Industry 4.0: Three Reasons Why Supply Chain Professionals Are Excited About It

Bogdan Büchner

Industrial revolutions are historical events. The first phase was ushered in with the commercial steam engine and the mechanical loom. The second era of industry came about with the advent of electricity, the assembly line and the beginning of mass production. The third industrial revolution was triggered after World War II by the computer (automation and computerization). Everyone seems to agree that the fourth era of industry, Industry 4.0 is underway. It has been called by different names, the smart factory, factory of the future, and the 4th industrial revolution and Industry 4.0, among other names. Whatever you call it, we all agree that its advent will change manufacturing as we know it.

The 4th industrial revolution is the world where machines are intelligent, networked (connected remotely to computer systems), and can learn and communicate with each other and the humans via the wireless web. It is the effect of this connectivity that has supply chain professionals excited.

The 4th Industrial Revolution marks the merging of virtual data with real production equipment to create what has been referred to as “smart factories.” The 4th industrial revolution is still in its early stages of development but is already transforming manufacturing. Supply chain professionals and manufacturers can now digitally plan and track their entire production process. This minimizes risks, increases efficiency and eventually drives revenues.

As a matter of fact, 35 percent of companies that have embraced Industry 4.0 model expect to register a 20 percent increase in their revenue over the next five years. The Industry 4.0 movement is already in progress in countries with large manufacturing footprints such as Germany, Japan, and the United States.

Currently, different countries around the world are adopting the Industry 4.0 model. The reason being, they have seen its potential and want to benefit from all the business opportunities opened by adoption it. Let’s look at some of the Industry 4.0 technologies that the supply chain professionals are excited about.

1. Predictive Maintenance Within the “smart factories,” sensors can be used to continually monitor key performance parameters (production line equipment and the production status). This information can be recorded and transmitted to the cloud to be used for predictive maintenance analysis. Supply chain professionals and the manufacturing personnel receive continuous status alerts in real-time. With this information at hand, supply chain professionals and MRO employees can reduce maintenance costs and increase productivity.

**2. Additive Manufacturing ** It is not a new phenomenon. Additive manufacturing has been with us for decades. Companies have relied on the process to prototype desired components before they are put in production on factory floors. Currently, additive manufacturing is being conducted on the factory floor thanks to the improved capabilities and reduced costs associated with 3D printing.

This has made it possible for the manufacturers in smart factories to fulfill spare part requirements, make design improvements and upgrades in less time. Raw materials that were previously a problem to ship (because of cost and weight) can now be created on-site. This has reduced costs and logistic headache for supply chain professionals.

Additionally, additive manufacturing methods have lowered required inventory levels and enabled the procurement teams to have greater flexibility than ever before.

3. Industry 4.0 RFID Tags In traditional manufacturing, product assembly lines necessitate human interaction for success. The interactions involve monitoring part inventory levels, identifying possible process improvements and more. By leveraging Industry 4.0, supply chain professionals, and procurement teams can monitor physical processes in real time.

With the Intelligent radio frequency identification (RFID) tag solution, supply chain professionals can track the status as well as the location of inventory throughout the entire supply chain. RFID tag solution enables procurement teams to track every piece of inventory to ensure that every single one of them is accounted for.

Also, it improves efficiency (makes it easier to find specific products within the warehouse, no matter where they are located). RFID tag solution can also prevent counterfeiting products. It is easier to verify the authenticity of products as they move through the supply chain.

The age of the 4th industrial revolution is upon us. It will revolutionize the supply chain around the world. Procurement professionals will have better control and understand their operations better. Also, they will be able to make more agile and informed decisions.

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