Industry 4.0 is a buzzword in today’s world. It has impacted every industry, and Logistics and Supply Chain Management has not been a deviation from the norm. Smart Supply Chain Management or Supply Chain 4.0 refers to the management Industry 4.0 causes upheaval and forces organisations to reconsider how they plan their supply chains. Several new technologies have arisen that are changing conventional workplace practices.
Megatrends and changing client expectations are other factors. Along with the requirement to adapt, supply chains also have the chance to utilise newly developing digital supply chain business models, reach the next level of operational performance, and change the organisation by implementing digitisation in supply chain management.
Supply chain management is significantly impacted by many megatrends, such as the continued global expansion of rural areas and the distribution of wealth to previously under-served areas. Another such trend is SCM 4.0. Below are a few characteristics of SCM 4.0:
Thus, if SCM 4.0 is adopted wisely, there is a significant role for IT in supply chain management.
Data within the supply chains has been ever-growing. The data gathered from various functions of supply chain management are not present in an integrated manner. If the information is not consolidated, it becomes pretty tricky for organisations to analyse the data and derive insights from it. Be it the planning stage or logistics, the role of IT in supply chain management is immense. Below are a few ways technology impacts supply chain management –
An in-store retail outlet is the last stage in a conventional consumer supply chain. When items are out of stock, either because they are normally on the shelf but are not when the customer visits the store or because they are items the customer wants to buy but the business does not carry, it commonly frustrates the customer. The solutions in these situations are well known.
The customer might want to speak to the manager, or the salesperson would go to the godown to check for the item. By this point, the customer may have given up and moved on to a rival or avoided making the transaction altogether.
Applications of IoT are increasingly being utilised to support “customer-managed inventory” (CMI) and “vendor-managed inventory” (VMI) management techniques. The “just-in-time” manufacturing revolution that Toyota and other corporations helped pioneer in the 1960s is equivalent to the supply chain management transformation brought about by these tactics. In such models, data is first supplied by a client, for instance, by scanning a barcode connected to a purchase, and is subsequently sent up the supply chain to the warehouse/distribution centre.
The information is then transmitted to the distribution centre so that orders may be fulfilled using technologies like RFID tags. Electronic Data Interchange (EDI) mediates the information in question. Since it is still difficult to predict demand accurately, inventory management models like scan-based trading or consignment share the risk between suppliers and retailers by allowing retailers to physically possess inventory while suppliers retain ownership. This way, the sale between the supplier and retailer does not occur until the final customer checks out at the register. There may be more intricate variations of this transaction.
EDI-driven CMI reduces forecasting mistakes along the supply chain by mediating several links between retailers, warehouses, manufacturers, and suppliers of inputs to production. All-in-all, it can help in future supply chain tracking and forecasting.
Supply Chain 4.0 may be viewed as a collection of technologies that are more likely to be implemented due to advanced management practices, or it can be considered an advanced management practice. Recent survey-based research has demonstrated that better management techniques, such as those connected to the adoption of Supply Chain 4.0, are likely to increase productivity and profitability and result in higher-quality outputs made using higher-quality inputs.
Supply Chain 4.0 aims to improve critical management skills such as efficient target creation, data gathering and analysis to track progress toward these goals, inventory management, coordination of targets/progress across production stages, and worker supervision and incentives.
By reshoring typical labour-intensive operations from developing nations back to developed countries, Supply Chain 4.0 technology may help businesses reduce the number of steps in supply chains. By lowering the amount of labour needed, these technologies increase the profitability of some production stages carried out in high-wage countries.
Thus, it decreases the incentive for businesses to locate there and the significance of low labour costs in determining comparative advantage and favouring the integration of various production stages at a single automated location. There could be a significant drop in monitoring tracking costs which would lower the overall costs. Supply Chain 4.0 methods are expected to be adopted and disseminated to varying degrees across businesses and nations.
Therefore, in the near term, it may lead to increasing industrial concentration in sectors where it is significant and income disparity between nations. Nations with better internet, companies with higher levels of digital entrepreneurialism, and businesses that have mastered earlier generations of supply chain management techniques are likely to benefit from using Supply Chain 4.0 techniques.
ALSO READ: Supply Chain Management and Operations Management go hand in hand
Below are two primary benefits of the integration of Industry 4.0 with SCM-
Supply chain 4.0 is the most technologically sophisticated version of the supply chain, allowing businesses to overcome various obstacles that the sector faces. Many industrial businesses are already making use of the distinctive qualities that supply chain 4.0 has introduced. In the upcoming years, over 80% of firms are expected to invest in linked technology, according to Gartner. Having said that, it appears to be a good opportunity to invest in this distinctive technology ecosystem and develop resilience for the future. To fully profit from these ground-breaking technologies, working in partnership with a reputable technology partner is integral. A postgraduate certification programme in Logistics & Supply Chain Management offered by the Manipal Academy of Higher Education (MAHE) through Online Manipal can serve as the perfect course for individuals aspiring to build their careers in digital supply chain management. Online Manipal has curated a programme to help such individuals take leverage of the growth of SCM 4.0. Visit Online Manipal to know more about the PGCP programme.
Information related to companies and external organizations is based on secondary research or the opinion of individual authors and must not be interpreted as the official information shared by the concerned organization.
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