Supply Chain Management

Industry 4.0: The Evolution of the Digital Supply Chain

The supply chain, despite its immense significance as well as potential, has been subjected to minimal evolution for more than half-a-century
Industry 4.0: The Evolution of the Digital Supply Chain
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Co-Founder and Director, LetsTransport
4 min read
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In the wake of unprecedented digitization and technological adoption, the supply chain is experiencing significant enhancements the world over. Digital technologies are paving the way for an evolved supply chain that goes beyond the traditional linear setup and is able to perform complex operations with a great agility and precision.

As per the 2017 MHI Annual Industry Report titled Next-Generation Supply Chains, about 80% of the respondents -- comprising manufacturers, distributors, and services providers -- affirmed that digital supply chain will be the dominant model within the next five years. The future is upon us in the form of an ever-connected and more dynamic setup: Industry 4.0.

Current Challenges within Supply Chain Management

The supply chain, despite its immense significance as well as potential, has been subjected to minimal evolution for more than half-a-century. There has been considerable disparity in terms of technology, which has led to an array of operational inefficiencies. These inefficiencies within the supply chain add considerable pressure on the overall functioningof the larger industrial ecosystem and can significantly affect product pricing.Each and every stakeholder, from the manufacturer down to the end-customer, ends up bearing the brunt of this technological gap.

Though there have been considerable changes in the approach to supply chain management, but most of these changes have not necessarily been transformative or even adequate to meet the growing demand for better methodologies.

Even today, when the recent wave of digitization has almost completely engulfed all industries, little has been done in the fieldof logistics. There's a significant lack of visibility within supply routes, creating bottlenecks andmaking the whole process more time-consuming, erroneous, and inefficient. Shipments are susceptible to a range of challenges, including low tractability, vehicular breakdown, disorganised supply itinerary, excessive idling, and ineffective last-mile delivery. Any of these factors could lead to the violation of SLAs (service-level agreements) and decreased customer satisfaction.

Industry 4.0 - A Futuristic Digital Supply Chain

The advent of cutting-edge digital technologies - cognitive computing, cloud networks, Big Data, geofencing, blockchain, machine learning, and IoT, to name a few -have been a boon for the modern supply chain.It is leading to the creation of a more sophisticated, interconnected, and enhancednetwork that can alter the dynamics of modern-day logistics. Such technologies are channelizing digital adoption into the supply chain and are gradually making them more effective. But an important question that arises is that apart from surface-level changes, can it really transform the traditional supply chain?

In addition to the apparent benefits that digital technologies usher in for the industrial supply chain, they are also actively enhancing and optimising existing processes and methodologies. Here's how digitisation is transforming the logistical landscape:

  1. Higher Visibility: The usage of IoT (Internet of Things) devices alongside sensors, RFIDs, scanners, and GPS-enabled devices increases the shipment visibility for the entire value chain.This paves the way for a systematic and data-driven approach which eliminates bottlenecks and facilitates significantly smoother operations.
  2. Enhanced Resource Utilization: The data-driven and interconnected nature of the digital supply chain alsoenables more effective resource utilisation. Technologies such as Big Data enable organisations to predict demand,which leads to leaner inventory andhighly favourable resource deployment. It also makes possiblea very effective vehicular maintenance strategy, thus ensuring lower vehicle breakdownandeliminating service disruption.Digital technology, moreover, warrants that midway additions can also be made to a semi-loaded vehicle en-route to its destination.
  3. Process Enhancement: Geo-coding and reverse geo-coding are doing away with issues that caused problems such as unperceivable or faulty addressesduring last-mile deliveries.The increased visibility also makes it possible to prepare the forward supply chain well in advance for an approaching shipment, thus ensuring shorter detention time at intermediate stops. Routes can also be planned with real-time traffic inputs and future projection using historic data.Moreover, geo-fencing ensures that vehicles maintain their prescribed path; any unauthorised diversion from the predetermined route by the vehicle is immediately communicated to relevantthe stakeholder.
  4. Highly Secure: Even emerging technologies such as blockchain are proving themselves to be very effective for wide-ranginglogistical use-cases. Blockchain functions on a decentralised and distributed ledger systemwhich is used in popular cryptocurrencies.This distributed ledger comprises of individual blocks which store information and cannot be altered on an individual level. This characteristic of the ledger makes it impossible for a cybercriminal to alter vital information for malicious purpose - making them more reliable.
  5. Warehouse Automation: Process automation also minimizes the human intervention and ensures round-the-clock operations with negligible errors at the distribution centre.

As we talk, technological deployments are actively being implemented in the market, finding application in various use-cases throughout the industrial landscape. They are making the supply chain more nimble, robust,and receptive, and above all, efficient!

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