What does industry 4.0 mean to supply chain?
Introduction: This paper presents a preliminary analysis of the impact of Industry 4.0 on SCM and aims to provide a thought towards Supply Chain 4.0. The scope of the analysis has been intentionally limited to include only four functions within a supply chain, i.e. procurement, transport logistics, warehouse and order fulfilment. This is presented with respect to the Key Performance Indicators (KPIs) of the SCM. It is hoped that the current output will open up future pathways to draw the bigger picture and thus conduct a fuller analysis of these impacts.
Research Method: The research method for this paper is based on review of researcg papers with SCM focus. SCM components and KPIs for each of the components were identified for better understanding of SCM and then the impacts of the changes in technology on each KPI were analysed. The opportunities and threats exhibited in each of the technologies for each of the KPIs were then discussed by linking them with each area of the SCM under study. KPIs are defined in order to obtain quantifiable measures to compare if there are changes over time. The identification of these KPIs is, however, rather complicated because there are no clear boundaries between the levers (buy, storage, sell, move).
“Buy” lever : The performance parameters are, for instance: quality standard for the raw materials, reject rate, service level, order accuracy etc.
“Store”: The performance parameters selected are for instance truck time at the dock, accurate receipts received, time from receiving to pick location, labor hours consumed per order, time from picked order to departure, etc.
“Move” : The KPIs to be analyzed are for instance: truckload capacity, turnaround time, shipment visibility, on-time pickups, on-time delivery, etc.
“Sell”: The KPIs selected are for instance: product availability, customer experience, response time, time to market, etc.
Results and Discussion: The results were created for technologies affecting each KPI, if a technology is affecting KPI then reason behind it is mentioned in form of template. Technology affecting KPIs in warehouse and transportation logistics were presented in form of template. The opportunities and threats with respect to industry 4.0 technologies were also presented in form of template. The aim of this paper is to fill the gap in the implementation of technologies involved in Industry 4.0 within the supply chain, particularly the warehouse, transport logistics, procurement and fulfilment functions. Through the analysis performed, the results showed that the areas which will be most affected by the introduction of Industry 4.0 are the order fulfilment and transport logistics. Finally, within the procurement function, Industry 4.0 shows 71.43% of opportunities, the remainder being opportunities or threats.
Conclusion: From the analysis performed, it can be seen that the implementation of certain technologies, such as virtual and augmented realities, 3D-Printing and simulation, results will all result in opportunities. On the other hand, big data analytics, cloud technology, cyber security, the IoT, miniaturization of electronics, AIDC, RFID, robotics, drones and nanotechnology, M2M and BI could be opportunities or threats for the organizations. The fact that some technologies can result in both of opportunities and threats is because all the different areas are interconnected, with no clear boundaries between them, depending on where it was analyzed, it could have a positive or negative connotation. The most relevant benefits are increased flexibility, quality standards, efficiency and productivity. This will enable mass customization, allowing companies to meet customers’ demands, creating value through constantly introducing new products and services to the market.
Limitation and future scope: Author calls for empirical research in this area. Due to the fact that the implementation of these technologies will be accompanied by a new environment where people work with machines, he believes that legal aspects, liabilities, insurance and ethics should be considered. The work should be continued with some empirical work and assessment of how companies should digitally integrate their supply chain with real implementation and data.
Summarised by Kirti Nayal, 1806007 Fellow Research Scholar 2018 Batch
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