Impact of Industry 4.0 on supply chains

 

Industry 4.0 is rapidly transforming the way businesses manage its key functions. Digitization — helped by disruptive new technologies like IoT, AI, big data & analytics, machine learning, automation and robotics, cloud computing, block chain, 3d printing, etc., and the explosive growth of smart devices — leaves no business segment untouched.

Supply chain management, more complex than ever before, stands to greatly benefit from digital transition. While transitioning to a digitized, automated and fully interconnected supply chain requires considerable effort and long-term investment, the pay-offs are enormous. Bringing supply chains online can help companies achieve the next level of operational efficiency and bear significant costs reductions.

 

Benefits:

 

Greater Transparency and Accuracy

 Global supply chains may include thousands of suppliers that work within a company's supply chain ecosystem. In such situations, maintaining end-to - end compliance and real-time asset monitoring is important — any weaknesses in supply chain risk management can lead to delays to the supply chain, lost revenue and excessive costs.

Going digital helps businesses to monitor the entire supply chain in real time, for example knowing the exact position of the goods (on order, in transit or in a warehouse). Combining alerts from supply chain partners with IoT info, advanced technologies easily track inventory. This increases order accuracy and ETAs, optimizes inventory, and reduces associated costs.

 

Data-Backed Decision Making Leading to Cost Savings

Advanced machine learning algorithms help to more accurately predict demand for a given item by analyzing data (from sensors, social network patterns, weather, etc.). They also include distributions of probability of the expected amount of demand, as opposed to a single forecast number. This allows companies to quantify both the upside opportunities and the downside risks associated with the supply chain and prepare accordingly. Using such predictive analytics approaches has decreased predictive errors by approximately 50 per cent. More accurately predicting demand helps companies manage their inventories, resulting in cost savings.

 

Increased Interconnections and Collaboration

An integrated network also reduces lead times by improved coordination, as suppliers may provide early notice, increasing a company's risk responsiveness. Another important aspect of such closed-loop planning is the alignment of pricing decisions with demand and supply planning; prices can be adjusted according to anticipated demand, stock levels and replenishment capability. This boosts revenues and optimizes inventory.

 

Improved Warehouse Management

Digitization can greatly enhance warehouse management capabilities — especially in terms of material supply chain and transport logistics. For example, sensors can track goods in real time, and predict exactly how long a consignment will take to arrive. Such real-time monitoring guarantees that collection and delivery is made on time. The RFID technology can predict a product's exact location, even its exact position within a vehicle. Such accuracy allows managers provide staff with location-based orders, saving them time. It also reduces the work hours consumed per order.

 

"Intelligent" Supply Chain 

"Thinking" supply chains can "learn" to recognize risks and change the parameters of their supply chain to mitigate those risks. They are constantly evolving and learning to handle many exceptions without any human involvement, except in the case of any unforeseen risks, when human intervention is needed to determine the next course of action.

 

Greater Agility

Advanced supply chain solutions integrate supplier, service provider, etc. data into a "supply chain cloud," ensuring that all stakeholders make the same fact-based decision making. Such end-to - end, real-time visibility will allow companies to react more quickly to real-time disruptions and minimize risk. The emergence of "Supply Chain as a Service" will also considerably increase agility.

Clearly, in Industry 4.0 companies have much to gain from improving their supply chain management, and those who are reluctant to do so run the risk of becoming uncompetitive.