological advances and customer needs. While the earlier industrial revolutions are characterized by mechanical production, mass labour and the usage of a lot of energy and natural resources, This next step of evolution can be described as the
Cunningham & Watson, 2018). To do that, companies must take advantage of information and communications technologies (ICT), which forms the basis of Procurement 4.0. Internet of Things (IoT) is one of the key drivers within Procurement 4.0 which has led to automation of mechanical processes that do not need human interference. (Boyes et al., 2018; Nicoletti, 2018). Amongst other things, this has led to the implementation of automotive vehicles and industry robots. The transition to these kinds of modern solutions will take time, require investment and education, but the result will be a lower requirement of labor, time savings, higher flexibility and a considerable improvement in the cost performance of procurement. (Nicoletti, 2018; Bag et al., 2020).
Tripathi & Gupta (2020) introduces four technological areas that form Procurement 4.0. This has been the technological standpoint for this study and the basis for the related technologies being researched further. The four technological areas presented Tripathi & Gupta (2020) are based upon the research done by Klünder, Dörseln & Steven (2019), but more technologies are introduced by Tripathi & Gupta (2020) which is why this is the article this study chose to base its study upon.
Authors like Vuksanović Herceg, Kuc, Mijušković & Herceg (2020), Da Silva et al., (2019) and Ghadge et al., (2020) discusses the implementation of the Industry 4.0 concept, the benefits and the challenges. The mentioned authors conclude certain implementation
challenges or barriers regarding Industry 4.0, but not this is done generally, not on a specific process. The parts that make up the supply chain differ, and the different parts (like
procurement) could react differently when Industry 4.0 is implemented into these processes. Also, when looking over the studies done in relation to Procurement 4.0, there is a lack of studies focusing on the implementation aspect.
3.0 Methodology
3.1 Research approach
The purpose of this study is to close the theoretical gap and extend the understanding of the implementation of Procurement 4.0. To do that, the approach of conducting a systematic literature review will be applied. According to Xiao & Watson (2017) a systematic literature review can take two shapes; It can take the form of a foundation to a future empirical
research by identifying a gap in the existing literature which the study aims to fill. Another approach is to make sense of existing literature and try to explain, clarify and summarize the existing literature. Our approach will be accordingly with the first option, with a purpose of filling a gap in the existing literature and lay a foundation for future empirical studies by contributing with literature.
This study will also be made as a qualitative content analysis. According to Dooley (2016) the purpose of a content analysis is to compare and simplify text from different publications and make it easier for the reader to understand complex qualitative data. Content analysis is also a flexible methodology that does not need to comply with many of the rules that exist within literary methods, and it is also suitable to combine with several different methods. (Bengtsson, 2016; Finfgeld-Connett, 2013)
3.1.2 Content analysis
3.1.3 Systematic literature review
A systematic literature review is a research method used when aiming to answer a specific question/ questions. The approche bases the research upon the gathering of different studies, or literary sources, related to the research question the study aims to answer. These sources are then analyzed and broken down to be used as pillars to answer the research question. (Denyar & Tranfield, 2009; Ward, Usher-Smith & Griffin, 2019)
This study has based the systematic literature methodology upon the steps introduced by Denyar & Tranfield (2009). Since the authors started with a limited knowledge regarding the subject, a pilot search was conducted as a step one instead of “Step 1: Question formulating” (See figure 3:1).
3.1.4 Combining content analysis with a systematic review
A combination of content analysis and systematic literature review has been made where parts from both methodologies have been used in this study. Other studies conducted by Khirfan et al. (2020), Finfgeld-Connett (2013) and Chua & Zhang (2020), who have also combined these methodologies, have been used as inspiration for how to design such a research. The steps of this study based on these combined methodologies are displayed in figure 3:1.
3.2 Aim of the study
The aim of the study is about finding an interesting area to study or problem to tackle, and then boil it down to the most critical point. (Bengtsson, 2016). The approach to this has been to do a pilot search and then limiting the area of study, using the purpose and research questions.
3.2.1 Pilot search
To begin the study, a pilot search was needed for the authors to get a better understanding and insight into the subject. This gave a comprehension of the subject and aided in formulating a purpose for the study, and inline with how Bryman & Bell (2019) described it. Furthermore, the use of a pilot search helped identify criteria for what sources of literature to use and not. The different literature sources for the pilot study were located by using certain search terms on academic databases. The search words where; Procurement 4.0, Industry 4.0 &
Procurement Process. During this part of the study, the authors noticed the lack of relevant studies done on the implementation of Procurement 4.0. This lack of studies, and thereby a theoretical gap, became the basis for the purpose of the study.
3.2.2 Deciding the Purpose and Research Questions
theoretical gap and extend the understanding of the implementation of Procurement 4.0. The defining of the purpose and research question is usually the first step in a systematic literature review according to Denyar & Tranfield (2009) and Ward, Usher-Smith & Griffin (2019), but as mentioned before, the authors felt like further knowledge about the subject was needed to define well-formulated and answerable questions.
Based upon the purpose and the pilot search, the research questions for this study were formulated and became; RQ 1: “Are there any implementation challenges resulting from the effects of implementing Procurement 4.0? ” and RQ 2: “Does the implementation of
Procurement 4.0 differ from the implementation of Industry 4.0?“
The lack of studies done on implementation of Procurement 4.0 and the highly discussed topic that was Industry 4.0 implementation, resulted in the curiosity to see if there are any differences in regards to implementation factors between Procurement 4.0 and Industry 4.0. To answer this, RQ 1 needed to be answered and the results discussed before answering RQ 2.
3.3 Sample and unit of analysis
Sample and unit of analysis is also a part of the preparation phase. (Khirfan et al., 2016). The sample size should include enough information and sources to be able to answer the research questions with assurance. This part should be navigated by the help of the aim in order to stay on the right track. (Bengtsson, 2016). Each search phrase or word should be presented and handled individually (Dooley, 2016). The key words and phrases that this study uses are presented in the figures 3.3 and 3.4.
3.3.1 Locating studies
electronic databases to find relevant literature. In this study we have used a combination of literature and scientific articles.
To find scientific articles, the search engines “One Search”, “BSU” (Business Source Ultimate), “Web of Science” and “Google Scholar” have been used. Articles have also been identified by keywords that appeared in the search engine in connection with an article being found, as well as by references linked to a particular article. Bryman & Bell (2019) suggest that this is an effective method to find relevant articles.
Headfield Google Scholar One Search Business Source Ultimate Web of Science Total result Subfields Procurement 4.0 383 34 6 7 430 Procurement process 116 12 0 5 133 Digitalization 175 16 24 3 218 Industry 4.0 270 21 1 3 295 Effect on procurement process 0 0 0 0 0 Effects 205 21 0 1 227 Total 1149 104 31 19 1303 Selected Articles 5 4 2 2 7
Headfield Subfields Industry 4.0 37 400 9 533 1 729 3 391 52 053 Implementation 20 700 5 339 104 2 26 145 Challenges 23 700 5 668 75 1 647 31 090 Implementation challenges 780 68 0 9 857 Barriers 16 000 1 693 20 183 17 896 Implementation barriers 303 30 1 7 341 Total 98 883 22 331 1 929 5 239 76 329 Selected Articles 7 7 4 6 7
Figure 3:3 Search result headfield; Industry 4.0
3.4 Data collection method
A content analysis is often divided into two different areas; Manifest analysis and Latent analysis, where manifest content analysis studies the text on the surface, by identifying what is said. It is the information about the article that is easily accessible. A latent content analysis on the other hand is used for studying the text more deeply, discovering the underlying
The manifest analysis is described more thoroughly in chapter “3.4.1 Study selection and evaluation” but are amongst other things; Peer reviewed, publication date and that they are within the right area (Procurement 4.0 Industry 4.0). A latent analysis of the chosen articles has also been performed, which is presented in the figures 4.1 and 4.5. By reading the texts carefully the purposes of each text have been extracted and the articles have been categorized based on their key elements and the effects the elements have on the procurement process. Each article has in a first step been studied individually and later on analyzed, accordingly with Dooley’s (2016) theory.
3.4.1 Study selection and evaluation
Since systematic reviews need to be transparent, selection criteria’s must be determined to judge whether or not an article addresses the subject and can be used in a proper way to answer the research question. To do that, the articles that contribute to the review should be justified why they have been used and presented for evaluation. A method of presenting trustworthy search criteria’s is to do a small number of pilot searches that are presented in the paper. The reason for inclusion or exclusion of articles should then be presented. The reason why articles are being included or not constitutes the search criteria. (Denyar & Tranfield, 2009)
While looking over the result, the authors criteria for identifying articles were firstly that the articles were published from the year 2016 and upwards. After an article had been identified, including the right search words and within the pre-established timespan, the authors
evaluated its content. Here the studies needed to conclude some sort of specific effect that the usage of Procurement 4.0 technologies would have on the procurement process. Here the headfield was “Procurement 4.0” and the different subfields can be found in figure 3:2. One study that differs from the others, is Kraumsi (2019). This study is not, to the authors
Figure 3:4 Selection of studies for chapter 4.1
The second part of the literature search, focused on the aspect of Industry 4.0
implementation. Here the headfield was “Industry 4.0” and the different subfields can be found in figure 3:3, otherwise the criteria were the same. One difference was that in this case, the articles needed to state direct implementation factors, or factors that may affect the
Figure 3:5 Selection of studies for chapter 4.2
3.5 Analysis & Synthesis
The analysis which consists of chapters “4.0 results” and “5.0 discussion” will be a mix of content analysis and systematic review methods.
been rearranged and compared in chapter 4.3, accordingly with the literature of Denyar and Tranfield (2009).
3.6 Reporting the results
4.0 Results
In this chapter the results of implementing the method of a systematic content analysis are presented. The foundation for this chapter is based on the study selection presented in figure 3.5 and 3.6. The manifest and latent data of these articles are presented and compared in this chapter with the purpose of answering the research questions.
4.1 Technologies’ effect on the procurement process
Figure 4:1 Studies and their aims/purpose
Chapter 4.1 will focus on the left-side part (A) of the conceptual framework (see figure 2:2 and 4:2) and identify the effects the technologies have on the procurement process when implemented.
4.1.1 Task automatization
Tripathi & Gupta (2020), Karumsi et al., (2018) discuss the automation of procurement tasks by purchasing orders being placed automatically with the help of support technology that identifies the need of procurement through stock levels and production schedules. An automotive program can keep track of this in real time and either suggest the amount of goods that need to be purchased, or automatically place an order for the right amount. Klünder et al., (2019) and Karumsi et al., (2018 ) argue that the whole process of operational procurement can be automated by using big data. That means that demand planning, purchase requisition, order quantities, purchase order and transportation could be automated. Layaq et al.,(2019), Klünder et al., (2019) and Karumsi et al., (2018) discuss the automation of tactical procurement, which is the negotiation with, and evaluation of the supplier. This process is considered time consuming due to the manual handling of suppliers. A suggestion that is discussed is that the supplier selection process can be fully automated by filtering out
suppliers to a few who get to sit in a face to face meeting. If a computerized system does this and presents the reasons behind the decisions, the whole selection process not only becomes more time efficient, but it is also an opportunity to save money and get transparency for the whole process.
4.1.2 More effective communication & information handling
Klünder, Dörseln & Steven (2019), Tripathi & Gupta (2020), Bienhaus & Haddud (2018), Bag et al. (2020) and Saw Khuan & Raman (2018) states that the utilization of Procurement 4.0 technologies will increase the effectiveness of the communication while aiding in
Klünder, Dörseln & Steven (2019) discusses communication and information handling, when approaching the “offer request”, “offer evaluation” and “negotiations of conditions”.
According to Klünder, Dörseln & Steven (2019) and Saw Khuan & Raman (2018), IoT and Cloud Computing will help in the external communication with e.g., suppliers. Big Data/ Business Intelligence will aid with internal information handling through analyzes. Tripathi & Gupta (2020) discusses information handling as an Integrated information platform as an information system built upon the technologies related to Procurement 4.0. Both Bienhaus & Haddud (2018), Saw Khuan & Raman (2018), Karmusi (2019) and Tripathi & Gupta (2020) highlight that certain information gathering will be automated (real-time information), communication more effective and that Big Data/ Business Intelligence will increase information visibility and aid in analyzes. Bag et al., (2020) adds that the
technologies allow for information gathering and a seamless flow of information throughout the company, permitting more strategic decision making possibilities. Layaq et al., (2019) presents a conclusion where the communication between suppliers is more effective with the use of Procurement 4.0 technologies, and that it reduces lead time.
4.1.3 Summary of technologies’ effect on the procurement process
Tripathi & Gupta (2020), Bienhaus & Haddud (2018), Saw Khuan & Raman (2018) & Bag et al. (2020) all state that the technologies related to Procurement 4.0 will affect the way the process operates. With tasks being automated, and more effective communication and
information handling Tripathi & Gupta (2020), Saw Khuan & Raman (2018) and Bienhaus & Haddud (2018) agree that the human role within the process will change and be more
strategic, innovative and more focused on negotiation. The information will automatically be collected, analyzed and used to make more strategic decisions to support organizational efficiency, effectiveness, and profitability.
With I 4.0 technologies, the procurement process according to Klünder, Dörseln & Steven (2019), Tripathi & Gupta (2020), Bienhaus & Haddud (2018), Saw Khuan & Raman (2018) & Bag et al. (2020) would in effect automate information gathering, handling, streamline automated- communication and eliminate uncertainty and lead time. In other words, the integration of Procurement 4.0 would increase process efficiency and reduce cost. The identified effects can and how it can be perceived, be seen in figure 4:3 below.
4.2 Implementation of Industry 4.0 Technologies
Looking over, analyzing, and evaluating the studies found for this chapter (seen in figure 3:5), five categories of implementation factors have been identified and are highlighted by most of the studies. These are Organizational, Employee, Technology and Financial.
This part of chapter 4.0 focuses on the right-side part (B) of the conceptual framework, (see figure 2:2 and 4:4) and implementation factors identified from the Industry 4.0
Implementation studies that can be seen in figure 3:5.
Figure 4:4 Industry 4.0 implementation factors framework
Figure 4:5 Studies and their aims/purpose
4.2.1 Organizational
The first, and most discussed category are implementation factors within the area of “Organizational”. Vuksanović et al., (2020), Da Silva et al., (2019), Muller, Kiel & Voigt (2018), Sony & Naik (2020), Ghadge et al., (2020), Bajic et al,. (2021), Bakhtari et al., (2021) all discusses implementation factors related to the organization and how it is managed.
Strategy, management, and standardization are presented as factors/sub-implementation categories that need to be considered.
Bajic et al,. (2021), Ghadge et al., (2020) and Bakhtari et al., (2021) highlights the
importance of the company having clear and defined strategies regarding digitalization and the implementation. Sony & Naik (2020) expands, and states that the strategy also must be inline with the company's overall strategies.
barrier, and that poor management will make the implementation harder for the company and the employees. Sony & Naik (2020) takes another approach, and states that management needs to support the implementation wholeheartedly and top management will actively have to work to succeed with the implementation.
Standardization is another factor mentioned by Vuksanović et al., (2020), Bajic et al,. (2021) and Bakhtari et al., (2021). Here Vuksanović et al., (2020) mention it as lack of standards regarding technology and within processes and Bajic et al,. (2021) as lack of standardization regarding information exchange. Bakhtari et al., (2021) states that Industry 4.0 is a concept that enables integration, and thereby standardization is needed. With standardization Bakhtari et al., (2021) indicates something that provides a framework to structure, develop, integrate, and operate the technological systems.
4.2.2 Employee
Vuksanović et al., (2020) ranks the lack of skilled workforce as the biggest implementation barrier. The skill of the employees, or the lack of expertise, is also mentioned by Da Silva et al., (2019), Muller, Kiel & Voigt (2018), Ghadge et al., (2020), Bajic et al,. (2021) and Bakhtari et al., (2021) as an implementation factor that needs to be taken into account. It is seen as important that the employees are trained and have the necessary skills in regards to the implemented technologies.
The employee's resistance to change within the organization is another highly discussed implementation factor and is presented by Vuksanović et al., (2020), Da Silva et al., (2019), Bajic et al,. (2021), Muller, Kiel & Voigt (2018) and Ghadge et al., (2020). Ghadge et al., (2020) describes it as industries and companies being insecure and not knowing what to expect in regards to changes or benefits. Vuksanović et al., (2020) came to the conclusion in their study, that resistance to change is not an important barrier. Ghadge et al., (2020) also states that a lack of knowledge or competence creates hesitancies.
incorporating training programs or something similar. Bakhtari et al., (2021) also states the job uncertainty related to the full implementation of Industry 4.0 and how certain roles might disappear or change. As mentioned before by Vuksanović et al., (2020), Da Silva et al., (2019), Muller, Kiel & Voigt (2018), Sony & Naik (2020), Ghadge et al., (2020), Bajic et al,. (2021), Bakhtari et al., (2021) and in chapter 4.2.1, management will need to support the lower levels in the different implementation phases.
4.2.3 Technology
In regards to technology Vuksanović et al., (2020), Da Silva et al., (2019), Muller, Kiel & Voigt (2018), Sony & Naik (2020), Ghadge et al., (2020), Bajic et al,. (2021), Bakhtari et al., (2021) all formulate their implementation factors differently. Da Silva et al. (2019) uses “Poor technological infrastructure of the company”, Ghadge et al., (2020) choses “Lack of digital infrastructure” and “Poor data quality and management” and Bakhtari et al., (2021) “Lack of Technology Integration and Compatibility”. The company's level of digitalization and technological maturity is commonly seen as an implementation factor. Sony & Naik (2020) highlights two critical success factors which is just that, the digitalization of the supply chain and the organization. Bajic et al,. (2021) agrees, and states the technological maturity as a factor, but also breaks it down and gives device incompatibility and algorithm development as examples. Da Silva et al., (2019) means that the complexity and advanced technologies are new for many companies and thereby a challenge when trying to implement. Bakhtari et al., (2021) focuses on the digitalization of the supply chain and the need for technological integration and interconnection.
4.2.3 Financial
The literature generally only states two implementation factors related to financial. One is the lack of, or need of, financial resources. Vuksanović et al., (2020), Da Silva et al., (2019), Muller, Kiel & Voigt (2018), Ghadge et al., (2020), Bajic et al,. (2021) and Bakhtari et al., (2021) all state this as a factor needing consideration. Vuksanović et al., (2020) ranks this as the third biggest barrier in regards to implementation. Da Silva et al., (2019) agrees and continues by stating the reason is based upon the high cost of buying/ procuring the
technologies, which Muller, Kiel & Voigt (2018) agrees upon. Bakhtari et al., (2021) presents IoT as the basis for the needed financial resources and states that the technology needs to be implemented in multiple partners in the value chain and therefore the investment is high for the technological infrastructure.
The second factor is presented by Ghadge et al., (2020), Bajic et al,. (2021) and Bakhtari et al., (2021) and is the uncertainty or lack of knowledge regarding return on investment/ economic benefits. Ghadge et al., (2020), Bajic et al,. (2021) and Bakhtari et al., (2021) all state that the uncertainty from the company's perspective could be high in regards to the return on investment and is thereby seen as a barrier towards implementation.
4.3 Procurement 4.0 Implementation Factors
Figure 4:6 Procurement 4.0 implementation factors framework
A main feature that has been discussed within task automatization is that purchase orders can be placed automatically by computer programs that keep track of production schedules and stock levels in real time. By deciding a point of purchase, the system can either give a suggestion for goods that need to be ordered, or actually complete the order. Automatization of purchases, as with many other task automatizations, has its advantages in the need of fewer employees handling the orders, which minimize many risks connected to procurement, and human errors. (Tripathi & Gupta, 2020; Karumsi et al., 2018). With the automation of supplier selection, communication and purchasing, the degree of interconnection and integration between involved parties will increase. Sony & Naik (2020) and Bakhtari et al., (2021) acknowledges the importance of trust and cyber security when working with these technologies that entails interconnection between the networks.
participation. Vuksanović et al., (2020), Bajic et al,. (2021) and Bakhtari et al., (2021) concluded the lack of standardization as an important factor which will affect how the management of the procurement process will have to handle the processes activities and the automatization of many of these activities as mentioned by Tripathi & Gupta (2020), Saw Khuan & Raman (2018) and Bienhaus & Haddud (2018). With activities and roles within the process changing and evolving, the management will need to clarify the newly formulated strategies and aims of the implementation.
The changes to the procurement process mentioned by Tripathi & Gupta (2020), Bienhaus & Haddud (2018), Saw Khuan & Raman (2018) & Bag et al. (2020) could result in resistance from the employees as stated by Vuksanović et al., (2020), Da Silva et al., (2019), Bajic et al,. (2021), Muller, Kiel & Voigt (2018) and Ghadge et al., (2020). Ghadge et al., (2020). With more effective and automated information gathering, analyzing and distribution, both internally and externally, employees could feel insecure about the future changes and job-uncertainties (Bakhtari et al., 2021). With the introduction of the new technologies and the changes to activities in the process could result in the employees lacking the necessary skills or competence. This fits well into Da Silva et al., (2019) statement regarding challenges implementing these complex and advanced technologies. Vuksanović et al., (2020), Da Silva et al., (2019), Muller, Kiel & Voigt (2018), Sony & Naik (2020), Ghadge et al., (2020), Bajic et al,. (2021) and Bakhtari et al., (2021) highlights the need for managerial interaction and support, and this could become paramount for the success of the implementation, which includes the training of employees to reduce insecurities and increase useful knowledge of the benefits and uses of the technologies.
5.0 Discussion
The starting point for this study, laid in the identified lack of studies done on the implementation of Industry 4.0 technologies done on specific processes. Since the
procurement process was generally discussed within studies as Procurement 4.0, this became the basis for this study. Here the authors noticed an abundance of articles and studies
presenting the benefits, and generally, the positive effects that Procurement 4.0 would have on the company/ procurement process, but not the challenges or barriers regarding the implementation. Since there was a lack of studies done on the subject, the approche became to try and close this theoretical gap by studying the effects the technologies would have on the procurement process, and the overall Industry 4.0 implementation factors being discussed by the literature. RQ:1 came about for the need of identifying changes that would occur within the procurement process, due to the implementation of Procurement 4.0. Knowing these changes was required to see how potential implementation factors would affect the process. Considering the pilot search displayed the lack of studies made on implementation factors within Procurement 4.0. Therefore, a need for a credibility check was a necessity, which accumulated in looking for implementation factors within other areas. In this case it became relevant to compare with I 4.0, on the account of Procurement 4.0 has its basis in its associated technologies. RQ 2 then originated from the theoretical gap that is implementation factors specified for Procurement 4.0, and to see if they differ from Industry 4.0
implementation.
The results from this study had the aim of extending the understanding, and thereby, closing the theoretical gap regarding implementation of Procurement 4.0. Chapter 4.0 is divided into three sub-chapters/ areas of focus, with the first one identifying certain changes and effects the technologies have on the procurement process. The main findings show a change of activities and how the process operates. The primarily change for a company implementing Procurement 4.0 is the automatization of different tasks e.g., supplier selection,
The results regarding the implementation of Industry 4.0 are also generally well-established factors amongst the selected literature and highlighted by most studies done on the subject. These implementation factors, most named either challenges or barriers, chiefly center around the implementation of the technologies for the whole company, and the effects it will have on the whole company, and not specific areas of operation/ departments within the company.
The result of this study shows that the main implementation factors (C in the conceptual framework) that need to be accounted for are connected to the effects the changes will have on the employees and how their work will change. With previous studies focusing on the implementation throughout the company, implementing Procurement 4.0 will only affect the employees within the procurement department.
With operative changes like this, management will be required to take a supportive role and aid the employees and minimize potential insecurities they might have regarding
job-uncertainty, unclear benefits etc. However, there will be less need for certain
administrative tasks regarding negotiation and order management, which may result in a reduced need of administrative staff within the procurement function. The outcome of these changes could be the previously mentioned insecurities. As stated, management will need to take a supportive role by aiding the staff in the transformation period with employee training, clarifying benefits and explaining the purpose for implementing the technologies.
Implementation factors being highly discussed in the Industry 4.0 literature, that does not affect the implementation of Procurement 4.0 are the high investment cost and the
technological maturity of the company. These are two important factors to consider when implementing these types of technologies, but they are more general and do not differ from when implementing Industry 4.0 or Procurement 4.0.
6.0 Conclusion
The purpose of this study was to try and close the theoretical gap and extend the
understanding of the implementation aspect of implementing Procurement 4.0. As shown in figure 3:3 and 3:4, a gap in the literature has been identified, as there was a major difference in the number of studies made on implementation of Procurement 4.0 compared to Industry 4.0. It could however be established that since Procurement 4.0 circles around the
automatization of the procurement processes, the application of these technologies, and the effects they have on a company, is the center of the implementation. Some of the
implementation factors identified from the Industry 4.0 studies, are not affected by the shift from Industry 4.0 to Procurement 4.0. However, it was possible to identify and connect implementation factors that affected Procurement 4.0. Identified areas of effect were mainly organizational (managerial) and employee related factors.
The main focus when implementing Procurement 4.0 is the managerial need to support and inform the employees. With the automatization of tasks/ the process, the work for the employees will change, and is the reason for managerial support. The use of these
technologies will not only automate tasks but interconnect the network between supply chain partners. The interconnection of these networks will lead to the necessity of trust between partners. Since these are online technologies, cyber security is part of that needed trust.
6.1 Managerial applications
There are several aspects brought up in this study that implies that management plays a key role in the implementation phase of procurement 4.0 technologies. For starters, management needs to set a strategy that is inline with the company’s overall strategy and take
responsibility for the implementation and digitalization of the procurement processes. A successful implementation also correlates to knowledge and engagement of the management, where poor leadership usually results in a less efficient implementation phase.
framework for the implementation of the new processes, which can lead to a more confident approach towards new processes and routines. The management is also responsible for the most discussed barrier which is the lack of skilled personnel. If the implementation of new technologies is to run smoothly, It is absolutely crucial that the employees receive proper training of the processes and routines. Lack of knowledge not only leads to the
implementation phase becoming less efficient, but it might also lead to an increasing resistance to change and uncertainties amongst the employees.
6.2 Theoretical applications
Future studies can utilize the implementation factors identified by this study, mainly the stated factors related to the organization, management, and employees. Regarding management, support and communication are two important factors when discussing implementation of Procurement 4.0. Management will need to support the employees in the transaction period, and communicate why these technologies are being implemented, what will change and how it will benefit the employee and the company.
Regarding employees, the resistance to change and the need for training are two important factors to take into consideration. Here, once again, the support from management will be important.
Furthermore, this study presents well-documented literary sources on Procurement 4.0 and its effect on the procurement process, and the implementation of Industry 4.0 technologies, and the mix and analysis of these two subjects. The literature review also introduces a conceptual framework of how the implementation could be perceived and from there that the effects, and general implementation factors, could result in Procurement 4.0 implementation factors. This can be used as a theoretical basis in upcoming studies.
6.3 Future research
be done with a partner organization so the true effects and implementation challenges can be tested and documented.
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Figures
All figures are the author's own illustration Figure 2:1 Procurement 4.0 areas of technology
Figure 2:2 Procurement 4.0 implementation framework Figure 3:1 Research process of Systematic Content Analysis Figure 3:2 Search result headfield; Procurement 4.0
Figure 3:3 Search result headfield; Industry 4.0 Figure 3:4 Selection of studies for chapter 4.1 Figure 3:5 Selection of studies for chapter 4.2 Figure 4:1 Studies and their aims/purpose
Figure 4:2 Effects on the procurement process framework Figure 4:3 Effects on the procurement process
Figure 4:4 Industry 4.0 implementation factors framework Figure 4:5 Studies and their aims/purpose
Appendix
Annex 1: Identified Effects of Procurement 4.0 Technologies.
Effect Authors
Cost reduction Klünder, Dörseln & Steven Tripathi & Gupta (2020) Layaq, Goudz, Noche & Atif Karumsi
Improved traceability/transability Tripathi & Gupta (2020) Layaq, Goudz, Noche & Atif
Bag et al. (2020)
Improved Process Efficiency Tripathi & Gupta (2020) Bienhaus & Haddud
Layaq, Goudz, Noche & Atif Silva
Karumsi
Improved Communication/information
handling Klünder, Dörseln & Steven Tripathi & Gupta (2020) Bienhaus & Haddud
Bag, Wood, Mangla & Luthra Layaq, Goudz, Noche & Atif
Karumsi
Annex 2: Identified Implementation Factors on Industry 4.0
Title Implementation factor
Challenges and Driving Forces for Industry 4.0
Implementation 1. Lack of skilled workforce 2. Lack of managerial competence Vuksanović Herceg, Kuc, Mijušković & Herceg
(2020)
3. Lack of financial resources
4. Lacks of standards and conscious planning (Organizational challenges)
5. Resistance
Implementation of Industry 4.0 concept in
companies: empirical evidences Government
- Lack of governmental regulation and policies Da Silva, Vander Luiz et al. (2020)
Financial
- Need for high financial investments
Technology
- Poor technological infrastructure of the company
- Complexity of the technologies (technical components, functionalities and modes of operationalization)
Organizational management
- Poor organizational management.
Leadership will be instrumental in conducting changes in the company
- Lack of multidisciplinary practical knowledge - Lack of specialized and diversified suppliers - Lack of methodological procedures for adopting the concept of Industry 4.0 - Lack of understanding of the concept, practice and actions
- Lack collaboration between companies and suppliers
Human capital
- Internal resistances to organizational changes
- Lack of skilled labour (knowledge, experiences)
What Drives the Implementation of Industry 4.0? The Role of Opportunities and Challenges
in the Context of Sustainability Organizational and production fit
High implementation efforts regarding, e.g., costs and standardization
Muller, Kiel & Voigt (2018)
Employee qualification and acceptance
Employee fear and concerns Lack of expertise
Critical factors for the successful
implementation of Industry 4.0: a review and
future research direction 10 critical success factors
First critical factor: align the Industry 4.0 initiatives with organizational strategy Sony & Naik (2020)
Second critical factor: the top management shall support the Industry 4.0 initiatives wholeheartedly
Third critical factor: employees will be important for the success of Industry 4.0 Fourth critical factor: make your products or services smart
Fifth critical factor: make efforts to digitize the supply chain
Sixth critical factor: digitize the organization Seventh critical factor: change management Eight critical factor: project management Ninth critical factor: managing cyber security Tenth critical factor: Industry 4.0 and
The impact of Industry 4.0 implementation on
supply chains Organisational
Financial constraints Ghadge, Abhijeet et al (2020)
Lack of management support Resistance to change
Lack of digital vision & strategy Lack of expertise
Complex network systems
Legal & ethical
Legal issues
Problems related with coordination and collaboration
Data privacy and security issues
Strategic
Profiling and complexity issues
Lack of policies and support from government Lack of R&D
Unclear economic benefits Lack of digital culture
Technological
Lack of digital infrastructure Poor data quality and management
Industry 4.0 Implementation Challenges and Opportunities: A Managerial Perspective
Managerial; related to either the overall implementation of the Industry 4.0 concept or the implementation of the defined Industry 4.0 technology
lack of financial resources Bajic, Rikalovic, Suzic & Piuru (2020)
lack of human resources security issues
Technological; related to the
implementation of a specific technology category
algorithm development
Evaluating Industry 4.0 Implementation Challenges Using Interpretive Structural Modeling and Fuzzy Analytic Hierarchy
Process High Initial Investment Cost on Infrastructure Lack of Education and Skills Training Program Bakhtari, Waris, Sanin & Szczerbicki (2021)
Lack of Skilled Workforce (Worker 4.0) Data Security (Digital Trust)
Lack of Digital Legislation Lack of Standardization
Lack of Technology Integration and Compatibility
Organizational Constraints
Uncertainty of Return on Investment Employment Disruption
Expiring Old Business Models
