Industry 4.0 - The Supply Chain Perspective

Given the nature of global supply chain set up in I 4.0, it is critical to ensure dynamic re-configurability across the supply chain both upstream and downstream
I4-supply (PresseBox) (Porto, ) Manufacturers around the world are preparing for the new industrial revolution, Industry 4.0, however, is it just the manufacturers who need to prepare for I 4.0? How does it impact the supply chains of industries globally?

I 4.0 can be viewed as the convergence towards digitization of global supply chains, which includes in its umbrella the entire business process of all industry segments. Its impact depends on the maturity and level of automation in the specific industry segment, but it will be omnipresent in all industries and applicable throughout the supply chain.

From the perspective of a Chief Supply Chain Officer (or CSCO), it is important to view I 4.0 in a holistic manner and realize that information processed from manufacturing plants is all but a part of a larger agenda. Entire supply chain needs to become connected end-to-end and remain transparent for I 4.0 to be truly applicable for an organization.

The changes will occur in factories, where smart manufacturing will completely change the way manufacturing is currently practiced. Customer focused manufacturing will require plants to be highly automated and flexible, thereby necessitating suppliers and dealers to transform their operations to deliver more customized and demand based service. Factory layouts will change and will require business partners to adapt to changed product life cycles. Larger amounts of data will flow to and from manufacturing plants, thereby requiring the IT infrastructure across the supply chain to become capable of handling the high volumes of information being shared.

Geography does not matter

Internet based connectivity is the second major change. Because virtually connected operations will no longer require geographical connectivity - manufacturers may have RM suppliers in Japan, customers across Asia and manufacturing plant in North America - conventional business model will require supply chains to remain connected through the internet and yet be able to function in a more precise and time bound manner than ever before.

Digitization of logistic components, right from pallets to transport trucks, will allow smarter tracking. Customer feedback collected from all across the globe will be communicated with suppliers, and modifications will made based on web based communications. This way of manufacturing will mandate the CSCO to consider connectivity and communication across supply chain as a primary objective.

Industry 4.0 truly adds value to operations by providing the capability of analyzing large amounts of data. Big Data analytics is one of the pillars of this new revolution and supply chain personnel need to understand that there would simply be more information coming their way. Everything involved in a process, right from a warehouse rack, to a guillotine machine, to a supply container, will have the ability to communicate, which will then require analysis and the CSCO needs to be ready for this.

Highly automated process equipment and complex IT infrastructure does not eliminate the need for workers. On the contrary, it creates the need for highly skilled workers, who can effectively utilize the information available at their disposal. Future workforce would need to be competent at problem solving and systems engineering. It is crucial for a leader to understand the current workforce and their capabilities, in order to help modify the existing human resource to be ready for the challenges I 4.0 brings.

Another key aspect for the CSCO to consider would be the end-to-end visibility across the supply chain. Given the virtual and geographically diverse set up in I 4.0, ensuring that suppliers are always connected with the organization and that their IT applications in place can truly capture and make sense of data coming towards them is extremely important. It is also necessary that communication across the supply chain remains bilateral, data and information should flow to and from partners. Say information regarding an assembly made in China, received from a customer in Africa, should reach to the supplier in China in real time, even if the information is communicated to the OEM located in France.

Operations in-(virtual)sync

With the rise of consumerism even in B2B transactions, it is almost a compulsion for value chains to incorporate and modify their operation to suit mass customization. Demand driven manufacturing beckons all production plants in the supply chain to modify operation and become flexible enough to change, based on the need placed by the marketplace. This kind of flexibility requires synchronization of the virtually connected operations and thereby should be one of the top priorities of a CSCO.

The entire supply chain should react or rather act in unison based on fluctuations in demand and thereby prevent imminent losses and improve chances of gaining combined profitability. Achieving mass customization is only possible requirements can be translated to shop floor action items in real time, irrespective of where production takes place physically.

Given the highly demanding nature of I 4.0 from the agility and connectivity perspective, it is safe to say that current sort of singularly linked supply chain networks will no longer be applicable. It is important to realize that now the end customer should be the focus of each and every partner in the supply chain and this would require re-configuration and re-alignment of current supply chain structure.

Smart devices are forming what one refers to as new ‘Product Innovation Platforms’. The leaders in supply chain will need ensure their systems are modified enough to facilitate faster product development, smarter manufacturing, better managed product life-cycles and higher process agility & resilience.

So if you are the top boss heading a global supply chain, you have a lot to think about. Key deliverables from a supply chain perspective is to have a well connected supply chain which is agile enough to meet demand based requirements, which can adapt to major changes with minimum effort.


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