What is the impact of Industry 4.0 on the supply chain?

Industry 4.0 and purchase decisions illustration
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As the pressures of modern industry have changed and grown, effective supply chain management has become integral to business processes. The new State of Manufacturing report from Essentra Components found that half of manufacturers said supply chain pressures were having an impact on their business, with 62% predicting it to continue for up to five years.

To maintain supply chain efficiency and resilience in this highly competitive and challenging market, many manufacturers have introduced new technologies into their businesses.

Specifically, the successful implementation of Industry 4.0 technologies into manufacturing systems has enabled businesses to stay competitive with their supply chain performance. This article will explain exactly how manufacturing companies are using the impact of Industry 4.0 on supply chain management to benefit them and their customers. 


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How is the supply chain changing?

The increase in globalisation across the last century means the supply chain has become more extended and complex. As such, the supply chain for just one product can involve the coordination of several different teams and systems across multiple continents.

Recently, certain pressures have exacerbated these challenges and made supply chain management even more complicated.

  • COVID-19 severe restrictions on the movement of goods and people created significant delays in global production and logistics, with 76% of manufacturers predicting that supply chains won't recover till the end of 2023. To avoid this level of disruption in the future, 67% of global manufacturers are reevaluating their material sources.
  • Environmental sustainability: with legislators and governments putting stricter environmental regulations on manufacturers, supply chain sustainability has become a higher priority. This is particularly true for customers, which are prioritising sustainable supplier selection alongside product price and quality.
  • Customer demands: though this has always been a driver of how supply chain management is conducted, modern consumers are demanding greater convenience and customisation from manufacturers. This is increasing the number of supply chains as well as making them more complex.

As a result of these challenges, the digital transformation of supply chains has become a necessity for any manufacturing company looking to stay resilient and competitive.

What does Industry 4.0 in the supply chain look like?

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While traditional supply chains were linear and straightforward in nature, modern models are webbed networks that span several continents. Plus, in the case of those built within the circular economy, supply chains can also be cyclical in nature, which presents its own challenges to manufacturers.

The process integration of Industry 4.0 technologies at each stage of these supply chain systems gives them the capabilities they need to perform efficiently.

Product Development

Customers are increasingly demanding greater customisation alongside faster delivery of products. This means the product design and development process needs to be quicker and highly accurate.

The introduction of virtual reality (VR) and augmented reality (AR) into the product development phase means digital data can be overlaid onto prototypes to speed up the process of testing and visualisation. Similarly, 3D printing and additive manufacturing technologies enable rapid visualisation and simulation.

As a result, the successful implementation of these technologies helps even disparate manufacturing teams collaborate on product development and means products can be fast-tracked to market without sacrificing quality.


To get products to customers on time at the right price, operational costs need to be kept low and production planning needs to be as accurate as possible. Cyber physical systems, big data and cloud computing technologies are key to making this possible.

With a cyber-physical system, manufacturers can benefit from the efficiencies of machinery with the complex decision making and value-addition of humans. The smart machines, sensors and robots collect a range of data about the manufacturing process, which is stored in the cloud.

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Production research can then be conducted by human workers, machine learning or artificial intelligence (AI) technologies (without human involvement) to achieve operational excellence while using materials and energy as efficiently and cost-effectively as possible.

Plus, in the future, its hoped that customers will be able to connect to and view this data via a manufacturer’s enterprise resource planning (ERP) software. This will allow them to have complete visibility over their manufacturers' supply chains, giving them extra quality assurance and helping them make a sustainable supplier selection.

Distribution and logistics

Industry 4.0 technologies open up the possibility of complete industrial information integration between suppliers, manufacturers, customers and distributors. This means any logistics can be planned in more accurately, so each truck leaves a factory full of products with their delivery routes optimised to be as efficient as possible.

This won't just help lower distribution costs and speed up delivery times, but reduce the carbon emissions of logistics thanks to improved fuel efficiency.

How does Industry 4.0 benefit manufacturer supply chain performance?

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Though it requires significant investment to integrate Industry 4.0 technologies into a manufacturing supply chain, there are lots of benefits to be gained for businesses that get it right.

More accurate planning

By collecting and analysing data about customer demand, production volumes and operations, supply chains can be mapped and resourcing can be planned in advance. By forecasting customer purchasing decisions, manufacturers can put accurate production schedules, raw material orders and resource planning in place.

These analytical capabilities don't just allow manufacturers to work and deliver products more efficiently, but help them plan predictive maintenance, repairs, and upgrades such as a legacy equipment replacement programme. This minimises production downtime and means business assets are used for as long as possible.

Greater production efficiency

Empowered by big data analytics, manufacturers have complete visibility over their operations. This enables them to view and adjust any parameters they need to make their process as efficient as possible.

This doesn't just help them to deliver high-quality products quickly but minimise waste and carbon emissions too. This is key as more customers look for manufacturers with greener credentials and regulators put stricter environmental controls over manufacturers. It's also essential if the manufacturing industry is to join the circular economy, which focuses on minimising waste wherever possible.

Improved customer satisfaction

By sharing data across an entire supply chain management network, manufacturers can develop and deliver quality products quickly and cost-efficiently. From sourcing raw materials to organising final distribution to customers, even complex networks can be optimised and streamlined thanks to the insights and automation possible with a smart supply chain.

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Plus, having a digital supply chain means manufacturers will eventually be able to give customers total visibility over where their products come from. This will set them apart in terms of transparency and give them a competitive advantage in the market.

What are the benefits of Industry 4.0 for customer supply chains?

When an Industry 4.0 supply chain works, it can bring a whole host of benefits to customers.

  • Improved decision-making: better visibility over supply chains means customers can make their manufacturer selection process more thorough. With plenty of information, performing due diligence and environmental impact evaluations becomes much easier.
  • Easier quality assurance: by seeing manufacturers' production processes and supply chain parameters, customers can have greater reassurance of their product quality. They can also cross-reference supplier quality controls, view raw material suppliers, and conduct their own operations research to ensure manufacturers can meet their needs.
  • Better service: having access to customers' production scheduling, inventory management and planning means manufacturers can use predictive analytics to improve order accuracy and pre-empt customers' product needs. In the future, this will mean producing and delivering products without customers needing to place an order.

In short, having a supply chain powered by Industry 4.0 technologies gives customers complete visibility over the origins, production, and quality of their products (even in complex chains), empowering them to make more informed decisions about their manufacturers and suppliers.

What is the impact of Industry 4.0 on supply chain management for Essentra Components?

Essentra Components has implemented a range of Industry 4.0 technology, such as big data analytics and smart manufacturing equipment, to deliver a seamless, hassle-free customer experience.

By collecting and analysing data securely from demand, production and distribution software, Essentra Components has built a resilient, modern supply chain that delivers high-quality products to customers reliably and efficiently.

Product development

Additive manufacturing and 3D technology is key to Essentra Components' product development process. For standard product ranges, 3D CAD drawings have been developed so customers can insert them into their project designs for prototyping or testing purposes.

For custom solutions, Essentra Components uses 3D printing and rapid prototyping processes to quickly and accurately develop quality products. With the ability to create prototypes on an industrial 3D printer, Essentra Components can iterate bespoke designs quickly before putting a new component into production.



With a range of 45,000 products, Industry 4.0 technology is key to helping Essentra Components manufacture 80 million parts a week, distribute them to customers across the world and efficiently manage their complex supply chain.

By integrating their eCommerce platform with their production processes, Essentra Components enables customers to order free samples that will be delivered quickly and help them check they're fit for purpose.

Smart planning software takes customer orders directly into the factory. By communicating with smart machines, it's possible to manufacture the desired number of components in the fastest and most cost-effective way.

Operators and managers can monitor and analyse OEE levels (Overall Equipment Effectiveness) in real time and remotely. This means any data captured during production can be used to refine the industrial engineering process. Sometimes this can be done automatically without any human involvement.

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Essentra Components' injection moulding machines are also remotely linked back to the manufacturer, meaning their performance can be monitored and any faults immediately diagnosed or remotely resolved. Plus, thanks to machine learning and industrial automation such as robotic sprue pickers, production times can be continually improved upon.

This doesn't just improve production efficiency, the speed of product delivery and operational costs, but can also help minimise wastage and increase sustainability. As well as sharing this environmental data with industry legislators, Essentra Components also aims to provide this securely to customers so they can make informed supply chain decisions.


By using automated and interconnected technologies to drive distribution, Essentra Components warehouses are implementing Industry 4.0 technology to keep the supply chain network connected and speed up delivery time.

Combining this technology with an established distribution network means Essentra Components can offer more than 1 billion parts for fast dispatch. This means Essentra Components customers can benefit from the quicker delivery of higher quality products.

Thanks to the combination of smart manufacturing and Industry 4.0 technology throughout their whole supply chain operations, Essentra Components also has the potential to use predictive analytics to provide an even more efficient customer service in the future.

However, as with any other technological system, cybersecurity is key, which is why Essentra Components has several controls in place to ensure their and their customers' data is completely secure.

In short, for Essentra Components, the impact of Industry 4.0 on supply chain means the components manufacturer and distributor can make it easier for customers with an efficient, resilient supply chain and hassle-free service.