Comment: Industry 4.0 is disrupting the supply chain for good

The impact of Industry 4.0 could easily be identified as a threat and a disruptor to the traditional supply chain. The truth is that, when deployed correctly, this dynamic combination is the antidote to supply chain disruption.

In 2016, global supply chains were impacted by a series of unfortunate natural disasters including earthquakes and typhoons that ravaged nations throughout Asia. In 2015, analysis by insurance firm Allianz Global Corporate and Specialty found that between 2010 and 2014, the top five causes of business interruption loss globally were fires and explosions, storms, machinery breakdowns, faulty equipment or materials, and workforce strikes.

Current events that are continually unfolding must also be considered, such as the economic nationalism propelled by the election of Donald Trump and the UK’s impending exit from the European Union. However, there are less dramatic situations that can cause supply chain disruption on a more frequent basis – small acts than have a large impact, such as human error causing delays on the production line. This creates an obvious knock-on effect that directly impacts the rest of the supply chain.

It is clear that the supply chain is vulnerable to disruption. The traditional supply chain ecosystem is built around a rigid process that does not provide supply chain organisations with the flexibility to adjust to disruptions that will impact the bottom line, or the opportunity to predict or prepare for those disruptions.

The traditional process is typically governed by inaccurate analysis of the market that dictates supply chain operations in order to meet the predicted sales. A digitised reinvention of the supply chain will replace this inaccurate, siloed process with a flexible and agile solution that utilises data to severely diminish the impact of disruption.

Industry of Things

The moniker Industry 4.0 represents the fourth industrial revolution which in turn refers to the rise of data exchange and automation in manufacturing technologies. ‘Internet of Things’ (IoT) is a similar term that supports the same notion of the world becoming more connected and is widely used to describe connected devices used in both industrial and domestic environments. In theory, connected devices, whether in a factory or in the home, bring all of these environments together to create one interconnected eco-system.

Disseminating the data

From the shop floor to the factory floor, each connected device provides important data that can be fed into the digitised supply chain. To be of true value, this data must be tracked and visualised. Visibility is a key area of focus in leveraging data in the evolution of Industry 4.0, and it’s equally as important in the supply chain. Once the data is feeding into the supply chain and clearly visualised, the organisation can begin to think about disruptions before they occur. This can be achieved by manipulating the data in three key areas; supply chain design, event simulation and decision support.

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