Over the last 30 years logistics has evolved from a purely operational function that reported to sales and manufacturing to an independent management function, which is already being spearheaded by dedicated teams and a CSO (chief supply chain officer).Â
From managing inventory, ensuring steady supply of production lines and timely delivery to customers, the emphasis of supply chain has shifted to advanced planning processes such as analytical demand planning or integrated S&OP. The new supply chain is all about integrated operations from customers to suppliers.
Trends in supply chain
Industry 4.0 is encouraging companies to reimagine their supply chains. Emerging digital transformation services and technologies such as the cloud, the internet of things (IoT), artificial intelligence (AI), 3D printing, robotics, autonomous vehicles, drones, and augmented and virtual reality are pushing the value chain toward hyper-transparency, real-time data sharing and predictive analytics.
Rural areas worldwide are consistently growing, causing economic activity to shift into regions that were earlier ignored. Pressure to reduce waste, carbon emissions, and traffic regulations for socioeconomic reasons add to the challenges faced by logistics companies. Changing demographics also mean reduced labor availability and heightened ergonomic requirements, leading to increased pressure on logistics.
Customer expectations are also growing: the world of online delivery has resulted in increasing service expectations, and a strong granularization of orders. We have come a long way from Henry Ford’s assembly line, and the emphasis has shifted from mass-production to customization. Online shopping also means increased visibility and access to a wide variety of options for the customer, which further necessitates the need for competitive supply chains
Advantages of supply chain 4.0
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- Supply chain 4.0 will be faster, reducing delivery times to just a couple of hours. Thanks to advanced forecasting approaches, et predictive analytics, supply chains will now be able to take market trends, weather, holidays, and more into account providing an accurate forecast of customer demand.
- Future supply chains will also be more flexible and agile. Real-time planning will endow supply chains with the ability to react to changing demand or supply situations effortlessly. Increased flexibility throughout the delivery process can allow customers to reroute shipments to a more convenient location, after they’ve been dispatched.
- Greater visibility: Going digital enables companies to track the entire supply chain in real time, including exact location of goods (on order, in transit, or in a warehouse). Advances solutions can even track inventory by combining updates from supply chain partners with IoT data. This improves ETAs (reducing out-of-stock situations), enhances lot and batch control, optimizes inventory and lowers related costs.
- Better collaboration: A fully integrated digital supply chain management solution enables information to flow seamlessly between suppliers, manufacturers, and customers. It breaks silos and transforms supply planning into a continuous process.
- An interconnected platform also reduces lead times through better communication, as suppliers can provide warnings early, increasing a company’s responsiveness to risk. It also integrates pricing decisions with demand and supply planning, which means that prices can be changed as per the expected demand, stock levels and replenishment capacity.Â
- Digitalization can also significantly improve warehouse management capabilities, especially the aspects of supply chain inventory and transportation logistics. As described earlier, sensors can track goods in real-time, and accurately predict how long it will take for a consignment to arrive. Such real-time tracking ensures on-time pickup and delivery.
- RFID technology can pinpoint the exact location of a particular product, allowing managers to provide location-based instructions to workers. This greatly lowers labor hours consumed per order. Thanks to tracking devices, companies can optimize the number of carriers per shipment, and inventory storage per square foot.Â
A 3-step roadmap to achieve a successful implementation of Supply Chain 4.0
Use real-time data to synchronize supply and demand
According to the Hackett Group study, Analytics: Laying the Foundation for Supply Chain Digital Transformation, 66% of supply chain leaders say advanced supply chain analytics will be critically important to their supply chain operations in the next two to three years.Â
Predictive business intelligence using artificial intelligence, machine learning, asset tracking and social media intelligence applications can be used to produce accurate, statistics-based demand forecasts that leverage current, historical and external information like point-of-sale data from a single, enterprise-wide data repository.Â
A cloud-based dashboard, augmented reality (AR) or virtual reality (VR) applications can provide 360-degree visibility, traceability and collaborative platform into real time forecasts related to supply and demand variances.
Implement a strong supplier alliance program
The focus of Supply Chain 4.0 has shifted from static command and control to a dynamic real-time partnership between organizations and their suppliers. The success of a Supply Chain 4.0 implementation partly depends to the ability to forge meaningful integrated relationships with supply partners and customers.
Using supplier certification programs, blanket POs and technologies like cloud-based dashboards, asset tracking for construction and manufacturing, organizations can ensure better quality, efficiency, transparency, traceability, and on time delivery with minimal risks, resulting in bottom line growth for all stakeholders.
Customize the supply chain to your specific business requirements
Developing a new supply chain model that works for your organization begins with identifying the building blocks of Supply Chain 4.0, and then choosing appropriate building blocks to create a customized model. The final step involves developing a strategic plan for success, followed by rigorous execution.Â
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