How supply chains reach the potential of Industry 4.0

Posted by Ashwin Patil on June 1, 2017

You’ve likely heard about Industry 4.0, the fourth industrial revolution, in which new technologies are blurring the lines between physical and digital worlds and opening real time access to unprecedented data sources. This revolution will likely change the way products are conceived, designed, produced, priced and delivered to customers and likely transform today’s linear supply chains into dynamic digital supply networks.

Along with dramatic advances in computing memory, network connectivity, and processing, disruptive technologies, such as sensors and artificial intelligence, are forming the foundation for advanced analytics and informed decision making that take the mundane and time consuming tasks out of work. When these are applied to supply chains, the result will be connected, intelligent, customizable, scalable, and nimble digital supply networks. The new, integrated networks will enjoy a continuous flow of data some of it otherwise hidden. Management of these networks will involve gathering insights from distributed data, sensors, and connected assets and using the insights to create stronger outcomes.

Digital supply networks can be a powerful competitive weapon that adds value across the entire enterprise. Not only can they help reduce costs and improve asset efficiency, they can also enable growth in new markets, enable new products and services, help capture new audiences, and create a focus on service that drives loyal and repeat customers. Smart products connected to a digital supply network offer new opportunities as they capture data and insights that can be monetized across the network.

The potential for unparalleled ROI

Forward-thinking businesses that embrace the supply chain transformation have the potential to achieve substantial ROI. Revenue increases can result from:

  • The combination of smart packaging, applications, and data to push reorders and refills
  • Targeted marketing combined with inventory data and competitive pricing to facilitate dynamic discounting
  • Connections to customers at the point of consumption to drive sales
  • Digital product lifecycle management to accelerate delivery
  • Monetization of the data in network through subscription services

Digital supply networks can also contribute to improved margins by:

  • Lowering R&D costs through rapid prototyping
  • Identifying substitute materials and lower-cost sources
  • Identifying root errors and driving process improvements with sensors
  • Decreasing service costs via better digital insights
  • Decreasing transportation and liability costs with the use of automated warehousing robots, driverless trucks, and dynamic routing

Greater asset efficiency can be realized with:

  • Predictive maintenance that can maximize manufacturing performance and device reliability
  • Product quality and manufacturing efficiency improvements via use of a digital twin
  • Sensor-enabled labor monitoring that can optimize workforce assignments and scheduling
  • Automated inventory management
  • Augmented reality that can assist with maintenance, reduce errors, and rework costs

Digital supply networks will likely increase company responsiveness, especially in the case of unexpected issues such as natural disasters, contamination outbreaks, or supplier shutdowns. They will also enable proactive risk mitigation and fast responses to customer demands.

The time is at hand to welcome the technological changes accompanying Industry 4.0 and begin realizing the benefits of digital supply networks.

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