Industry 4.0 revolutionized many industries, and now it’s being applied to supply chains. Dubbed Supply Chain 4.0, the application of the Internet of Things (IoT), robotics, and analytics to supply chain management can significantly improve performance and reach greater levels of customer satisfaction.
As supply chain management deals with greater obstacles and challenges due to labor shortages, increased consumer demands, and increasingly limited resources, Supply Chain 4.0 brings suppliers and customers together for a more streamlined supply chain process. See the importance of digitization for supply chains and the vital technologies making it happen.
The Future State of Supply Chain Digitization
Digitization gives companies an opportunity to address the needs of customers, mitigate the challenges on the supply end, and keep supply chains efficient in an industry that’s experiencing significant challenges.
The future of supply chains is:
- Faster: The aim of product distribution is delivery within a few hours, which can be done with advanced forecasting and predictive analytics of internal and external forces. Weekly forecasts are necessary to address the demands of fast-moving products.
- Flexible: Real-time planning provides flexibility in the face of changing supply conditions or demands. Planning is a continuous process intended to react to changing conditions dynamically. Customers can reroute shipments for their convenience, for example.
- Granular: Customers want increased personalization, leading the push toward micro segmentation and mass customization. Customer needs are addressed in granular clusters with a broad suite of products and “logistics menus” that can be customized. Some of the concepts fueling this granular approach include drone delivery.
- Accuracy: Supply chain management requires real-time, end-to-end transparency through every step of the supply chain, from the broad business processes to the granular details like the pinpoint location of a delivery truck.
- Efficiency: Efficiency in the supply chain is enhanced by automation using robotics and autonomous trucks. These processes can be used for everything from packing and shipping to autonomous transport.
Here are some key technologies for the digitization of the supply chain.
Smart technology is working its way into nearly every industry, and logistics is no different. Automation, remote fleet management, cargo tracking, and robotics can be used to gain real-time insights into the status of a shipment and a vehicle’s location in the transport network.
Companies are also using automation to stay agile. Mundane tasks can be automated to free time for tasks that only humans can perform, optimizing the overall business processes. Automation limits human error as well, helping companies cut down on lost time and lost revenue incidents due to mistakes.
Business intelligence technology are used to stay flexible and optimize the supply chain according to changing market conditions. IoT technologies with sensors provide real-time data insights for rapid action, giving companies the ability to adapt in real time without human involvement.
Cloud-based GPS and RFID technology is playing a role in tracking and remote management. These technologies can provide real-time insights on the location of cargo within the warehouse or transit network, and monitor transportation efficiency and transparency.
Supply Chain Management Driven by Demand
Agility is vital to transportation and logistics. Demand-driven supply chain management has been a component of logistics for years, but the new developments in data and insights require a higher level of agility to stay relevant and meet changing demands.
IoT and sensor technologies with machine learning and predictive analytics are necessary to collect and analyze environmental data and provide real-time insights, allowing rapid responses when external or internal conditions shift.
Enhanced Communication with Digital Thread
A digital thread creates a closed loop between the digital and physical worlds. This communication framework can be used to share information to consumers and keep the entire supply chain responsive as volume, design, and through-life service changes.
Integrating a digital thread can only be effective if people and workflows are included, however. This creates an integrated value chain and ensures collaboration between suppliers and customers. In return, both parties enjoy better efficiency with lower costs.
Cyber Security and Risk
One of the significant challenges with digitization, for both supply chains and other industries, is the inherent security vulnerabilities. The digital supply chain leaves opportunities for hackers and other bad actors to find ingress points in the supply chain and exploit these vulnerabilities. In addition, the integration of multiple parties means that security must be prioritized across every aspect of the network – not just the company itself. Suppliers can create vulnerabilities that allow access to manufacturers, and vice versa, which has wide-reaching ramifications for the partnerships and the customers within the ecosystem.
End-to-end security measures are the only option to close access points for hackers. Both suppliers and manufacturers need a strict security protocol and evaluation process to monitor and assess risk. Both individual organizations and partnerships need to consider the security issues across the entire ecosystem and address them with strict protocols.
Changing customer demands are one of the key drivers behind current supply chain challenges. Customers are shifting their habits and have expectations of rapid order processing and delivery, creating more pressure on businesses. Delayed orders, incorrect delivery, or excessive processing time could cost a business a customer, so logistics and distribution companies need to ensure efficient processes. To address this, some manufacturers have adopted centralized distribution and real-time inventory management systems.
Customers also want customization and better supply chain transparency. Additive manufacturing and rapid prototyping are offering opportunities to restructure supply chains and address these demands. In addition, manufacturers are choosing on-premises capabilities to reduce waste.
Supply Chain 4.0 Is the Future of Logistics
Like other industries, the logistics industry is experiencing disruption from the technology of Industry 4.0. Automation, robotics, data analytics, cloud-based GPS, and other technologies have the potential to revolutionize supply chain management and meet the new consumer demands with improved organizational performance. With the right technologies in place, the digitization of the supply chain offers opportunities for companies to increase agility, flexibility, and efficiency to optimize processes and serve customers better, in turn, gaining more revenue.
About the author
David is CEO of DB Schenker USA, a 150 year old leading global freight forwarder and 3PL provider. David Buss is responsible for all P&L aspects in the United States, which is made up of over 7,000 employees located throughout 39 forwarding locations and 55 logistics centers.