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Digital supply chain management
1. 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
2. Short recap and summary of Industry 4.0
Full presentation, click here
Or Go to Digital Supply Chain Management Here
3. 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.
4. 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
5. 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
6. 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/
7. 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
8. 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
9. Predicted Benefits of Digitalization and Industry 4.0
• Weforum estimates $100 trillion of
value that digitalization could be
generated over the next decade
• Unlock value through Digital
Transformation
– Digital transformation could unlock $1.3
trillion of value for the electricity sector
– if it embraces digitalization
• BCG Quantitative Analysis of
Manufacturing in Germany
– Productivity: Vary by industry.
Automotive companies can expect 10-
20 percent increase
– Revenue: Additional growth of about 30
billion USD / year
– Employment: 6 percent increase during
the next ten years
• Studies point that the fourth
industrial revolution can create up to
3.7 trillion in value by 2025
Reduced C02 Emissions
Lives Saved by increased security
Cost Savings
Time Savings
Net Job Creation
Accidents and Injury avoidance
10. 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
12. 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
13. 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
14. 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
15. Supply Chain Digitalization
BlockChain
• Smart Contracts
Autonomous
Transportation
• Self-driving
autonomous trucks
Data Analytics
• Fleet and
performance analysis
Internet of Things
• Remote Asset
diagnostics
Drone Technology
• Inventory and
capacity
management
Robotics Systems
• Material handling
Augmented
Reality
• Cargo inspection
Cloud Digital
Platform
• Dynamic asset
pricing
3D Printing
• Hub for part
manufacturing
16. 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
17. Case Study:
Alibaba Transportation Planning
• Vehicle-cargo matching
• Route planning
• Delivery optimization
• Key topics:
– Internal and external
data can be used on
effective ways
– Algorithms deliver new
type of insights
How to Leverage Big Data
to Deliver Smart Logistics
video
18. Blockchain
• Enablers:
– Data interoperability
– Secure transactions
– Reduce process times
• Smart Contracts
• Automated pricing and
payments
• Tracking and traceability
• Case study
– IBM and Maersk video
19. Case Study:
IBM and Maersk Blockchain
• Exchange events data and
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
• IBM and Maersk video
20. 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
21. Augmented & Mixed Reality
• Optimize Logistics
Operations
– Object recognition
– Picking
– Sorting
– Goods inspections
• Case Study Video
– DHL Vision Picking
22. 3D Printing
• Decentralize production
– Customize production
– Reduce transportation
cost
– On-demand
– Need for warehouse?
• Case Study Video
– BMW
24. 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
25. 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
26. 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
27. 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
28. 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
29. 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
