Supply Chain 4.0 and the key technology drivers



The digital revolution has created a paradigm shift in supply chain management. Going digital is no longer optional for businesses, the digital disruption in the form of industry 4.0 coupled with other advanced technologies is forcing companies to rethink and redesign their supply chains. The supply chain enabled and empowered by these digital technologies is being referred to as Supply Chain 4.0 or a Digital Supply Chain.

Traditional supply chains with their bulky ERP systems and manual processes no longer suffice the needs of businesses that are racing against time to fulfil the needs of customers whose choices have become unpredictable, thanks to e-commerce. Also, sustainability and accountability are two more key concerns which the traditional supply chains fail to address completely. 

Contrary to the traditional supply chains, a digital supply chain network is driven by the power of advanced technologies and data analytics to generate value for all the stakeholders. Digital supply chains have well-integrated systems, greater supply chain visibility, smarter inventory management, and greater automation compared to the traditional supply chains. Below are the key technologies that are helping shape the digital disruption in supply chains.

Key Technologies driving Supply Chain 4.0:

  • Cloud Technology – Almost all the ERP solution providers have created ERP applications that run on the cloud. Running the application on the cloud helps businesses to reduce costs, build the supply chains to scale, and achieve better performance. However, moving to the cloud from on-premise ERP systems comes with several challenges. Businesses having sensitive information are apprehensive about the security of such applications. Also, the implementation is an expensive and time-consuming process. However, seeking the help of experienced consultants will aid businesses to transition from ERP to cloud smoothly.
  • Internet of Things (IoT) – We live in a world of connected devices, thanks to the Internet. All these devices can collect, share, retrieve, analyze data, and trigger actions without manual intervention. All the IoT networks are powered by sensors. The data collected by these sensors is seamlessly transferred via wireless networks to other applications or devices. This form of Machine to Machine (M2M) communication is enabling businesses to share and track the movement of men and material through the entire supply chain.
  • Blockchain – The distributed ledger and smart contracts form the core of Blockchain Technology. While the distributed ledger prevents illegitimate transactions, smart contracts help businesses to automate the contract execution based on pre-committed conditions. This makes supply chains more transparent. Businesses can track and trace all the events that occur on a business transaction and detect fraud immediately with the help of this technology. Also, in sensitive industries such as pharmaceuticals and food processing, it enables build trust in the market by letting consumers know the journey of the product from production to market.
  • Business Intelligence and Data Analytics – Businesses continuously generate data that can be transformed into useful information with the help of business intelligence tools to gain actionable insights into the supply chain performance and other related metrics.
  • Artificial Intelligence (AI) powered by Machine Learning – From chatbots to advanced human-less manufacturing plants and warehouses, AI is enabling businesses to leapfrog into the future of supply chain management. From simple forecasting tools to advanced computer vision applications, AI has become ubiquitous in all areas of supply chain management. 
  • Augmented Reality – Augmented Reality enhances the real world view with computer-generated elements and provides a rich interactive experience for the users. The applications of augmented reality in the supply chain include user training, inventory management, remote collaboration, warehouse management, and transportation optimization. The adoption of this technology is still in nascent stages with a promising outlook for the future.

The key benefits of a digital supply chain:

  • Faster Delivery Times – Speed of shipping is one of the critical factors contributing to customer loyalty. Going digital can help businesses to centralize disparate business processes and handle the flow of information effectively. This helps businesses to cut down the delivery times drastically.
  • Flexibility – The agility of the supply chains matters the most when the demand patterns, tastes, and preferences of customers change rapidly. By going digital, businesses can capture the changes in the trends in the market relatively faster, thus enabling them to act faster. Technology integration and a real-time supply chain view can help businesses to have better control over their supply chains and respond faster to changes in the external environment.
  • Improvement in Service Levels – Service levels can be improved by continuous monitoring, reporting, and acting on the insights from the customer data. BI tools and data analytics applications consume real-time data and guide businesses to take timely actions to constantly improve their service levels.
  • Track and Trace – With the help of Blockchain Technology businesses can track the complete activity history of the product through the entire supply chain. All the updates about the product related to manufacturing, quality, and logistics can be recorded on an immutable shared ledger enabling visibility and transparency.
  • Improved Efficiency – With increased output delivered by minimizing the effort and resources involved, the digital supply chain helps businesses to improve their efficiency considerably. With AI businesses can identify and trim the flab and make businesses leaner and smarter. Augmented Reality can help businesses to reduce the time and effort needed for training the human resources and manage the warehouse operations effectively.
  • Reduced Costs – Though the initial technology costs could be high, in the long run, businesses will yield the benefits of cost reduction by end-to-end digital integration of the supply chain. 

The supply chains of the future are here. To gain an edge over the competition, businesses have to adapt to these rapid technological advancements and adopt the digital transformation of their supply chains. Technological acumen combined with the right data, tools, and human resources will help businesses to build sustainable, agile, and efficient supply chains. To make their digital transformation successful and get the desired financial results, it is advisable for businesses to partner with consultants or technology experts who can guide them to plan and implement the strategy effectively.

Read our insight on Simplified Business Strategy:

Simplified Business Strategy ~ Key To Success

How to start and not stop at the end of this article piece?

I would recommend starting simply by just taking this approach, which has negligible risk, simple and yet an amazingly effective positive step towards our goal of a proactive strategy

A) Take pen -paper or manual method (start now)

Start implementing the recommended strategy using your existing technology resources for a known and low-risk segment of customers within your supply chain Business to find out what works and what doesn’t. Indeed this causes efforts, but this will pave the way for better clarity around unknown risks.

B) Take help from technology

Work towards making it unattended, assisted by using Super-fast digital solution such that it works autonomously without losing its efficacy by engaging a solid, affordable Business and Technology solution partner.

If you are a CEO/COO/CIO/Managing Director/General Manager who is spending more time in reactive/preventive mode than future-facing, please reach out for an exploratory conversation.

Our Contact details

Harish Garg (Mentor Supply Chain)

Pradeep Mishra (Director and Co-founder)

Ashok Mulchandani (Partner – Business Success and Strategic Transformation)

Amit Bhagat (Director – Business Strategy)

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