Supply Chain 4.0 is one of the most exciting advancements the manufacturing sector has seen in recent years. John Burgess, Project Delivery Director at supply chain management software specialist Balloon One, discusses the implications of this new technology for the manufacturing industry.

The digital revolution is well underway, and one major disruptor which is set to shake up the manufacturing sector is Supply Chain 4.0 — possibly the biggest advancement we’ve seen in the industry since the introduction of computers. The software essentially holds up a digital mirror to the real world, allowing manufacturers to respond dynamically to changes and issues in real time. By providing a constant stream of clear, accurate data, it allows businesses at every stage in the supply chain to make smarter, more informed decisions.

Here, I’ll explain how Supply Chain 4.0. works, and discuss how I expect the software will revitalise the industry over the new few years.

What is Supply Chain 4.0?

Supply Chain 4.0 is a fully integrated software model which uses multiple technologies to provide better connectivity and easier sharing of information between different levels of the supply chain. This means that data can flow in many directions across the whole chain, rather than just back and forth in a linear way.

At the heart of Supply Chain 4.0 is the Internet of Things (or the IOT for short). This is a network which connects machinery and allows it to collect, store, and distribute data without any human involvement. Autonomous machinery equipped with smart AI can then automatically use this information to make critical decisions in an instant, again without any need for human input.

In a nutshell, the 4.0 management system uses artificial intelligence and the IOT to facilitate faster, easier data sharing across the whole supply chain, improving efficiency in every area.

The Internet of Things helps to anticipate demand more accurately

The ultimate aim of any management software is to help match supply to real demand, minimising surplus products and waste. While old software models used previous consumer behaviour and other factors to try and forecast demand, this doesn’t always provide the most accurate data, as anomalies or unexpected changes to the market can always occur. There’s also the issue of informational gaps in the chain, as the data can only travel up and down the chain in a linear way.

Supply Chain 4.0 provides a much more accurate reflection of actual consumer demand in real time, because it allows data to flow in all directions, rather than just straight up or down. The Internet of Things immediately and autonomously relays the most up-to-date information between different objects, with no need for human involvement, saving a great deal of time.

Thanks to the IOT, the right information is always available at critical points, leading to smarter, faster decision-making and efficient production and delivery. For adopters of the new software, the greatest advantage of this will be lower overheads and a drastic reduction in overproduction, increasing profit margins at the end of the chain.

It will make manufacturing more consumer-led

Anticipating the levels of demand more accurately isn’t just better for manufacturers: it will also improve the process for the end consumer. Manufacturers will have a much clearer idea of what consumers want, and when they want it, allowing them to satisfy customer orders according to real demand. As a result, consumers will be able to get the products they want more quickly. I expect we will soon see many companies migrate to consumer-driven factories that produce stock on-demand, rather than trying to estimate it ahead of time.

It’s better for the environment

The manufacturing sector doesn’t have the best track record when it comes to sustainability, and many aspects of it take a heavy toll on the planet. When demand isn’t estimated accurately, it can lead to overproduction. That often means that products and parts go to waste, as do the resources used to make them. Many manufacturing processes also have large carbon footprints, which is made worse by inefficiency.

But, as Supply Chain 4.0 allows for much more accurate forecasting and on-demand production, wasteful overproduction is greatly reduced. Stock and parts are only ordered when needed across all levels of the chain, which helps to keep road transport and shipping to a minimum and helps to lower the overall carbon footprint of the industry.

Additionally, the move to on-demand production means that there’s no need for warehouses to stockpile huge inventories of products and parts. As a result, it could help to cut the carbon footprint of the logistics division within the supply chain, too.

Using new sources of data from the Internet of Things and insights from artificially intelligent machinery, Supply Chain 4.0 improves efficiency across every aspect of the chain, benefitting businesses, consumers, and the environment. It has the potential to revolutionise the entire sector, and I think we can expect the software to have a remarkable impact over the coming years.