Accelerating your supply chain 4.0 journey
Logistics and supply chain has witnessed tremendous evolution in recent years. From being a function that supported production and sales teams and ensured that the supply lines stayed operational to becoming a strategic contributor to the bottom line and superior customer experience, supply chain teams play an unprecedented role in organizational success. In that backdrop, Supply Chain 4.0 is transforming supply chain management from a linear model in which instructions flow from supplier to producer to distributor to consumer and back to a more integrated model in which information flows in an omnidirectional manner throughout the supply chain. The end effect of this development could be making the goods economy more responsive to consumer demand.
“Supply Chain 4.0” is the re-organization of supply chains – design and planning, production, distribution, consumption, and reverse logistics – using Industry 4.0 technologies.
How can Supply Chain 4.0 help? The primary ingredients of Supply Chain 4.0 are big data and intelligence. As per current estimates, 1.145 trillion MB of data is created every day. And this number is growing exponentially. For instance, each individual on this planet generated at least 1.7 MB of data per second on average in 2020. This led to significant digital waste making it critical to adopt new technologies to increase the operational effectiveness of such supply chains. To mitigate this challenge for businesses, Supply Chain 4.0 promises improved agility with up to 30 percent lower operating costs, a 75 percent reduction in lost sales, and an equivalent decrease in inventory, according to McKinsey.
Trends in supply chain management
Industry 4.0 has significantly disrupted manufacturing industry and pushed organizations to rethink their supply chain designs.
Several megatrends heavily influence supply chain management. There is a continuing growth across rural areas worldwide, with wealth shifting into erstwhile underserved regions. With climate change accelerating, there is a heightened pressure to reduce carbon emissions. Over the past few years, the increasing shift to online has led to increasing service expectations and a much stronger granularization of orders. Additionally, a rising trend toward hyper-customization to drive growth is also leading to constant changes in the SKU portfolio. Digital transformation enabled transparency and easy access to several options for customers regarding where to shop and what to buy. All these trends have contributed to significantly driving competition in supply chains.
To build on these trends and cope with the dynamic requirements, supply chains need to become faster, more granular, and more precise.
How to get started with Supply Chain 4.0
Businesses looking to revamp their operations should start early and utilize the best practices listed below to emerge triumphant and be competitive in Supply Chain 4.0.
Use real-time data to synchronize supply and demand.
Predictive business intelligence using AI, machine learning, asset tracking, and social media intelligence applications can be used to produce accurate, statistics-based demand forecasts. It is vital to leverage current, historical, and external information like point-of-sale data from a single, enterprise-wide data repository. A cloud-based dashboard, augmented reality, or virtual reality application can provide 360-degree visibility, traceability, and a collaborative platform for real-time forecasts related to supply and demand variances.
Implement a robust supplier alliance or partnership program.
The approach is to shift from static command and control to a dynamic real-time partnership between organizations and their suppliers. Using supplier certification programs, blanket POs, and technologies such as cloud-based dashboards, asset tracking, and blockchain, organizations can ensure better quality, efficiency, transparency, traceability, and on-time delivery with minimal risks, resulting in bottom line growth for all stakeholders.
Customize the supply chain to specific business needs.
Developing a new supply chain model that works for your organization requires a radical ecosystem shift toward a digital supply chain. It begins with identifying the building blocks of Supply Chain 4.0 and then choosing building blocks to create a customized model. The final step is developing a strategic plan for success, executed through a robust tactical program.
Accelerating your supply chain with Zensar
From Zensar’s point of view, a digital supply chain is when we connect every system, every device, and every aspect of the supply chain and automate as much of the workflow as possible. This makes it easy to track the movement of goods and shipments across all entities in the supply chain. And as we track, monitor, and manage the flow of goods and data, we can use actionable insights to drive better business KPIs across inventory management, forecasting, machine downtime, and customer experience.
We work with our clients across the hi-tech and manufacturing industries to help them roll out new reference architectures for digital supply chains. Our indigenously developed diagnostic tool helps assess supply chain maturity across domains, including SC network design, demand planning, inventory management, warehouse operations, transportation or logistics, order management, returns management, and post-sales or customer service. Armed with an accurate understanding of our clients’ maturity levels, we help them accordingly. The maturity levels are:
Supply Chain 1.0 is where organizations use fragmented legacy systems that cannot automatically compute or protect inventory levels.
Supply Chain 2.0 focuses mainly on paper-based supply chains with a low level of digitization. Most processes are manual, the organization’s digital capabilities are limited, and available data is not leveraged to improve business decisions.
Supply Chain 3.0 describes supply chains with basic digital components in place. IT systems are implemented, and only a few data scientists are part of the organization to improve its digital maturity.
Supply Chain 4.0 is where the entire enterprise system is digitally connected, leveraging all the data available. It is possible to monitor, measure, and define shipping costs, reduce inventory forecasting errors in real-time, create real-time pricing of promotions based on inventory and merchandise, track logistics and vehicles, and have the capability for last-mile delivery using drones.
So, Supply Chain 4.0 is where most businesses want to be from where they are now — 2.0 or 3.0. And our velocity-driven approach at Zensar makes that possible.