Supply Chain 4.0 – the new and improved model

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A traditional picture of a retailer and customer relationship could be personable and labour intensive. These times might be long gone and although we are not quite at the stage of complete automation, we are certainly on track to get there. So, what does an the future of supply chain look like?

Context of supply chain management

Supply chain management is the act of managing the whole process from customer order placement to product delivery. Although, currently, supply chain management seems to be less and less about perfecting the collaboration of customer service, timely delivery and inventory management but instead a means of driving higher sales and profits.

The role of automation in the supply chain is to essentially increase efficiency thereby influencing sales and profits. This ensures every process is optimised as much as possible and the time delay between the customer placing an order and receiving the product is kept to an absolute minimum. This level of efficiency was achieved in the past through a focus on operational logistics, which involved the picking and sorting of orders and timely shipping, however now the focus tends to be more on operational planning as logistical processes can be handled by automated systems.

Inventory 4.0

This is the catchy name used to denote the computerisation and automation of the manufacturing industry. Industry has been shaped by four major eras of development namely mechanisation, electricity, computerisation and now a combination of computers and automation that marks the start of something truly unprecedented. A key feature of Industry 4.0 is the adaptability of the computer systems and how they contain machine-learning algorithms to be able to assess situations prior to eliciting a course of action. They are also capable of controlling robotics remotely, which has huge potential for many industries including supply chain management. To be considered Industry 4.0, systems must incorporate compatibility and communication between devices, sensors, computers and humans; the ability to transform the physical world into conceptualised data through sensors; the ability to support humans both in tasks and decisions; and decentralised decision-making where the system can make simple decisions without human input.

Automation in practice

Two major retailers present themselves as world leaders of Supply Chain 4.0. Rather than focusing on reducing costs by optimising the supply chain, they are focused on increasing sales. Adidas is one of the leading footwear retailers in Russia and happened upon huge success by creating an omnichannel retail strategy that allows customers to purchase products via a range of methods including click and collect, ship from store and endless aisle. Essentially this enables a customer to purchase product that is available anywhere in the whole country even if it is out of stock in their home town. As you can imagine, this infrastructure not only supports but is also supported by optimised inventory management, enabling the retail giant to turn more and more inventory into sales thereby increasing revenue and decreasing wastage. Technological solutions are required to underpin such an endeavour such as RFIDs (or radio-frequency identification tags). These facilitate tracking of product at any point in the supply chain, feeding data back to a centralised hub from which all supply chain coordination can take place.

The second retailer to admire is Amazon, who are investigating methods of optimising delivery of product to customers. Their ambitions go as far as aiming for a sub-30 delivery system which sees product delivered to a customer’s waiting hands in under 30 minutes. The way in which they propose achieving this is by using unmanned flying drones to a set location denoted and coordinated through a computerised system. This really is the epitome of computers and robots working in harmony. However, a proposition such as this needs to be well-researched as drones would need to stay clear of aircraft flight paths and electrical wires, which can be difficult in urban areas. Bloomberg reports that Amazon has opened a research facility in France to develop their own air traffic control system to facilitate the smooth implementation of drones. Although this is a massive undertaking, the world of supply chain management is evolving in an exciting way.

Concluding thoughts

Supply chain management is heading in a new direction with increasing automation and the use of robotics. There is, however, a lot of back-end support required for which optimum inventory management is essential. This is facilitated through software systems that get everything online and computerised so it can be incorporated seamlessly into automated counterparts.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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