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1.1 Background of Study 1
1.2 Problem Statement 1
1.3 Objectives of Study 2

2.1 Industrial Revolution 3
2.2 Internet of Things (IoT) 5
2.3 Artificial intelligence (AI) 7
2.4 Big Data 8
2.5 Supply Chain in Fourth Industrial Revolution 9


3.1 New Technologies 12
3.2 Integrated Planning and Execution 12
3.3 Logistics Visibility 13
3.4 Procurement 4.0 14
3.5 Smart Warehousing 14
3.6 Efficient Spare Parts Management 15
3.7 Autonomous and B2C logistics 16
3.8 Prescriptive Supply Chain Analytics 16
3.9 Smart Supply Chain Enablers 17





2.1 Timelines of Industrial Revolution 4

2.2 The supply chain at the center of the digital enterprise. 9

2.3 The digitally enabled supply ecosystem vs. traditional linear supply

2.4 Expected impact of digital transformation on the cost situation in


2.5 Effect of push technologies and pull demand on the digital supply



1.1 Background of study

Manufacturing process changes aligned with industrial revolution time frame. Early

in industrial revolution, manufacturing focusing on homemade process. When First

Industrial Revolution involved, manufacturing process started to using mechanization in

their manufacturing process. In Second Industrial Revolution, manufacturing started

produce in big scales or mass production. For Third and Fourth Industrial Revolution move

to be automation production and digitalization.

All industrial transformation phase, supply chain changes together to suit with the

transformation. All these Industrial Revolution impact on your supply chain. In term of

process/flow the supply chain, costing and strategies supply chain.

1.2 Problem Statement

The Fourth Industrial Revolution is characterized by the convergence of

breakthrough technologies such as advanced robotics, artificial intelligence, the internet of

things, virtual and augmented reality, wearables and additive manufacturing that are

transforming productions processes and business models across different industries.

Business leaders can no longer focus on developments and trends in their own sectors alone,

but need to understand potential transformations and disruptions in the entire world of

suppliers, customers and adjacent markets. Systems are being transformed not specific

products or services. Cyber physical systems combine communications, IT, data and

physical elements integrating many core technologies

Today the main focus is on the smart factory but what is the meaning for the supply

chain management. The internet of things leads to a high transparency regarding the status

of the supply chain and its nodes. The amount of information increases rapidly with the

automatic acquisition of data/events. Standardized event information in high quality can be

distributed within the supply chain with methods of the internet of things. But: transparency

is not enough, the right conclusions have to be drawn at the right point (Akinlar, 2014).

1.3 Objectives of Study

The objectives of this study are:

i. To investigate the effect of Fourth Industrial Revolution on Supply Chain in

term of process/flow.

ii. To determine effect of Fourth Industrial on Push/Pull view cycle in supply




2.1 Industrial Revolution

The First Industrial Revolution took place between about 1700s and early 1800s.

Early 1700s, manufacturing was often done in peoples homes, using hand tools or basic

machines. Industrialization marked a shift to powered, special-purpose machinery, factories

and mass production. The iron and textile industries, along with the development of the

steam engine, played central roles in the Industrial Revolution, which also saw improved

systems of transportation, communication and banking ( Staff, 2009). In this

Industrial Revolution, manufacturing process focusing on mechanization production by

using water power or steam power.

The Second Industrial Revolution started around 20th century was created a wave of

globalization expanded allowing for greater movement of people and ideas. Advances in

electrical power drive the growth of mass production and the factory line or assembly line.

In other words, during Second Industrial Revolution all manufacturing start change in their

production activities. Location for manufacturing not any more focusing power source but

spread to other city as long as have an electricity sources.

The Third Industrial Revolution was driven by the widespread adoption of new

digital technologies such as computer into the manufacturing for automate production. It

makes manufacturing to more globalization. The Third Industrial Revolution was taking

place from 1970 until nowadays.

Nowadays, world already move to Fourth Industrial Revolution. Fourth Industrial

Revolution are the cyber physical production system driven. It also called as Digital

Industrial 4.0. The widespread adoption by manufacturing industry and traditional

production operations of information and communications technology (ICT) is increasingly

blurring the boundaries between the real world and the virtual world in what are known as

cyber-physical production systems (Ralf C. Schlaepfer, 2015).

Figure 2.1: Timelines of Industrial Revolution

(Quilligan, 2016)

Digital Industry 4.0 means combined communications, IT, data and physical

elements. That allows the creation of digital factories or digital plantsin which machines

talk to products and other machines, objects deliver decision-critical data, and information

is processed and distributed in real time resulting in profound changes to the entire industrial

ecosystem. This connected everything environment allows for more automation and

personalized interactions (Quilligan, 2016).

Like the revolutions that preceded it, the Fourth Industrial Revolution has the

potential to raise global income levels and improve the quality of life for populations around

the world. To date, those who have gained the most from it have been consumers able to

afford and access the digital world; technology has made possible new products and services

that increase the efficiency and pleasure of our personal lives (Schwab, 2015).

Industrial Revolution 4.0 is the culmination of several technological innovations all

coming to the forefront; sophisticated sensors, cloud computing, 3D printing, artificial

intelligence, and advanced robotics. These connected devices utilize RFID, Wi-Fi, cellular

networks and other technologies to communicate with each other and the cloud to become

the Internet of Things. In terms of industry, this revolution entails the utilization of cyber-

connected systems which monitor factory processes to maximize efficiency and reduce

downtime (Bossard Group, 2017).

Five key technologies, which are currently at different stages in terms of level of

readiness and adoption across industry sectors, are expected to significantly impact supply

chains, both individually and in combination: internet of things, artificial intelligence,

advanced robotics, enterprise wearables and additive manufacturing (WEF, 2017).

2.2 Internet of Things (IoT)

Organizations in todays economic reality are on the verge of profound changes in

their operations. They are related to a quick progress in information technology and the

economy entering the fourth phase of the industrial revolution. More opportunities to create

systems integrating physical and virtual worlds are one of its key differentiators, and the

Internet of Things is the underlying technology (Wielki, 2016).

Nowadays Internet of Things (IoT) gained a great attention from researchers, since

it becomes an important technology that promises a smart human being life, by allowing a

communication between objects, machines and everything together with peoples. IoT

represents a system which consists a thing in the real world, and sensors attached to or

combined to these things, connected to the Internet via wired and wireless network structure.

By the technology of the IoT, the world will become smart in every aspects, since the IoT

will provides a means of smart cities, smart healthcare, smart homes and building, in addition

to many important applications such as smart energy, grid, transportation, waste

management and monitoring (Aldein Mohammeda and Ali Ahmed, 2017).

For enterprises, IoT can underpin solutions that improve decision-making and

productivity in manufacturing, retail, agriculture and other sectors. Machine to Machine

(M2M) solutions - a subset of the IoT already use wireless networks to connect devices to

each other and the Internet, with minimal direct human intervention, to deliver services that

meet the needs of a wide range of industries. In 2013, M2M connections accounted for 2.8%

of global mobile connections (195 million), indicating that the sector is still at a relatively

early stage in its development. An evolution of M2M, the IoT represents the coordination of

multiple vendors machines, devices and appliances connected to the Internet through

multiple networks (Shukla et al., 2017).

Internet of things may be facing two major challenges in order to guarantee seamless

network access; the first issue relates to the fact that today different networks coexist and the

other issue is related to the big data size of the IoT. Other current issues, such as address

restriction, automatic address setup, security functions such as authentication and

encryption, and functions to deliver voice and video signals efficiently will probably be

affected in implementing the concept of the internet of things but by ongoing in

technological developments these challenges will be overcome. The internet of things

promises future new technologies when related to cloud, fog and distributed computing, big

data, and security issues. By integrating all these issues with the internet of things, smarter

applications will be developed as soon. This paper surveyed some of the most important

applications of IoT with particular focus on what is being actually done in addition to the

challenges that facing the implementation the internet of things concept, and the other future

technologies make the concept of IoT feasible (Aldein Mohammeda and Ali Ahmed, 2017).

2.3 Artificial intelligence (AI)

Artificial intelligence (AI) was introduced to develop and create thinking machines

that are capable of mimicking, learning, and replacing human intelligence. Since the late

1970s, AI has shown great promise in improving human decision-making processes and the

subsequent productivity in various business endeavors due to its ability to recognize business

patterns, learn business phenomena, seek information, and analyses data intelligently.

Despite its widespread acceptance as a decision-aid tool, AI has seen limited application in

supply chain management (SCM) (Min, 2010).

Machine-generated insights will pave the way for greater precision and accuracy.

While repetitive tasks are performed by machines, people can focus on more complex

activities. Physical assets replace low-skilled labor, which requires investment in and

upskilling of the existing workforce. This represents a significant change for workers and

should be accompanied by the appropriate communication and support of the employer

(WEF, 2017)

The benefits AI technologies bring to supply chain planning are the ability to provide

speed and accuracy beyond human capabilities. It is possible to have a supply chain thats

smarter, faster and self-healing, meaning it continuously observes and measures data and

automatically adjusts or repairs itself as it finds exceptions. The supply chain will be able to

detect, predict and suggest, letting you answer those fundamental supply chain questions

outlined above (Cheater, 2017)

2.4 Big Data

Big Data is mainly driven by the widespread diffusion and adoption of mobile

devices, social media platforms including YouTube, Facebook and Twitter, and IoT related

concepts such as RFID technology (Fosso et al., 2015).

The cause of increasing attention of Big data analytics in SCM is its complexity and

the influence that SCM have on the overall performance of companies. The SCM area is

facing the challenges which may lead to inefficiency and wastage, e.g. delayed shipments,

rising fuel costs, inconsistent suppliers or ever-rising customer expectations. Companies

expects that Big data analysis will bring profits through the process visibility and

effectiveness improvement, global supply chains integration and demand management

improvement. In the area of strategic planning and management of supply chains, Big data

analysis is especially important (Zdrenka, 2017).

Traditional supply chain applications evolved to use transactional data to improve

the supply chain response. The foundational element of supply chain systems is order and

shipment data. These data forms are used extensively in the three primary applications of

supply chain management: Enterprise Resource Planning (ERP), Advanced Planning

Systems (APS) and Supply Chain Execution (SCE). The genesis of Enterprise Resource

Planning (ERP) systems was to improve the order-to-cash and procure-to-pay functionality

and maintain a common code of accounts for financial accounting. Similarly, Advanced

Planning Systems (APS) applied predictive analytics to these two data types to plan and

improve the supply chain response. In parallel, Supply Chain Execution (SCE) systems

evolved to improve organizational order to shipment capabilities (Cecere, 2012)

2.5 Supply Chain in Fourth Industrial Revolution

In Fourth Industrial Revolution, all matter that have related with manufacture flow

will be change and become digitalization. It will be created new ecosystem in the

manufacture process. Figure 3.1 below show how supply chain changes in this ecosystem.

This ecosystem will be based on full implementation of a wide range of digital

technologies the cloud, big data, the Internet of Things, 3D printing, augmented reality, and

others. Together, they are enabling new business models, the digitization of products and

services, and the digitization and integration of every link in a companys value chain: the

digital workplace, product development and innovation, engineering and manufacturing,

distribution, and digital sales channels and customer relationship management (Schrauf and

Berttram, 2016).

Figure 2.2: The supply chain at the center of the digital enterprise.
(Schrauf and Berttram, 2016)

The structure of supply chain also changes in this ecosystem. Where in traditional

supply chain using linear structure but in digitalization supply chain become centralize with

all supply chain process. Figure 2.3 below show differential between traditional supply chain

and digital supply chain.

Digital supply chain is based on four main attributes; Integrated, Intelligent, Flexible

and Rapid (Capgemini, 2015). Integrated will be delivered through Supply Chain Tower as

a centered in supply chain structure.

Figure 2.3: The digitally enabled supply ecosystem vs. traditional linear supply chain.
(Schrauf and Berttram, 2016)

Digital technologies also can reduce costs by, for example, intelligent forecasts or

operational support for the employee, thus also increasing productivity. Implementing these

technologies can also improve customer relationships and open new business areas. The

majority of companies in the manufacturing sector (79.9%), logistics services (85.5%), and

retail (74.5%) recognize these and similar positive effects of a digital transformation (see

Figure 3) (Kersten et al., 2017)

Figure 2.4: Expected impact of digital transformation on the cost situation in companies.
(Kersten et al., 2017)

Digitalization has created the opportunity to revolutionize old business models and

in particular to implement new supply chain strategies. Many industries have moved from

Push strategies to Pull strategies, just to find that these strategies lead to significant service

and distribution problems. They eventually move to Push-Pull supply chains (Werner, 2013).

Figure 2.5: Effect of push technologies and pull demand on the digital supply chain.
(Schrauf and Berttram, 2016)

Driving the transformation to the smart supply chain are two tightly intertwined

trends. On one hand, new technologies like big data analytics, the cloud, and the Internet of

Things are pushing into the market. On the other, more exacting expectations on the part of

consumers, employees, and business partners are pulling companies to develop more reliable

and responsive supply chains (Schrauf and Berttram, 2016).



3.1 New Technologies

Supply chains operate along the traditional Supply Chain Operation Reference

(SCOR) processes plan, source, make, deliver, return, and enable. Every one of these

elements is rapidly being revitalized through technological innovation. We divide up the

technologies into eight key areas: integrated planning and execution, logistics visibility,

Procurement 4.0, smart warehousing, efficient spare parts management, autonomous and

B2C logistics, prescriptive supply chain analytics, and smart supply chain enablers.

All of these elements are interrelated, and they build on one another. Consequently,

a digital supply chain strategy needs to consider all of them to leverage the full benefits of


3.2 Integrated Planning and Execution

The business goal of the digital supply chain is to deliver the right product into the

customers hands as quickly as possible but also to do so responsively and reliably, while

increasing efficiency and cutting costs through automation. This goal cannot be achieved

unless the supply chain is fully integrated, seamlessly connecting suppliers, manufacturing,

logistics, warehousing, and customers, and driven through a central cloud-based command


With this level of integration, signals that trigger events in the supply chain can

emanate from anywhere in the network and alert all to issues affecting supply or demand,

such as shortages of raw materials, components, finished goods, or spare parts. In a world in

which customized manufacturing is fast becoming the norm, and customers are becoming

ever more demanding, the fully responsive supply chain is a huge competitive advantage

and fast becoming a must-have.

3.3 Logistics Visibility

The key to success for any supply chain is efficient exchange of information. The

traditional supply chain is fraught with friction, caused primarily by lack of complete and

timely information. Potential for disruption is high; sudden shifts in demand, lack of raw

materials, and natural disasters can wreak havoc on the best-laid supply chain plans. And the

outsourcing of many necessary elements only makes it harder to understand the supply chain

in full, fogging visibility into the transportation network and making it difficult to mitigate

problems as they occur.

Thats why the overarching goal of the digital supply chain is to open the supply

network for all to see. B2C markets are pulling companies along to provide this level of

visibility, demanding more information about shipment arrivals with real-time updates. In

B2B networks, producers expect timely status information on their supply shipments, which

are typically linked to production plans. Constantly updated and reliable transportation

information can significantly improve the producers customer satisfaction as well.

3.4 Procurement 4.0

Digitizing procurement will radically change the tools and talents required, add new

categories to be sourced, and transform the value proposition of the procurement function.

Efficient integration and management of suppliers of raw materials and parts is a

critical building block in the digital supply chain ecosystem. The digitization of many

traditional aspects of procurement is already under way, as companies use a variety of big

data tools and techniques to connect more closely with suppliers, aid the planning process,

improve sourcing, actively manage supplier risk, and boost collaboration. The result is lower

costs and faster delivery throughout the supply chain as it becomes increasingly automated.

3.5 Smart Warehousing

The concept of adopting and implementing a smart factory solution can feel

complicated, even insurmountable. However, rapid technology changes and trends have

made the shift toward a more flexible, adaptive production system almost an imperative for

manufacturers who wish to either remain competitive or disrupt their competition. By

thinking big and considering the possibilities, starting small with manageable components,

and scaling quickly to grow the operations, the promise and benefits of the smart factory can

be realized.

The Smart Factory Logistics methodology created by Bossard meets customer needs

and make inventory management leaner and more agile. Bossard has three specific solutions

to make your facility smarter:

i. Customer-specific evaluation The Smart Factory Logistics approach includes a

comprehensive logistics management analysis of delivery, supplier consolidation,

operation and maintenance, and even encompasses strategic customer consultation.

Smart Factory Logistics systems are engineered to suit different manufacturing

environments and production setups ensuring maximum operation flexibility.

ii. Intelligent systems Patented technologies like SmartBin and SmartLabel

communicate the current inventory levels from warehouses, holding areas, or

lineside. Automatically triggered orders and replenishment means you have exactly

what you need when you need it.

iii. Big data software creates transparency With our own supply chain collaboration

software, ARIMS, we can collect and deliver data on a large scale to create

transparency. Beyond plotting usage and deliveries, ARIMS can be used to plan and

implement an increase or decrease in planned production.

(Bossard Group, 2017)

3.6 Efficient Spare Parts Management

The warehousing link in the supply chain is expensive, labor-intensive, and fraught

with potential error. Digitization will certainly eliminate much of its inefficiency and

integrate the process into the entire supply chain. Meanwhile, 3D printing is poised to

transform this critical link in the chain even further.

Consider the problem of spare parts. At many warehouses, more than half of all orders

shipped are one-time requests for spare parts, and the demand for them is highly erratic,

almost impossible to predict. Thats why companies typically maintain huge inventories of

parts, many of which must be kept for 30 years or more if customers are to keep operating

older machines.

Already, digitization is revolutionizing the warehousing and distribution of spare

parts. Sophisticated analytics software allows demand for spare parts to be forecast much

more precisely, through solutions such as predictive maintenance of industrial vehicles and

machines. That in turn allows companies to optimize spare parts storage and distribution, as

a great deal more information can be integrated, such as social listening and traffic and

weather data, on which demand and distribution depend.

3.7 Autonomous and B2C logistics

Few elements are likely to influence the general perception of the digital supply chain

as much as the rise of autonomous logistics. The notion of driverless cars already turns heads.

Fleet management will deploy all manner of driverless vehicles and other robotic

innovations that will play an increasing role in moving goods around the world.

The most common use of autonomous vehicles in logistics will be driverless trucks.

Like their car brethren, self-driving trucks will depend on mapping software and short-range

radar to assess the vehicles surroundings. Wireless connections to other vehicles and to the

road itself will provide additional information that will speed up traffic flow and reduce

roadway congestion and accidents.

The possibility of autonomous truck convoys a modern-day wagon train with

multiple trucks in a line will reduce the need for human drivers and allow the trucks to

drive more closely together. Internal sensors will help fleet operators assess damage to cargo

and determine maintenance requirements.

3.8 Prescriptive Supply Chain Analytics

The goal of the digital supply chain is to fully integrate and make visible every aspect

of the movement of goods. The key to this critical element of Industry 4.0 is big data

analytics. Already, companies have the tools to describe much of the current state of their

supply chains where the goods are, where the demand for specific items is currently coming

from, and when items are likely to be delivered. And companies are learning to predict

critical elements of the chain. Demand through the chain can be better anticipated thanks to

more sophisticated signals from the market, which translates to demand for production

capacity, storage and logistics needs, and changes in raw materials requirements.

The next stage in the development of supply chain analytics will be the most

important: the ability to prescribe how the supply chain should operate. The goal isnt simply

to optimize demand planning; or the supply chains distribution facilities, routes, and mobile

assets; or the management of inventory and spare parts. Instead, the key lies in the ability to

optimize for any number of factors across the entire chain, depending on circumstances, and

then be able to actively modify the chain accordingly.

3.9 Smart Supply Chain Enablers

Companies setting out to build the smart supply chain face a difficult task, one that

will likely prove impossible unless they develop a clear strategy that is fully responsive to

the opportunities on offer in a fully digital environment. It must be based not just on the

companys current operations and business model but also on new business models available

once digitization has been implemented, such as creating direct sales channels and leap

frogging levels in the value chain.

Once the strategy is determined, companies must put into place several key

capabilities needed to carry it out, in addition to the supply chain applications discussed

above. These key capabilities include the following:

i. Processes.

ii. Organization and Skills

iii. Performance management.

iv. Partnering.

v. Technology.



Supply chain very important structure in manufacturing. History have been told that

behind successful organization or company depends on their supply chain management. In

Fourth Industrial Revolution, supply chain management must change and become

digitalization. Indeed, the structure of supply chain management, integration strategies,

technology drive the supply chain and so on must change follow the industrial

transformation. Digital supply chain is a new era for supply chain management with four

main attributes. The challenging for manufacturing are to prepare the equipment for

digitalization such as highly technology software, big data storage, and including to prepare

workforce that ready adopt the digitalization in work place.

The biggest impact from the Fourth Industrial Revolution technologies and concepts

is to be expected from a technological view especially for the procurement, production and

distribution activities in the supply chain. The organization of the supply from a

technological view will mainly change due to the implementation of Business Intelligence

technologies, Smartphone Apps, and RFID-technologies and the miniaturization of

electronics. However, structural changes to the organization are to be expected mainly in

manufacturing processes. Impacting technologies are the Machine to Machine

communication, and Smart Factory including Smart Logistics. With the combined

implementation of Smartphone Apps and Smart Data tools, the interaction of people within

the supply chain will face a huge impact in the sales departments of companies, where the

customer can be integrated and organizational borders are eliminated.


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