Industry 4.0: What it means for supply chain, sourcing and procurement 

09-Jun-16 09:28

In this guest post, Tradeshift’s Charles-Henri Royon argues that the wave of disruptive technology that is shaping the consumer and commercial world is already having a direct effect on the way procurement thinks and behaves. 

Industry 4.0 —or the Fourth Industrial Revolution— is ushering in new disruptive technologies that were once just the dreams of science fiction. While most have had their stint as consumer gimmicks (let’s not forget the 3D-printed burger), many, such as AI, robotics, automation and IoT, are now considered essential tools for innovative organisations.

3D printing, for instance, has gone beyond just consumer gimmicks and is now being used by manufacturers to produce items from prosthetics, to fuel injection nozzles and aeroplane partitions. This on-demand production process opens up a wide range of opportunities in the supply chain, including reducing time to market and lowering production costs. One day organisations may even be able to download manufacturers’ product designs and 3D print items in their own office.

We’ve also seen the likes of Amazon and DHL publicise their proof of concepts for drone delivery. Although it may be a while yet before these become a reality (there are technological and legal obstacles to overcome), we are seeing them being adopted in other areas, such as construction, suggesting they could become more mainstream and used in smart warehouses, for example.

Then we have Hyperloop from Tesla founder Elon Musk – it started out as a provocative whitepaper and has just received the green light in California to start construction of a five-mile system to transport freight cargo, as well as passengers, at speeds well in excess of 550mph. As well as cutting hours of travel time down to minutes, the Hyperloop is also set to reduce costs, boost the velocity of production, and avoid traditional logistical hassles of overbooked cargo ships, closed ports, and bad weather.

These innovations will drastically enhance the interconnectedness across companies and processes, both internal and external. But in such an interdependent environment, businesses will need greater collaboration with partners across industries, geographies and specialist domains in order to add visibility and value across the supply chain.

The key will be to ensure the speed at which the processes take place and the data they generate match up to the speed of the technologies. Global technology platforms that can handle all supply chain interactions will therefore be essential.

By bringing business processes —collaboration, transactions and relationships— into the cloud in digital form, organisations can overcome the traditional challenges of enterprise software. These challenges include reinventing business processes between companies, bridging cloud and on premise, connecting processes across application silos, and bringing relevant data into the hands of decision makers in real time.

Radical change is coming from the combinatorial effect of new technologies. Everything from material handling, inventory management, and warehousing to transportation, supply chain management, and procurement will have the potential to be impacted by tech such as Hyperloop, drones, 3D printing and beyond.

In less than five years from now, enterprise CPOs and CFOs, along with purchasing and insight departments, may very well find that working within Industry 4.0 will become second nature. They should prepare now to ensure they have the platform in place to support the revolution.