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Digital Supply Chain — Impact of Industry 4.0 on Supply Chain Management

Digital Supply Chain — Impact of Industry 4.0 on Supply Chain Management

October 11, 2018 - Hitendra Rathore

Read Time 3 Mins.

The Fourth Industrial Revolution — Industry 4.0 — has begun.

The emerging technologies and applications in automated data gathering using the Internet of Things (IoT), machine learning and artificial intelligence, as well as analytics and cloud computing systems in play today are already changing the way we do business.

The supply chain industry is also undergoing a transformation, adopting digitization, automation, and centralized business intelligence systems. According to a study on Industry 4.0, conducted by PwC, almost 33% of 2000+ respondents said digitization of supply chain operations is well underway in their companies.

The introduction of cyber-physical systems and the Internet of Things (IoT) is revolutionizing the pace of this transformation in supply chain management (SCM).

The development of supply chain visibility solutions for every level — manufacturing, procurement, logistics, warehousing, and fulfillment — has made companies with integrated digital supply chain functions far more efficient than their predecessors.

Let’s dig in to the impact of Industry 4.0 on each component of the supply chain management process.

 

Planning & Execution

The planning and execution phase in SCM focus on end-to-end process and maintaining a balance between supply and demand. Decisions are now more data-driven, and the integration of automated end-to-end data aggregation solutions will be a game changer in deciding the more practical approach.

The integration and digitization of operations eliminates silos in enterprises, allowing decision-makers across functions to respond to disruptions in real-time. Whether it’s a shortage of raw materials, adapting to a change in market dynamics or customer preferences, identifying (and nullifying) the root cause of inefficiency in day to day operations, or gathering market intelligence to plan for the future, a digital supply chain can stay on top of it all with minimal need for human intervention.

Supply chains with an effective ERP solutions and integrated monitoring and tracking solutions can handle day-to-day operations as well as strategic initiatives with ease, giving you the intelligence and insight to be future ready.

 

Procurement & Manufacturing

Customer demand, manufacturing and holding capacity, and the current supplier landscape, these are some of the factors that affect procurement and its operational overheads.

The integration of live demand data from points of sale, current performance and inventory data from manufacturing and holding facilities, as well as up to date information on in-transit raw material or inventory from suppliers can help streamline procurement and manufacturing operations to the point where buffer or safety stock is no longer necessary.

Industry 4.0 is all about digitization and the integration of monitoring, tracking, and analytics technologies to enable seamless SCM and improve operational efficiency — both now and in the future — for existing processes.

 

Logistics

Logistics & transportation management, by far, has the most to gain from supply chain digitization and Industry 4.0.

The automated real-time management of a large number of shipments and in-field assets like shipping containers is going to be the next big leap in improving productivity.

Real-time shipment tracking solutions will allow supply chain managers to optimize routes, fleets, and field asset utilization in real time, with the added advantage of automation to reduce the need for human intervention.

Automated logistics management systems improve responsiveness to changes that affect throughput, ETA, unnecessary overheads like fuel costs, and the ability to hit narrowing windows of delivery, especially for last-mile logistics.

 

Warehousing

Industry 4.0 warehouses will function as an autonomous entity, with automation handling the majority of tasks like space management, inventory tracking, and order picking. Simplifying or reducing labor-intensive tasks can boost efficiency and reduced operational overheads.

When coupled with end-to-end supply chain visibility solutions for inbound or outbound logistics, smart warehouses can anticipate the inflow of goods and space requirements, requisition assets like personnel or pallets, and update enterprise inventory holding and throughput levels in real time.

Warehouse inventory tracking and management  systems coupled with other emerging technologies like augmented reality (AR) could also be an option to increase process efficiency. DHL experimented with augmented reality software and smart glasses to improve the order picking process at their Ricoh warehouse facility in the Netherlands. As a result, the efficiency of the picking process increased by 25% when augmented reality was implemented.

 

Conclusion

The impact of Industry 4.0 on the digital supply chain isn’t limited to better efficiency and productivity.

Adopting supply chain digitization solutions will give you an edge over competitors, improve your ability to service customers and build better business collaborations, and generate more avenues for revenue. Start early, take small steps, and implement pilot projects to completely transform your digital supply network in due course of time.

 

Industry 4.0 - Overcoming the Challenges of Supply Chain Digitization

 

 

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