The Importance of Industry 4.0’s Digital Supply Chain

Traditionally, supply chain management was a back-office function in manufacturing businesses. It was important, of course, particularly in regulated sectors like pharmaceuticals and MedTech, but it wasn’t central to the performance and management of the company. In other words, it wasn’t on the day-to-day radar of C-Suite executives – CEOs, CFOs, etc.

This is changing as companies embrace Industry 4.0 technologies and move towards digital supply chain solutions. They are doing this to remain competitive and meet customer expectations as existing systems are rapidly becoming unfit for purpose.

A new reality is now developing, a reality where supply chain management influences all aspects of the business from strategic planning to corporate reputation to sales to product development and more.

The Evolution of the Supply Chain

In the past, supply chain management was a manual process. Records were kept on paper (if they were even kept) and communications, data analysis, decision-making, approvals, etc would all have been physical processes.

Today, many elements of supply chain management are now digitised. In fact, in some businesses, there is extensive digitisation.

So, there is more data, with much or all of it stored digitally. This makes it easier and faster to access than physical records while also improving accuracy.

Communications are also digital, with technologies like email, video conferencing, screen sharing, etc.

Software is used to enhance decision making by, for example, providing managers with dashboards to help them better understand the data that has been collected. This improves oversight of both the manufacturing and supply chain management processes.

However, even though a lot of elements in the supply chain are digital, this is not the digital supply chain.

The Hybrid Supply Chain

What we have now in most manufacturing operations is best described as a hybrid supply chain. Various elements have been digitised, but processes are still manual, albeit with the use of digital technologies.

Look at an example of a customer who wants to significantly increase the number of products it intends to purchase. Confirming there is capacity in your supply chain to meet this increased manufacturing demand could take days or weeks. This is because the process of communicating with, and getting agreement from, the various components are still manual, i.e. emailing, phoning, or video calling a supplier in your supply chain is a manual process.

After several days, you get assurances from the various points in your supply chain that they can meet the increased demand, so you ramp up your manufacturing operations to deliver the client’s bigger order.

However, you have limited oversight of how those in your supply chain are delivering on their promises. As has always been the case, a supply chain is only as strong as its weakest point. You have minimal oversight over those weak points… of any points in the supply chain, in fact.

This is because the supply chain data you have is limited and is not real-time, resulting in situations where the first time you hear there is a bottleneck or quality issue, for example, is when the problem is already live and has already impacted output.

The Digital Supply Chain

Here is where the digital supply chain really shows how it can benefit manufacturing businesses. In the digital supply chain, every point is connected, making data available in real-time via the cloud.

In the above example, informing and getting commitments from the various components in your supply chain for the increased order would be simultaneous, with that measured in minutes and hours rather than days or weeks.

In addition, you would have real-time oversight over each element of the supply chain, giving you real-time information on everything from quality control to production rate.

Combine this with big data and dashboard technology, and you move from being a reactionary manufacturing operation to operating on a reactive and preventative basis.

This enables you to deliver on the objectives mentioned at the start of this blog – meeting changing customer expectations and remaining competitive – as well as other objectives important to your business.

As a result, the digital supply chain should not be considered a future concept but should be a high priority for your organisation today.