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The impact of Industry 4.0 on the supply chain

clock 4 minutes | 08 Dec 2020

Industry 4.0 and purchase decisions illustration

Industry 4.0 has had a far-reaching impact on manufacturing businesses. How Industry 4.0 affects the manufacturing supply chain is just one part of this. Traditionally, the supply chain was a singular, linear process. Now, with the advent of big data, the supply chain is being transformed into a complex network.

This opens up plenty of opportunities for customers and procurement leaders, as well as challenges for manufacturers and distributors. So how does Industry 4.0 affect procurement processes and how can businesses combine digital technology with the supply chain? Here is some advice and insight from our experts.

What does an Industry 4.0 supply chain look like?

Traditional supply chains are very much a linear, single-track process that meets at the finished product. From end-to-end, a customer would have very little visibility of a product’s development and distribution. This made it a challenge for procurement departments to estimate costs and predict lead times.

However, within an Industry 4.0 supply chain, this data becomes widely available to customers and procurement teams. This will help customers get regular feedback from suppliers on where their product is in the chain. Plus it enables them to plan their orders so manufacturers and distributors can send products without customers having to think twice.

Data and automated communication systems can interact with other parts of the supply chain network. For Industry 4.0 and supply chain management, this means a more flexible, efficient and responsive solution. It also becomes a differentiator for manufacturers, opening up more competition in the market and driving down costs.

What are the challenges for manufacturers?

As the supply chain network grows and becomes more complex, there are many challenges that manufacturers will have to face. These include visibility and security, managing data and engaging with both suppliers and customers.

Visibility and security

To make the most of Industry 4.0’s challenges and opportunities, a supply chain needs to be visible to customers. With this, come great concerns over cybersecurity. Giving customers more information about their products, such as data about their quality or location within the supply chain, without putting confidential business data at risk is a concern for many manufacturers.

Engaging suppliers and customers

For a network to be effective, it has to engage each part of the supply chain. This involves getting essential buy-in from your suppliers and customers. The wider team also needs to be involved if a manufacturer wants to stay competitive.

Managing data

With more visibility and connectivity, comes more data. So having an effective data infrastructure is key to creating a supply chain ready for Industry 4.0. By making the investment now to manage this wealth of data quickly and accurately, you can gain huge benefits later on.

Internet of things illustration

How does Supply Chain 4.0 benefit manufacturers?

It takes a lot of investment to get your supply chain ready for Industry 4.0. However, there are lots of benefits to be gained for manufacturers that get it right. This includes forecasting and planning, creating a more efficient and cost-effective production process ready for manufacturing 4.0.

Forecasting and planning

By linking data from supply chains together, it becomes easier to forecast purchasing decisions. For manufacturers, this means that production schedules can be planned out way in advance and demand can be more accurately forecast. It can also help them with their own investments, such as a legacy equipment replacement program.

Making production more efficient and cost-effective

Forecasting tools and supply chain data can help predictive maintenance be planned in advance, reducing downtime. The ability to link machines to the cloud also means essential information can be communicated directly with its manufacturer. This helps to create a more efficient production process.

Connecting distribution and manufacturing

By sharing your data with your distribution network, you can streamline the delivery of your products to customers. At Essentra Components, we’re working hard to connect our production and distribution even more closely together. By staying connected, we can create an efficient supply chain across our network.

What are the benefits for procurement departments and other customers?

When an Industry 4.0 supply chain works, it can bring a whole host of benefits to procurement teams and customers. For example, you can integrate your planning or design phases with your manufacturer, ensuring better product quality. Indeed, combining Industry 4.0 and procurement holds plenty of opportunities to be more efficient and cost-effective.

Integration into your planning and design phase

By integrating scheduling software and design data into a manufacturer’s systems, the products customers need will be delivered automatically. It also means that any information customers need (such as lead times or product details) is easily accessible. This gives customers ultimate flexibility and helps them to save on costs.

High product quality

With greater visibility over the production process, customers and procurement teams can have greater reassurance of their product quality. Combining digital technology and procurement information has lots of benefits, including the ability to cross-reference supplier quality controls. This data will ultimately help customers to make more informed decisions about the quality of their products.

Better certainty of supply

Having access to your scheduling and planning means manufacturers can easily pre-empt your product needs. Plus, customers will be able to see exactly where their product is in the supply chain. This can be expanded across any Industry 4.0 enabled manufacturers and suppliers, making it much easier for procurement teams and customers.

Supply chain illustration

How is Essentra Components getting its supply chain Industry 4.0 ready?

Uniquely placed as both a manufacturer and a distributor, our team works hard to continuously improve our communication systems. We’ve invested in our production sites with Internet of Things-enabled machinery and data infrastructure. We’ve also upgraded our ecommerce websites and our distribution operations to support a more efficient production process.

Using the data from our Manufacturing Execution System (MES), we can easily identify weaknesses and opportunities in our processes. This feeds directly into our long-term Industry 4.0 strategy. By doing this continuous improvement, we work towards our ultimate objective of creating a truly hassle-free customer service.

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