How Industry 4.0 Will Influence The Supply Chain

Industry 4.0 is predicted to bring about major changes for many businesses. These changes will also influence the supply chain including the relationship between customers and suppliers as there will be a change in the traditional organizational boundaries.

Industry 4.0, also known as smart manufacturing, refers to a new era of the Industrial Revolution and its main focus is on automation, machine learning and using real-time data. It aims to digitize business operations such as IT, engineering, production and logistics to ensure that these operations are more holistic and connected.


How Does Industry 4.0 Impact The Supply Chain?


Here are some ways that Industry 4.0 is predicted to influence the traditional supply chain.


1. Smart Factories

A smart factory invests in technology processes such as automation and flexible manufacturing in order to implement production solutions which will be able to fulfill the needs of today’s market. It aims to integrate and link customers and business partners in order to optimize product lifestyle changes.

All these changes will ultimately change the layout of the current factory, allowing businesses to respond better and quicker. Smart factories will bring about potential to save costs and bring about innovation in production systems.


2. Advanced Analytics

More and more businesses will be forced to use production data as it provides insights on production processes, resource utilization, product development, and quality control. Businesses which capitalize on the usage of data and predictive analytics will be able to experience faster, cheaper, safer and more reliable manufacturing processes. This allows them to save their time and their resources as well.


3. Intelligent Supply Chain

Industry 4.0 contains supply chain technology that assists businesses in gaining real-time insights regarding fleet status and location, ensuring better remote fleet management. These insights are gained through Radio Frequency Identification technologies or cloud-based GPS which give real-time updates on the cargo including when it is in transit.

The real-time insights offered can be used to improve transportation performance and improve any delivery route issues. The business is able to gain full visibility of the transportation processes and become more responsive throughout the whole supply chain system.


4. Usage of the Digital Thread

A digital thread is a communication network that allows you and your consumers to share information, enabling you to create a feedback loop. This not only connects you with data, but your systems as well. Improving your data communication can transform your product chain making it more responsive.

A digital thread can integrate your value chain between your suppliers, customers and your organization. This integrated value chain where suppliers and customers collaborate can reduce inefficiencies in your supply chain, create better knowledge of your supplier performance and customer behavior, and lower your costs.


5. Demand-driven Supply Chain Management

Embedded sensor technologies are used for demand-driven supply chain management enabling better demand forecasting. These sensors can monitor, collect and report data of the current data environment and then respond based on remote instruction. This will prepare businesses for any changes and respond to these changes quicker.




What Are The Benefits of Industry 4.0?


Industry 4.0 offers ROI opportunities as well as plenty of benefits in your production line which include:


1. Increased Transparency and Accuracy

Industry 4.0 is digital-based and offers tools that assist businesses with real-time visibility of their supply chain such as locating goods in a warehouse. They also receive updates that allow them to keep track of their inventory.


2. Improvement in Warehouse Management

Through smart factory which has multiple smart devices that are capable of self-optimization, businesses can reduce their production downtime. Industry 4.0 includes machine monitoring and automated decision-making which allows you to produce more at a faster rate.


3. Reduce Costs

Investing in a smart factory might cost a lot, but in the long run it is able to reduce costs for your business. This is because of faster manufacturing, better resource management, reduced product quality issues, reduced operational costs and decreased machine and product line downtime.




What Are The Challenges Industry 4.0 Poses?


Industry 4.0 might have great growth opportunities, but with great opportunities come great challenges. Here are some challenges industry 4.0 poses.


1. Capital

Investing in new technologies such as Robotics, IoT and AI can be quite expensive. This would mean adding huge capital investments which might not be easy for smaller companies.


2. Security Risks

When implementing industry 4.0, the risk of security risks occurring is very high. During the integration process data leaks, security breaches and cyber theft are likely to occur which can have negative financial implications and damage the brand’s reputation.


3. Data Privacy

Industry 4.0 makes the industry more interconnected; and businesses gather and analyze manufacturer and customer data. There becomes data privacy concerns as this data could easily be leaked and it could be challenging for all the parties involved.






Industry 4.0 has the potential to bring about technological developments in supply chain processes. It offers plenty of benefits and growth opportunities allowing businesses to equip their production lines and remain competitive.




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