Supply Chain 4.

0
An introduction to the key implications of digital technologies in Supply Chain
Management

Danar Mustafa

Driving digital transformation in Operations and Supply Chain Management

 Short recap and summary of Industry 4.0

Full presentation, click here

Or Go to Digital Supply Chain Management Here

 Key Definitions
Digit: From the latin word for “finger”, referred to counting on fingers

Digital: Information & Communication Technologies, represent information

digitally, i.e. 0 and 1, rather than analogue

Digitization: The process that converts analogously represented information into

digitally represented

Digital Transformation: The processes that change current organizations & their
operations from predominately not utilizing digital technologies into doing so

Digital Business: Situations when a business utilizes digital technology so as to

activate economic value creation and appropriation

Industry 4.0: Is referring to trend towards automation and data exchange in

manufacturing processes. Also known as Industrial Internet or SMART
manufacturing.
 Industrial Revolutions

• The first industrial revolution (-1765)

– Agriculture processes are replaced with industrial
mechanization
– Invention of steam engine
• The second industrial revolution (-1870)
– New sources of energy: electricity and oil
– Combustion engine
– Telegraph
– New organization and productions models by Taylor
and Ford
• The Third Industrial revolution (-1969)
– Rise of electronics  transistor and microprocessor
– High-level automation  PLC and robots
• The Fourth Industrial revolution
– Internet and virtual world (cyber physical systems)
– Cloud
– Big Data Analytics
– Internet of Things
 Industry 4 across the globe
Germany
• Industrie 4.0

Sweden
• Smart Industry

United States
• Smart Manufacturing Leadership

Japan
• Industrial Value Chain Initiative

China
• Made in China 2025

https://ec.europa.eu/digital-single-market/en/coordination-european-
national-regional-initiatives
 Driving Technologies
• Internet of Things
– Sensors connecting devices
• Mobile Solutions
– Tablets, wearable sensors, smart
glasses
• Cloud Computing
• Cyber-physical system
– Monitor and control physical assets
• Big data analytics
– Turning data into insights
• Manufacturing technologies
– Robotics and 3D printing
• Distributed ledgers
– Blockchain

https://www.gartner.com/smarterwithgartner/5-trends-emerge-in-gartner-hype-cycle-
for-emerging-technologies-2018/
 Cost of sensors, bandwidth and processing power

• Moore’s Law
– The number of transistors that fit
on a chip grows exponentially.
Processor Power doubles every 18
months
– Processing costs have declined
almost 60 times in the last 10 years
– Sensor prices have dropped to an
average of 60 cents
• Butters Law
– Communication speed doubles
every 9 months
– Bandwidth cost has decreased by a
factor of nearly 40 times
• Kryder’s Law
– Storage capacity doubles every 13
months
 Physical  Digital  Physical
• Monitor, control, optimize
and automate
– Data is the new oil , from
analog to digital
– New products and service
offering
• Sensors, wearable's, Mixed
reality
– Move from physical to the
digital world
• Autonomous robotics and
simulations
– Interact with the digital world
– Digital Twins
 Predicted Benefits of Digitalization and Industry 4.0

• Weforum estimates $100 trillion of

value that digitalization could be Reduced C02 Emissions
generated over the next decade
• Unlock value through Digital
Transformation Lives Saved by increased security
– Digital transformation could unlock $1.3
trillion of value for the electricity sector
– if it embraces digitalization
Cost Savings
• BCG Quantitative Analysis of
Manufacturing in Germany
– Productivity: Vary by industry. Time Savings
Automotive companies can expect 10-
20 percent increase
– Revenue: Additional growth of about 30
billion USD / year Net Job Creation
– Employment: 6 percent increase during
the next ten years
• Studies point that the fourth Accidents and Injury avoidance
industrial revolution can create up to
3.7 trillion in value by 2025
 Three Effects to Consider
• Mass Customization
– Individual requirements
– Flexible production
– New pricing models
• Automation
– Smart and connected
robots in production
– Process Automation
– Intelligent Applications
• Big Data
– Improved decision-making
– Faster problem-solving
– New types of innovation
Digital Supply Chain Management
 What is Supply Chain Management?
• "Supply Chain is the network of organizations
that are involved, through upstream and
downstream linkages, in the different
processes and activities that produce value in
the form of products and services in the
hands of the ultimate consumer" - Martin
Christopher (2013)
– Physical flow: movement, and storage of
materials and goods
– Information Flow: Coordinate and control
day-to-day flow and long-term plans

• Logistics Management is referring to day-to-

day activities of managing, acquiring, storing
and transporting resources

• Supply Chain Management acknowledges all

activities such as marketing, new product
development, finance and customer services

supplychaininformation.blogspot.com
 Why focus on improving Supply Chain Management?

• Income Statement
– Response time to customer
request
– Product Quality
– Time to market for new products
– Transportation Cost
– Selling Cost
– Inventory Cost
– Forecast accuracy
• Working Capital
– Holding Cost
– Correct invoicing
– Payment on time

• Conclusion:
– Supply Chain decisions impact
financial performance
 Supply Chain Inefficiencies
• Studies shows:
– Today, up to 30% of the vessel’s
voyage time can be spent in
port
– In UK about 3 hours per
shipment is wasted on
requesting and funneling data
from suppliers and partners
– More than 100 million of
hours/year are wasted in
procurement and freight
administration
– Trading with non-customs
union partner incur 17% more
wasted time in administration
– Supply chain inefficiencies
(ordering, inventory, patient
flow etc.) leave $23B in
potential savings on the table
for hospitals
• … At the same time, pressure
to make supply chains more
– Faster
– More flexible
– More customized
– More accurate
– More efficient
• And at the same time
– Sharing Economy
– E-Commerce
– Technology Development
– Trade Wars
– Demographic Changes
– Environmental Drivers
 Supply Chain Digitalization
BlockChain Autonomous Data Analytics
• Smart Contracts Transportation • Fleet and
• Self-driving performance analysis
autonomous trucks

Internet of Things Drone Technology Robotics Systems

• Remote Asset • Inventory and • Material handling
diagnostics capacity
management

Augmented Cloud Digital 3D Printing

Reality Platform • Hub for part
• Cargo inspection • Dynamic asset manufacturing
pricing
 Data and Analytics as the core
• Operations Efficiency
– Create optimal inventory level and reduce
buffer inventory
• With Internet of Things solutions data can flow
in real-time from suppliers, partners and
customers
– Optimize Transportation Planning
• Machine Learning Techniques to predict
patterns from historical data on weather and
traffic planning
– Improving end-to-end visibility of material
flow planning
• Data from RFID, GPS, Sensors
– Control Tower
• All types of data can be translated into
optimizing decision making based on real-time
data
• Customer Experience
– Optimize last mile deliveries
– Fleet management
– Customization
• New types of Business Model and strategies
– Real-time data intelligence
– Platforms and new types of network
 Case Study:
Alibaba Transportation Planning
• Vehicle-cargo matching How to Leverage Big Data
• Route planning to Deliver Smart Logistics
• Delivery optimization video

• Key topics:
– Internal and external
data can be used on
effective ways
– Algorithms deliver new
type of insights
 Blockchain
• Enablers:
– Data interoperability
– Secure transactions
– Reduce process times
• Smart Contracts
• Automated pricing and
payments
• Tracking and traceability
• Case study
– IBM and Maersk video
 Case Study:
IBM and Maersk Blockchain
• Exchange events data and • IBM and Maersk video
handle document
workflows
• Enabling end users to
securely submit, stamp
and approve documents

• Key points:
– New types of products and
services
– Potential savings from
more efficient process
 Internet of Things
• IoT
– Track and trace assets
– Inventory Management
– Fleet management
• Coordinate and plan
– Delivery
• Alerts and navigation
• Autonomous operations
• Case Study Video
– Traxens Smart Container
– Siemens RFID
 Augmented & Mixed Reality
• Optimize Logistics
Operations
– Object recognition
– Picking
– Sorting
– Goods inspections
• Case Study Video
– DHL Vision Picking
 3D Printing
• Decentralize production
– Customize production
– Reduce transportation
cost
– On-demand
– Need for warehouse?
• Case Study Video
– BMW
 Robotics
• Warehouse efficiency
– Collaborative robots
– Scalable
– Flexible
• Case Study Video
– OCADO
– Kiva Warehousing
 The Idea of Control Tower
• One integrated system solution
• Transparency of material and
information flow
• Improve visibility
• Better planning and
monitoring
• How to start?
– Collect data
– Basic reporting and analytics
– Proactive monitoring

• Read: What is a Control Tower

 Other initiatives
• Drones and Automation
– Air Drone Delivery
– Electrical Cargo Bike
– Drone Inventory
– Robot Process Automation
– Self-driving trucks
• Benefits
– Flexible
– Accuracy
– Speed
– New type of services
 Security, privacy and integrity
• Everything will be
connected
– Who owns the data?
– What happens with our data?
– Are the devices protected and
secure?
• AI systems and Algorithms
– Fairness
– Accountability
– The Black Box
• Complex Data Ecosystems
– Data are brokered on global
markets
 Case study – Business Models
• Klöckner & Co, GE, Baxter,
Electrolux, Valmet, Google
Nest, Tesla,
– From transactional selling
parts/repair to optimized assets
– Co-creation
– Ecosystem  connect partners and
integrate system of systems
– New Pricing models  Pay as you
need
– New types of aftermarket services
– AI for automated decisions and
analysis
– Real-time operational data platforms
– Personalization offer and services 
Customer centric
– Smart, connected and integrated
products and services
 Emerging Supply Chain Strategies
• Last Mile Delivery
Models (e-commerce)
– Crowd sourced
– Parcel terminals
– Electrical tricycles
– Drone deliveries
– Digital lockers
• New types of
warehouse solutions
– Smart and Mobile
 Next step
• How to start your Digital Supply Chain
Transformation?
– Vision statement
– Strategy roadmap
– Manage pilot projects
– Measure maturity in processes
– Business Model Discovery

digitalstrategy-ai.com
 Contact
• info@danarmustafa.se

• LinkedIn:
https://www.linkedin.com/in/danarmustafa

• danarmustafa.com

• digitalstrategy-ai.com