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Industry 4.0: The future of supply chain

Article by Ayman Zeroual, Senior SAP SCM Consultant at TheValueChain Luxembourg.

What challenges your customers are facing and what solutions do you provide to them? What kind of companies use your services?

The challenges that companies face are different from industry to industry and for some of them the implementation of Industry 4.0 technologies will for sure bring a lot of improvements. Manufacturing companies see it as having a great potential while companies, like in the constructions sector, do not currently see a lot of potential.

Many of our customers that have decided to use the smart technologies to run their business fall in the first category of companies and the main challenge that they are facing is the integration of their IT infrastructure to achieve a high degree of interconnectivity and integration to be able to process data from all segments of their companies to achieve a better process optimization and adopt predictive actions when needed through real-time data analysis.

To help our customer achieve their goals, we at TheValueChain implement cloud-based solutions that have a high level of integration between them. IT Solutions like SAP S/4HANA Cloud, SAP Integrated Business Planning (IBP), SAP Intelligent Asset Management (IAM), to name a few, help our customer to achieve rapidly and with a low TCO, their goals.

With SAP S/4HANA Cloud, our customers can run all segments of their business in modern and intelligent-ERP system with built-in intelligent technologies, including AI, machine learning, and advanced analytics.

The integration of SAP S/4HANA with other applications such as SAP Integrated Business Planning (IBP) and SAP Intelligent Asset Management (IAM), allows our customers to achieve a higher degree optimization and cost-reduction thanks to the improved supply chain transparency, improved inventory as well as predictive maintenance to prevent downtimes. This integration is done thanks to the SAP Business Technology Platform, which allow us to bring together intelligent enterprise applications with database and data management, analytics, integration and extension capabilities into one platform for both cloud and hybrid environments, including hundreds of pre-built integrations for SAP and third-party applications.

What are the benefits of using smart technology (automation, machine-to-machine communication, the internet of things) for the supply chain?

The digitalization of the supply chain is a transversal process that spans the entire product lifecycle and involves all business divisions: development, production, marketing, sales and distribution. By breaking down the functional barriers that separate the different areas, it is possible to create a fully integrated ecosystem that transparently involves all stakeholders, from suppliers of raw materials and components to transporters, retailers and end customers.

Smart technologies (intelligent sensors, IoT systems, and intelligent assets) scattered throughout the supply chain provide real-time measurement of all stages of procurement. Predictive Analytics and Big Data platforms make it possible to assess the effects of each event on the business, automate processes and prevent failures.

At the same time, the use of APIs (Application Programming Interface) ensures the immediate sharing of collected information with all partners involved in the supply chain. Finally, mobile applications allow access to data from any place and device, facilitating the timely management of each event.

For example, the installation of automatic vertical warehouses connected to business management systems allows to automate the loading-unloading operations of products, reducing human intervention and consequently the risk of accidents. Moreover, it allows to better manage the storage of goods and to have an excellent visibility on stocks, avoiding production stops.

More generally, the ability to analyze and react quickly to all factors that may negatively impact the supply chain brings numerous benefits in terms of:

–Improved internal organization;

–Reduction in delivery times;

–Increased product availability;

–Decreased quantity of stock in the network;

–Less stock breaks;

–Reduced working capital;

–Greater satisfaction and loyalty of distributors and consumers.

Are we witnessing the emergence of a new business model in the era of industry 4.0?

Industry 4.0 pushes companies to develop new skills, both at the individual level of the employees and within the whole organization. Thanks also to the automation of repetitive and low-value tasks, now employees can focus on value added activities, and this leads of course to the improvement of the business model of existing companies.

On the long run, those improvements will lead in completely new business models in specific segments of the companies. Usually, what we at TheValueChain have noticed in our experience is that the segments that are more subject to changes are those that are users of heavy IT applications such as procurement, sales, production and logistics and warehousing. For these segments, the digitalization and automation within smart factories is a big game changer and of course, it will re-design the existing business scenarios.