Oct 23

four steps to I4 enabled supply chains

Six years ago the term Industrie 4.0 has been branded at the Hanover Fair 2011 “get new technology first”. Since then several models have been designed to show what is comprised by Industrie 4.0 (I4). Instead of drafting yet another definition, this post will focus on I4 supply chains. The goal is to reach autonomous systems. Yet, for most organizations this means revolutionizing the way they operate. For this reason organizations should follow a four step approach slicing the transformation into manageable pieces. Each of the four steps works best if the organization applies lean methods:

1. visibility
It is easily explainable. Visibility means that you document your processes and know exactly which process steps are adjacent. In a first moment it seems an easy task. However, most organizations struggle to record their processes across departments coherently. In addition to the flow of goods/ services the underlying IT settings should be outlined as well. In most cases the IT department is in the best position to ensure visibility. They select a business process modeling software and consistently map processes for all departments. This task should not be underestimated and should be started with right away. Processes owners are responsible for updating the business process model when change occurs.

2. traceability
Once you know the sequence of events that your product/ service passes through, products/ services should be uniquely identifiable. Batch or lot number are widely used. Lately, products/ services can be authenticated by a token using blockchains, too. They can be labeled by an imprint or by tags. The latter can emit info passively or actively. Depending on the demanded frequency of location and status transmittal, organizations have to choose the right technology. Event-based recording can be achieved by manual scanning at each major event, for near real-time recordings tags need to be placed on either the product or packaging and a capable technology infrastructure has to be created. For real-time traceability NB-IoT, 5G or similar and SigFox, LoRA-WAN or similar are required for outdoor or indoor purposes, respectively.

3. predictive action
Once products/ services are traceable their footprint can be stored in a data lake. With each goods flow the power of the data lake increases. Using statistical analysis, nowadays often referred to as big data, analytics or both, organizations are able to predict lead times, destinations, configurations and possible pitfalls. Depending on the computing power and the business intelligence (BI) software can also simulate supply chain disruptions and test whether their supply chain risk mitigation strategies are suitable. However, to achieve this capability organizations need to gather plenty of structured data and also employ data scientists.

4. autonomous systems
In step three we have the collected the prerequisite for I4 enabled supply chains: data. The fourth step is simply installing the technology which act upon the predictions. Yet, the BI software needs to be capable of generating prescriptive data, meaning that for a specific event solutions are in place. They guide the supply chain managers on which decision to take and potentially can trigger the right action themselves thanks to machine learning. Ultimately, at each event in the supply chain the autonomous systems are installed that execute the commands of the BI software. Supply chain managers will have to monitor the events and ask the data scientist to fine tune the algorithms of the BI software. The requirement for this rather visionary supply chain is that an organization and its people are able to run an orchestrated, data-, hard- and software infrastructure.

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