Using Digitalization to Navigate Through Disruptions
Industry 4.0 is a revolution in manufacturing and holds promise for improving supply chain efficiency and flexibility. The convergence of technology disruptions—automation, analytics, artificial intelligence, and augmented reality—drives this revolution. Why is digitization important and what key technologies are fueling the shift?
Intelligent supply chains. Intelligent technologies, such as automation, remote fleet management, and cargo tracking, are transforming supply chain technology to provide in-depth, real-time insights into locations and cargo status.
Cloud-based GPS and RFID technology provides instantaneous updates on cargo location, whether in warehouses or in transit, and assessing transportation performance and efficiency.
Digital thread. A digital thread is a communication framework that can share information to data consumers in a continuous feedback loop. A communication framework can ensure the entire supply chain is responsive as shifts in volumes, manufacturing, design, and through-life service occur.
For this to be effective, workflows and people need to be integrated. This marks the evolution from supply chain network to integrated value chain, allowing suppliers and customers to achieve collaboration and efficiency while reducing costs.
Demand-driven supply chain management. In transportation and logistics, decisions need to be made quickly and agility is essential. Demand-driven supply chain management has been part of the industry for some time, but the high volumes of data and deep insights require a step up from traditional methods. In the past, forecasting was based on historical demand, but that may not be enough with the influx of data and current demands.
IoT-embedded sensor technologies enabled with predictive analytics and machine learning can gather, analyze, and report insights from the environment and provide real-time responses to stay agile in the face of increasing demands. Data also offers insights to inform decision-making and build strategies and contingencies to adapt to future obstacles and maintain high levels of customer service, sales, and efficiency.
Cyber threats. Bad actors have more opportunities to exploit vulnerabilities in a digital supply chain, especially with third-party vulnerabilities that grant access to the real target. Conversely, manufacturers can have gaps that provide access to suppliers, destroying brand relationships across the entire ecosystem.
Suppliers and manufacturers need a rigorous protocol and evaluation process to assess risk and create stringent security across organizations and partnerships.
Meeting customer expectations. Customers have become used to fast order processing and deliveries and have little patience for delayed orders. To respond to these demands, some manufacturers are switching to centralized distribution and real-time inventory management.
The increasing demand for hyper-customization is also fueling shifts and linking the customers to the supply chain. Rapid prototyping and additive manufacturing are restructuring supply chains and more manufacturers are choosing on-premises manufacturing capabilities with lower waste.
Digitization holds promise for addressing current challenges in the supply chain environment and creating more opportunities moving forward.
Author: David L. Buss , CEO, DB Schenker