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Fourth Industrial Revolution and Supply Chains

Andrew McNeilis, Managing Director at DSJ Global APAC, identifies the key stressors and bright spots with Industry 4.0 and its relation to end-to-end supply chains. This article was originally published on Supply Chain Asia.

We are currently in the midst of the Fourth Industrial Revolution; characterised by the proliferation of breakthrough technologies, such as the internet of things (IoT), artificial intelligence (AI), augmented reality, advanced robotics, and so on. The Fourth Industrial Revolution is already resetting and pressing the reshuffle button on life as we know it, radically altering the way we work, exist, and coexist alongside one another. As we live in an age of great seismic change, now offers the best chance to look back through a historical lens to chart a path forward.

Obviously, Industrial Revolutions are not a new phenomenon. The First Industrial Revolution took full fruition in the 18thcentury with rapid technological advancements in mechanised spinning, steam power, and iron production. The Second, which existed between mid-19thto early 20th century, was an era that witnessed the expansion of electricity, petroleum, and steel. The Third Industrial Revolution, or ‘Digital Revolution’, began in the late 20thcentury, which saw the rise of electronics and information technology as an enabler of automation. Fast forward to the present day, the Fourth Industrial Revolution is on the horizon, and the capabilities of technology to blend the physical, digital, and biological is an exciting prospect for companies and business leaders. However, with the rise of Industry 4.0, does this present new opportunities or disruptions to supply chains?

It’s important to note, Industry 4.0 is the capsule and colloquial term used to summarise the ever-sophisticated impact of technology in industrial manufacturing.

Talking to Andrew McNeilis, he reports, “as we traverse down through time, if we look at the emergence of technology on manufacturing and production, this certainly caused a rippling impact across many sectors.” McNeilis further comments, “to provide a specific example in my lifetime, back in the early 1990s, I was involved in outsourcing 22 huge potato chips production lines, where all the packaging of chips into multi-packs were completed by humans. Overnight, 650 workers were replaced with equipment. Like anything, with disruption comes risks and threats, creating both huge challenges and opportunities.”

Today, from the warehouse, manufacturing, logistics stage, right through to the shop floor, the software is at every touchpoint in the supply chain. While software controls much of modern supply chains, advanced manufacturing of Industry 4.0 is connecting the dots – aggregating sales-led data from the end-user and feeding it back to design teams. Where traditionally this would have been done through word of mouth, manufacturers now have a huge number of next-generation digital tools at their disposal, where permitting. Andrew McNeilis observes, “I think in the Asia Pacific, as well as the rest of the world, Industry 4.0 is here and already happening. Businesses are under constant pressure, either to manufacture their products better, faster, cheaper or on the flipside of the coin, to create products with incredible innovation where they compete on design, quality, innovation and not simply on price.”

As the pace of customer behaviour changes with the tide and real-time disruptions, such as the Suez Canal block in 2021, continues to grip global supply chains, it’s important to remember that the introduction of new technologies can yield new ways of serving and disrupting existing needs. Disruption is also flowing from agile competitors who, at the click of a finger, can have access to a treasure trove of digital platforms as the basis for competitive research – helping them dominate the playing field by innovating or improving the cost-efficiency of their products. For McNeilis, “Industry 4.0 is not an overnight sensation. Some organisations are advanced in their harnessing of digitalisation and interconnected technology to make their manufacturing process better, yet other organisations are just kickstarting this journey.”

A key point to stress, with the onset of Industry 4.0, is that this evolutionary period is not simply about harnessing technology, but also about harnessing equipment capable of being manipulated and operated. To exemplify, there are many firms that have antiquated but very reliable traditional industrial technologies used in the manufacturing process. To automate this machinery, there clearly will be huge capital investment costs and “businesses will have to make critical decisions further down the line regarding how far to drive Industry 4.0 based on the core output of what they manufacture”, states McNeilis. One thing is for certain, as supply chain organisations and manufacturers alike share the same destiny and strive to embrace Industry 4.0, there will be some incredible opportunities within this space.  

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