Manufacturers around the world are preparing for the new industrial revolution, Industry 4.0, however, is it just the manufacturers who need to prepare for Industry 4.0? How does it impact the supply chains of industries globally? Industry 4.0 can be viewed as the convergence towards digitisation of global supply chains, which includes in its umbrella the entire business process of all industry segments. Its impact depends on the maturity and level of automation in the specific industry segment, but it will be omnipresent in all industries and applicable throughout the supply chain.
A HOLISTIC APPROACH
From the perspective of a Chief Supply Chain Officer (or CSCO), it is important to view Industry 4.0 in a holistic manner and realise that information processed from manufacturing plants is all but a part of a larger agenda. Entire supply chain needs to become connected end-to-end and remain transparent for Industry 4.0 to be truly applicable for an organisation.
The changes will occur in factories, where smart manufacturing will completely change the way manufacturing is currently practiced. Customer focused manufacturing will require plants to be highly automated and flexible, thereby necessitating suppliers and dealers to transform their operations to deliver more customised and demand based service. Factory layouts will change and will require business partners to adapt to changed product life cycles. Larger amounts of data will flow to and from manufacturing plants, thereby requiring the IT infrastructure across the supply chain to become capable of handling the high volumes of information being shared.
GEOGRAPHY DOESN'T MATTER
Internet-based connectivity is the second major change. Because virtually connected operations will no longer require geographical connectivity - manufacturers may have RM suppliers in Japan, customers across Asia and manufacturing plant in North America - conventional business model will require supply chains to remain connected through the internet and yet be able to function in a more precise and time bound manner than ever before.
Digitisation of logistic components, right from pallets to transport trucks, will allow smarter tracking. Customer feedback collected from all across the globe will be communicated with suppliers, and modifications will made based on web based communications. This way of manufacturing will mandate the CSCO to consider connectivity and communication across supply chain as a primary objective.
BIG DATA ANALYSTICS
Industry 4.0 truly adds value to operations by providing the capability of analysing large amounts of data. Big Data analytics is one of the pillars of this new revolution and supply chain personnel need to understand that there would simply be more information coming their way. Everything involved in a process, right from a warehouse rack, to a guillotine machine, to a supply container, will have the ability to communicate, which will then require analysis and the CSCO needs to be ready for this.
Highly automated process equipment and complex IT infrastructure does not eliminate the need for workers. On the contrary, it creates the need for highly skilled workers, who can effectively utilise the information available at their disposal. Future workforce would need to be competent at problem solving and systems engineering. It is crucial for a leader to understand the current workforce and their capabilities, in order to help modify the existing human resource to be ready for the challenges Industry 4.0 brings.
Another key aspect for the CSCO to consider would be the end-to-end visibility across the supply chain. Given the virtual and geographically diverse set up in Industry 4.0, ensuring that suppliers are always connected with the organisation and that their IT applications in place can truly capture and make sense of data coming towards them is extremely important. It is also necessary that communication across the supply chain remains bilateral, data and information should flow to and from partners. Say information regarding an assembly made in China, received from a customer in Africa, and should reach to the supplier in China in real time, even if the information is communicated to the OEM located in France.
OPERATIONS IN SYNC
With the rise of consumerism even in B2B transactions, it is almost a compulsion for value chains to incorporate and modify their operation to suit mass customisation. Demand driven manufacturing beckons all production plants in the supply chain to modify operation and become flexible enough to change, based on the need placed by the marketplace. This kind of flexibility requires synchronisation of the virtually connected operations and thereby should be one of the top priorities of a CSCO.
The entire supply chain should react or rather act in unison based on fluctuations in demand and thereby prevent imminent losses and improve chances of gaining combined profitability. Achieving mass customisation is only possible if requirements can be translated to shop floor action items in real time, irrespective of where production takes place physically.
FROM CONNECTIVITY PERSPECTIVE
Given the highly demanding nature of Industry 4.0 from the agility and connectivity perspective, it is safe to say that current sort of singularly linked supply chain networks will no longer be applicable. It is important to realise that now the end customer should be the focus of each and every partner in the supply chain and this would require re-configuration and realignment of current supply chain structure.
Smart devices are forming what one refers to as new ‘Product Innovation Platforms’. The leaders in supply chain thus ensure their systems are modified enough to facilitate faster product development, smarter manufacturing, better managed product life-cycles and higher process agility & resilience.
Key deliverables from a supply chain perspective is to have a well-connected supply chain which is agile enough to meet demand based requirements, which can adapt to major changes with minimum effort.
STRONG DIGITAL RELATIONSHIPS
Incredible 71% of the companies which took part in one of our surveys voted that their use of data analytics and digital technologies will focus on improving the customer relationship and customer intelligence along the product life cycle for the next five years. This finding clearly sets the precedent for what is to come.
It is extremely important to note that the future of manufacturing will completely change: sale of products will no longer be based on the traditional ‘Push’ model, instead goods will be manufactured based of ‘Customer Pull’, demand driven production, with varied degrees of customisation subject to industry segment. In certain cases manufacturing will be so much customised that a production lot size would be limited to one item per lot. So what are manufacturers dealing with here and what is the approach recommended for them to seize the opportunities which come with the inherent challenges of these changes?
With the advent of consumerism and well informed customer base, thanks to the information available in public domain, manufacturers are looking at highly demanding customers in the future. In both B2B and B2C transactions, customisations and production based on customer specifications will be the norm in the future, one size fits all sort of mentality will be completely outdated. Manufacturers around the world are already dealing with these challenges by increasing use of 3D printing and other such technological marvels, to allow for both economies of scale and higher value generation through provided customisation.
CONNECTING SHOP FLOOR TO TOP FLOOR
Software applications like the MES (Manufacturing Execution Systems), which act as a connector between the shop-floor and the top-floor applications will play a major role in helping organizations digitise their product offerings and form customer intelligent platforms. MES applications will help seamless transfer of data and orchestrate operation in a way the PLM can best utilise the market intelligence collected from customer to help modify manufacturing operation both within the organisation and for key value chain partners.
First movers in the Industry 4.0 are already at advanced stages where they have been able to offer customers the interactive digital platform. The customer’s opinion is converted to actual product and services. The future of manufacturing will be governed by such customer empowering, intelligence based platforms, which are characterised by the nexus of information exchange and interoperable technology.
Key for manufacturers who are still at the Digital Novice stage of digital maturity, is to see the big picture and plan their digitisation. The focus has to be on the customer and not on the product. What is important to recognise here is the need for harnessing the modern software technology (MES ERP, PLM, SCM, CRM, etc.) on offer today along with other technological advances like 3D printing, Augmented Reality, Artificial Intelligence, etc to devise a way to channel benefits to the customer, while reducing operational costs and increasing overall efficiencies.