The increased availability of advanced technologies has revolutionized the traditional supply chain model. Supply Chain 4.0 responds to modern customer expectations by relying heavily on the Internet of Things (IoT), advanced robotics, big data analytics, and blockchain. These tools enable automation and thus give organizations a chance to close information gaps and optimally match supply and demand.
“The reorganization of supply chains […] is transforming the model of supply chain management from a linear one, 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 to the supply chain.”
Understanding Supply Chain 4.0 and its potential impact on global value chains
Industry giants like Netflix, Tesla, UPS, Amazon, and Microsoft rely heavily on automation within their supply chain to lead their respective industries. Let us take a closer look at three powerful automation use cases.
1. Managing demand uncertainty
A painful aspect of supply chain ecosystems is the demand uncertainty and the inability to accurately forecast demand. Generally, this leads to a set of performance issues, from increased operational cost to excess inventory and suboptimal production capacity. Automation tools can forecast demand, remove uncertainty from the equation, and thus improve operational efficiency at each step along the supply chain.
Big data analytics (BDA) is an established tool that helps organizations manage demand uncertainty. It consists of data collection & aggregation infrastructure combined with powerful ML algorithms, designed to forecast demand based on historical (or even real-time) data. Modern storage solutions (such as data lakes) make it possible to aggregate data from a variety of sources: market trends, competitor information, and consumer preferences.
ML algorithms continually analyze this rich data to find new patterns, improve the accuracy of demand forecasting, and enhance operational efficiency. This is the recipe that Amazon uses to predict demand for a product before it is purchased and stocked in their warehouse. By examining tweets and posts on websites and social media, they understand customer sentiments about products and have a data-based way to model demand uncertainty. The good news is that such powerful analytics tools are not restricted to industry giants anymore. Out-of-the-box solutions (such as Amazon Forecast) make such capabilities widely available to all organizations that wish to handle demand uncertainty.
2. Managing process uncertainties
Organizations operating in today’s supply chain industry need to handle increasingly complex logistic processes. The competitive environment, together with ever-increasing customer expectations make it imperative to minimize uncertainties across all areas of supply chain management.
From production and inventory, to order management, packing, and shipping of goods, automation tools can tackle uncertainties and minimize process flaws. AI, robotics, and IoT are well-known methods that facilitate an optimal flow of resources, minimize delays, and promote optimized production schedules.
Internet of Things (IoT) is playing an important role to overcome process uncertainties in the supply chain. One major IoT application is the accurate tracking of goods and assets. IoT sensors are used for tracking in the warehouse, during loading, in-transit, and unloading phases. This enables applications such as live monitoring, which increase process visibility and enable managers to act on real-time information. It also makes it possible to further optimize a variety of other processes, from loading operations to payment collection.
Since 2012, Amazon fulfillment warehouses use AI-powered robots that are doing real magic. One can see robots and humans working side by side through wireless communication, handling orders that are unique in size, shape, and weight. Thousands of Wi-Fi connected robots gather merchandise for each individual order. These robots have two powered wheels that let them rotate in place, IR for obstacle detection, and built-in cameras to read QR codes on the ground. Robots use these QR codes to determine their location and direction. Like this, efficiency is increased, the physical activity of employees is reduced and process uncertainty is kept to a minimum.
Another example of how automation helps make process improvements comes from vehicle transport company CFR Rinkens. They have utilized automation in their accounting and billing department to quicken payment processing times, automate invoice creation, and decrease costs due to inaccurate information and delays.
“An area of need that we applied automation was within the accounting department for billing and paying vendors. With tons of invoices coming in and out, automation here ensures nothing falls through the cracks, and clients receive invoices on time providing them with enough time to process payment.”
-Joseph Giranda CFR Rinkens
The biggest benefits of automation are transparency, having each step of the supply chain organized, and eliminating grey areas for both clients and businesses.
3. Synchronization among supply chain partners and customers
Digital supply chains are characterized by synchronization among hundreds of departments, vendors, suppliers, and customers. In order to orchestrate activities all the way from planning to execution, supply chains require information to be collected, analyzed, and utilized in real-time. A sure way to achieve a fully synchronized supply chain is to leverage the power of automation.
CFR Rinkens uses a dynamic dashboard to keep track of cargo as they deliver vehicles across the world. This dashboard is automatically updated with relevant information that increases transparency and efficiency. High transparency allows for excellent customer service and satisfaction.
“Upon a vehicle’s arrival, images are taken and uploaded onto a CFR dashboard that our clients are able to access. All vehicle documents, images, and movements are automatically displayed within this dashboard. This automation helps on the customer service side because it allows for full transparency and accountability for quality control, delivery window times, and real-time visibilty.”
-Joseph Giranda CFR Rinkens
Automation offers an effective solution to the synchronization issue with blockchain. Blockchain is a distributive digital ledger with many applications and can be used for any exchange, tracking or payment. Blockchain allows information to be instantly visible to all supply chain partners and enables a multitude of applications. Documents, transactions, and goods can easily be tracked, payments and pricing can be historically recorded, all in a secure and transparent manner.
The shipping giant FedEx has joined Blockchain in Transport Alliance (BiTA) and launched a blockchain-powered pilot program to help solve customer disputes. Similarly, UPS has also joined BiTA as early as 2017, reaching for increased transparency and efficiency among its entire partner network. Such real-life use cases show the potential of blockchain technology and the impact that automation can have on the entire freight industry.
Blockchain increases the transparency of the supply chain and removes information latency for all partners on the network. The resulting benefits include increased productivity and operational efficiency as well as better service levels. Its massive potential makes blockchain a top priority for supply chain organizations and their digital automation journey.
Automation is playing a major role in defining the Supply Chain 4.0 environment. With heavy technological tools available to them, leading organizations are taking serious leaps towards efficiency and productivity. Automation gives them the power to accelerate and optimize the whole end-to-end supply chain journey. It also enables them to use data to their advantage and close information gaps across their network.
Originally Published: Unite.AI by Blue Orange Digital