How Will Industry 4.0 Impact Supply Chain Network?

As Industry 4.0 infiltrates the supply chain, it is clear that it will have a significant impact on everyone involved. Yet the question is, how is it?

Industry 4.0 and supply chain

As you would expect from a name such as Industry 4.0, profound and revolutionary changes are occurring in various sectors, including manufacturing, development and the modern supply chain.

Rightly nicknamed the fourth industrial revolution, and therefore the 4.0 in the nickname, it causes a general trend to improve the exchange of data and efficiency of the world. automation for a newly digitized landscape.

The 3.0 industry was the widespread adoption and deployment of automated technologies. advanced robotics and programmable logic controllers are not the least. Towards the end of this era, better and more efficient automation systems were introduced and players now use modern smart devices and data to improve and optimize systems.

In three words, the Third Industrial Revolution saw the adoption of computers and more modern technologies. The fourth revolution is to use the data collected by these platforms. AI, machine learning and advanced analysis platforms will collect real-time data from sensors and IoT machines to improve overall operations. This idea of Contextual Monitoring and Data Flow is essential to the creation of Industry 4.0.

This will have a huge impact on manufacturers and suppliers of goods. It will also affect all parties and processes involved in the modern supply chain.

Innovative Perspectives

Big data, machine learning and more powerful analysis tools can only mean one thing: an ever-growing library of innovative information. This information will be used in a new and interesting way, including the supply chain. In supply chain management, this system eliminates the most archaic processes and updates them to streamline them, make them more efficient and more agile. The next generation supply chain or the next logical leap forward, concerns the operation of the industry.

Digital data and content are at the heart of this process. The data can, for example, be used throughout the supply chain to identify inefficiencies and problems of logistics, transport and even distribution of goods. The machine learning and artificial intelligence can further exploit this information and extract repeatable trends and ideas.

A total of 66% of Supply Chain Leaders stated that over the next two or three years, advanced supply chain analysis will be "Of utmost importance" for their operations.

Improving Transparency and Decreasing Linearity

The conventional supply chain has a cascading effect. Each part or solution all along the chain has an impact on everything else – called "chain". Manufacturers rely on suppliers for a whole range of products and items, which they use to assemble their products. Distributors and retailers rely on these manufacturers to produce and deliver the products. All information tends to go in one direction.

Ineffectiveness occurs when part of the chain is facing a problem or a problem. This problem then aggravates the situation and continues to affect the entire chain. This process can have dreadful consequences. If a supplier misses an item or product, the manufacturer must then defer production to find an appropriate alternative. Retailers still waiting at the end of the chain are then left with a stock or an exhausted stock.

With Industry 4.0 and the introduction of smarter and more informative processes and devices, this will change dramatically. The so-called digital supply chain offers enormous improvements in terms of transparency and visibility. This process can now completely transform the once linear nature of the industry into something more modular. As a result, the people involved are no longer part of a chain of events and cascading processes. Each can serve more as a point or node on a network.

A manufacturer, for example, can predict the shortage of supply and take the necessary action. This leaves a greater decision-making capacity for the manufacturer on hold. They can quickly find an alternative or propose a new solution – mitigating the impact of chain breakage.

Strengthening Relationships and Collaboration

Improving transparency also helps forge stronger and more lasting relationships throughout the supply chain.

Businesses can create even more trust and support from their customers by opening up their processes and sharing how operations are managed. Today, many consumers care about the environmental and economic impact of businesses on the world around them. In some cases, people will outright refuse to do business with an entity that is harmful to the environment.

But it goes well beyond the end consumer. This also impacts relationships with parties, organizations, and other teams involved in the supply chain. Take a look at the food and beverage industry, where it's extremely easy to damage or contaminate food. Simply storing a type of food at an inappropriate temperature can lead to problems. However, with smart systems and data, suppliers, distributors and retailers can all stay informed and aware of the evolution of goods as they move from one part to the other.

Every person can determine exactly where things went wrong and what causes contamination or damage. It also allows them to take the necessary steps and build trust, even under stressful conditions.

The 4.0 industry certainly has the potential to dramatically improve communication and collaboration within the supply chain.

Reduction of transaction and operating costs

Smarter and more complex systems and information imply that parties can take steps to identify problems and weaknesses more quickly. Over time, they can regularly improve existing operations to become more efficient and streamlined. This has the effect of reducing associated costs.

In the supply chain, Big Data Platforms will also help reduce transaction costs, increase productivity, and create better systems. Big Data can be exploited in many ways to identify and discover new areas of efficiency. Massive data can in particular help the finances and highlights the main expenses and indirect costs. By reducing indirect expenditures, firms can save more than 25% of their overall expenditures.

This is truly a winning solution for the entire industry, as well as for everyone involved along the supply network. Accenture estimates that the first users of the IoT, or the first wave, will increase their productivity by 30% as well as their maintenance costs by 30%. Just imagine the impact this will have on cost savings for most organizations.

Industry 4.0 Creates Opportunities

The introduction of smarter and more detailed devices and systems also means that teams will collect more disparate forms of information. This may seem almost insurmountable, especially if you take into account the amount of data that will flow through a supply network, but that's where AI and machine learning solutions come in. With the tools and appropriate digital platforms, these processes can be almost fully automated while improving accuracy far beyond anything humanly possible before.

This system highlights the considerable potential for new opportunities and strategies. With improved and more accurate information, greater transparency, enhanced collaboration and cost reduction, parties along the supply chain have more leeway to experiment and diversify. This encourages the adoption of new and exciting new strategies and methods that otherwise would never be explored.

For example, 3D printing allows mass customization in which manufacturers can create products on demand, on order and with incredibly complex customization options. Such a configuration is only possible through the use of modern, intelligent and data-oriented technologies, such as online and mobile commands and production systems activated by IoT.

The future of the supply chain is extremely promising, thanks largely to the adoption of Industry 4.0.

Megan Ray Nichols

Technical writer and blogger

Megan Ray Nichols is a technical writer and independent blogger. She enjoys discussing the latest science and technology news on her blog, Schooled By Science. When she is not writing, Megan enjoys watching movies and hiking with friends.

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