SCM 4.0 - Adapt or Perish

“Much more than only a wish by companies, Supply Chain 4.0 will become a reality in terms of a transformation required. It is a strategic issue. Companies which do not put efforts on the implementation of Disruptive Technologies, will not be able to compete in the global market,” emphasizes Prof. Guilherme Frederico is Associate Professor of Operations and Supply Chain Management at School of Management - Federal University of Paraná – UFPR – Brazil.

What exactly is Supply Chain 4.0?

Supply Chain 4.0 is a new way about how the supply chain can be viewed and managed. It is an evolution of traditional supply chains into the context of the Industry 4.0’s trend. This new supply chain is formed by its processes (plan, source, make, delivery and return) fully interconnected in both horizontally and vertically structure. Supply Chain 4.0 is much more than only technologies implementation. Indeed, it is a managerial framework, which considers four main perspectives: Managerial and Capabilities Supporters, Technology Levers, Supply Chain Processes and Strategic Outcomes.

How can companies globally work towards attaining SCM 4.0?

The first thing companies should consider is that Supply Chain 4.0 must be a strong Strategic Driver. Operations and Supply Chain Strategy has changed now. Technologies have been seen in the past as the tool in order to improve supply chain processes. These technologies will continue to accomplish this role. However, with the 4th Industrial Revolution, companies must be able to understand which technologies will allow them to be ahead of their rivals and transform supply chain’s operations in order to foster competitive advantages. High collaboration with global technologies companies will be required with the aim of getting this transformation.

What are the new technologies that will aid in making it a reality?

There are a set of disruptive technologies continuously being launched in the market from the beginning of Industry 4.0 ware. However, it is important to first correctly understand which technologies must be prioritized and implemented for each supply chain. The main technologies, which are shaping the Supply Chain 4.0 include Internet of Things, Big Data Analytics, Cloud Computing, Robotics, Additive Manufacturing, Artificial Intelligence and Cyber Security Systems. All those technologies must be interoperable with each order with the aim to transform a traditional supply chain in a Cyber-Physical Supply Chain. Interoperability is the key factor towards the success of a Supply Chain 4.0 program. These Disruptive Technologies provide a breakthrough in the supply chain processes. Performance aspects such as collaboration, transparency, efficiency, flexibility, integration and responsiveness might be significantly improved with the use of these technologies. These improvements on the supply chain processes will directly influence the strategic outcomes of organizations, improving the customers, suppliers and other stakeholders’ satisfaction, reducing costs, increasing profitability and positioning of companies on the leadership scale in the global marketplace.

What can be the obstacles in this transition and how can companies brace for the same?

In the Supply Chain 4.0 framework, the first element to be considered is related to the Managerial and Capabilities Supporters. These elements must be properly developed and implemented to get a Supply Chain 4.0 program succeed. As already mentioned, the first thing is to put Supply Chain 4.0 as a Strategic driver fully supported by the higher leadership on its deployment. Also, Organization Awareness regarding the importance of Supply Chain 4.0’s initiative and its benefits should be deployed to the organizational people. Training and Education Programs are also other important aspects to make people more capable and impart them with the desired skill sets to implement and conduct these new technologies.

On the technical side, a robust IT infrastructure in terms of network, hardware and software should be implemented in properly supporting the Disruptive Technologies requirements. Compliance issues must be also observed. All these new technologies and processes must be compliant with global and regional regulations in order to guarantee the success of global supply chain processes. All these issues presented must be coordinated with adequate project management methods and orientation across the whole supply chain members.

How do you foresee global supply chains shaping up in the years to come?

Much more than only a wish by companies, Supply Chain 4.0 will become a reality in terms of a transformation required. It is a strategic issue. Companies which do not put efforts on the implementation of disruptive technologies, will not be able to compete in the global market. The integration, collaboration and transparency on the planning, sourcing, manufacturing and transportation processes fully interconnected will be something common for those companies, which will have successfully implemented a Supply Chain 4.0 program. Obviously, Supply Chain 4.0 strategy is a long-term horizon. However, it is important to begin now; implementing the steps required in the sense of the aspects and properly manage the maturity of these aspects during this strategic path will hold the key to the future.