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How Industry 4.0 makes supply chain more efficient

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Published on Thursday, 18 January 2018

The LCL focused on “Supply chain management 4.0” in its executive education workshop on 15 and 16 January.

Commonly referred to as Industry 4.0, we witness the fourth industrial revolution that brings together cyber and physical systems, coupled with pervasive (reactive) sensing and massive volumes of data that is crunched by advanced analytics systems yielding major improvements in efficiency.
Embracing Industry 4.0, supply chains adapt and change as well. Quoting Kai Hoberg, the lead instructor of the workshop, “in an end-game, live information on a machine’s condition could trigger production of the 3D-printed spare part that is then shipped by a drone to the plant to meet the engineer that is scheduled to replace the part.”

What are the key factors for successful implementation of supply chain 4.0?

Starting with effective control towers, organizations can enable end-to-end visibility to facilitate real-time business planning.

These efforts can be amplified with supply chain analytics. Namely, by leveraging the availability of data and quantitative methods, new insights can be created to gain insights and improve decision making throughout the supply chain: sales, inventory and operation planning, transportation, warehousing, sourcing and so forth. As an example, one can consider how detection of out-of-stock has evolved: moving from manual, through RFID and optical solutions, nowadays analytics can provide a step ahead into stock-out detection via inferential statistical analysis.

The next key to implementation are the smart devices which provide sensing, processing and connectivity.

As these devices become wide-spread in supply chains, it is important to use them efficiently and harvest the data generated. At the moment, these devices are effectively used for order generation and inventory availability, and provide a tool to lock-in demand.

Increased level of automation and artificial intelligence as a key

The physical layer of logistics is also changing with increased level of automation and artificial intelligence. While the implementation are primarily cost-driven, the new systems often provide ample of other benefits such as increased flexibility and shorter lead times. While exciting, wide spread implementation may take a while due to technological challenges, regulatory concerns, and scale issues, among others.

With new technologies and innovations, new business models emerge. Some organizations disappear, some adapt, and some re-invent themselves as leaders in innovation. Embracing technologies can be aligned along two dimensions: efficiency opportunities and growth opportunities. Achieving both is the ultimate goal. The transformation process can be full of hurdles, but managing the process is critical to ensure the highest chances of success.

Benny Mantin concluded with the importance to be duly prepared to change: “keep in mind: SCM 4.0 is a journey, we know where we start, but we don’t know where the path will lead us.”

 

The next LCL executive education workshop will be dedicated to the digitalisation of supply chain management and its impact on the supplier interactions. Registration are open. 

 

supply chain management 4.0 workshop class photo