The Digital Supply Chain Challenge

INTRODUCTION

introduction of mechanization and steam power in the late 18th century and the social upheaval that came with it. The second is electrification, the assembly line and mass production in the late 19th century. The success of Taylorism created the field of scientific management, which Ford employed in his auto plants, and manufacturing began a transformation to large factories and economies of scale. The third industrial revolution is perhaps the toughest one to guess. It refers to the introduction of basic automation and computers in around 1970. The implementation of programmable logic controllers (PLC) allowed companies to use simple robots to perform highly repetitive tasks and captured the imagination with futuristic images of robot arms in automotive plants. And, finally, there is the fourth industrial revolution – Industry 4.0. Industry 4.0 is an umbrella term that strives to describe a diverse mix of emergent digital technologies, each having a different value proposition to offer supply chain. There is no “normal” definition of Industry 4.0, and no formal list of technologies that it encompasses. But some of the most common elements that can be associated with Industry 4.0 are robotic process automation (RPA), collaborative platforms offered in the Cloud as software as a service (SaaS), machine learning (ML) and artificial intelligence (AI), big data, advanced analytics, cobots, internet of things (IoT), additive manufacturing and 3D printing, blockchain and augmented reality (AR). This is a very short list of examples – we have seen lists with over 400 different Industry 4.0 technologies. To make matters more complicated, many consultants have begun to refer to supply chain digitalization (SCD). SCD has no universally accepted definition that we have encountered but refers broadly to the subset of Industry 4.0 technologies that impact the less physical parts of the supply chain. So SCD can be thought of as including tools like supply chain control towers, traceability, inventory management and order management systems, but excluding shop- floor level technologies like cobots or automated guided vehicles (AGVs). In this book we use the two terms interchangeably. As a marketing strategy, the “Industry 4.0” framing has been a clear winner. It has helped catapult Industry 4.0 into a term many have heard – although not everyone will admit to not fully grasping the concept. We have received calls from small and medium-sized enterprise owners who would like to “do Industry 4.0,” as though it were a piece of equipment or a new technique like lean manufacturing or design thinking. All three evolutions are now intertwined and hard to untangle. It is difficult to talk about S&OP without slipping into advanced planning tools, supply chain

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