Overcoming next-gen manufacturing and supply chain challenges with logistics 4.0

When the pandemic arrived, only a handful of businesses were ready to face it, thanks to their adoption of digitalization. Companies that were serving thriving industries experience a sharp increase in demand for their services. Yet, manufacturers were grappled with supply chain disruptions. Logistics firms tasked with the movement, storage, and flow of goods were directly affected by the COVID-19 pandemic.

It’s a well-known fact that logistics is an integral part of value chains. A sound and digitally advanced logistics facilitate the proper flow of trade and commerce and move products from the manufacturers to the final consumers.

Logistics companies provide assorted services such as

• Multi-modal transportation
• Freight forwarding
• Warehousing
• Inventory management

Logistics companies drive global manufacturing and timely product availability in the market. Take Apple as an example. Its iPhone product uses components from around 200 suppliers from 43 countries! Can you sense the importance of streamlined logistics?

The economic impact of Covid-19 under different lockdown scenarios

Today’s global value chains need better resilience and efficiency in the flow of goods between and within countries. This is achievable by outsourcing logistics functions to such logistics-service providers that have integrated, end-to-end solutions capabilities.

As is the case in other industries, manufacturers are aware that there will be fundamental changes like better automation and focus on smaller and local factories when the pandemic ends.

How does logistics 4.0 impacts supply chain management?

Logistics is an integral component to supply chain management. Supply chain management involves planning, procurement, and managing goods, services, and information from origin to consumption.

Logistics, on the other hand, enables and aligns

In short, the global economy of the 21st century depends on logistics as it helps in smoother product management for meeting consumer demand. Companies forming partnerships with suppliers, shipping services and warehousers, and connecting them via automated systems realized reduced overhead costs and faster delivery.

And how is all this achieved, you might ask? Well, when businesses simplify communication and services across departments, it creates a smoother workflow blueprint. This also reduces costs with increased visibility and understanding of company needs. Companies also cut back on overheads by reducing warehousing costs and purchases based on

• Supply forecasts
• Better inventory management
• Reliable shipping
• Timely delivery to consumers

Effect of Industry 4.0 on supply chain

The world is moving up the digital transformation path with the help of disruptive technologies such as

• IoT
• AI
• Big data and analytics
• Machine learning
• Automation and robotics
• Cloud computing
• Blockchain

Supply chain management stands to gain a lot from the 4th industrial revolution, aka Industry 4.0. An interconnected digital supply chain lowers the

• Operational costs by more than 30%
• Lost sales opportunities by more than 60%
• Inventory requirements by more than 70%

In addition to that, it helps companies become agile, accurate, and efficient.

Let’s discuss a few critical benefits of supply chain 4.0.

Superior transparency and accuracy

Global supply chains might include thousands of suppliers within the supply chain ecosystem. Companies need to ensure end-to-end transparency and real-time asset tracking. If there are any gaps in supply chain risk management, it might lead to

• Supply chain disruptions
• Lost sales
• Unnecessary overhead costs

Digitalization enables companies to track the entire supply chain in real-time. They can also track inventory by combing updates from supply chain partners with IoT data, thus improving order accuracy and ETAs that

• Minimizes out-of-stock situations
• Enhances lot and batch control
• Optimizes inventory
• Lowers associated costs

Data-driven decisions lead to cost-saving

With the help of advanced machine learning algorithms, businesses can predict demand for a particular item more accurately by analyzing data from sensors, social network trends, weather, etc.

These advanced algorithms also provide probability distributions of the expected demand volume. With such information, enterprises can successfully calculate both the upside potential and downside risks involved in the supply chain and plan better.

Using advanced predictive analytics methods reduces forecasting errors by almost 50 percent. When companies can predict demand with higher accuracy, they can easily optimize their inventory, thus reducing overhead costs.

Enhanced interconnectedness and collaboration

When companies can create completely integrated, digital supply chain management, they can enable a seamless flow of information between suppliers, manufactures, and customers. By breaking data out of the silos, businesses can successfully turn planning into a continuous process.

With the help of an interconnected platform, companies can also lower their lead times because of better communication. Suppliers can provide early warning, thus increasing “responsiveness-to-risk.”

When you have achieved closed-loop planning, pricing decisions are integrated with demand and supply planning, boosting revenues and optimizing the inventory.

Better-quality warehouse management

Adopting digitalization can help manufacturing companies improve their warehouse management capabilities. They can deploy sensors for tracking goods in real-time and also predict consignment arrival with much better accuracy. Real-time tracking also helps them ensure on-time pickup and delivery.

With the help of RFID technology, they can predict the exact location, even when it is in transit. Achieving this level of preciseness allows managers to provide real-time location-based instructions to workers, thus saving time.

By using tracking devices, labor hours per order can also be reduced. Machine-to-machine communication can also come in handy for optimizing the number of carriers per shipment.

Smarter supply chain

Digitalization has enabled supply chains to think and learn to recognize risks. They can change their supply chain parameters to mitigate various risks. Intelligent supply chain software solutions can continuously evolve and learn to handle exceptions with minimum human involvement.

Here is a downloadable resource that deeply discusses the threats and opportunities post-pandemic in the supply chain for 2021 in the manufacturing industry. The resource talks about the shifting dynamics at the global scale, top challenges faced by the manufacturing industry during the pandemic, and the post-pandemic focus areas. It also highlights the emerging digital trends, roadblocks and challenges, and technologies required for reinventing the future of manufacturing.

2021 Supply Chain Threats and Opportunities Infographic

How has COVID-19 affected the supply chain?

The pandemic significantly affected supply chains globally, with national lockdowns bringing the flow of raw materials and finished goods to a standstill. But it came as a blessing in disguise for manufacturers as it helped them discover unseen vulnerabilities in the supply chain. The pandemic accelerated the challenges that were already present in the legacy supply chain system.

The above chart shows the degree of impact this pandemic had on the industry.

The post-pandemic threats and opportunities

Supply chains are complex and sensitive, and they depend on customer demands and their ever-changing state. The supply chain won’t ensure high value without effectively organized transport. Due to this reason, logistics becomes the critical factor in the quality of any supply chain.

An adequate supply chain requires special knowledge, skills, and professional management. Effective transport helps in improving a supply chain by decreasing reducing time and resource utilization. Supply chain professionals can then transport products and deliver them to the correct location promptly.

We hope this article helped you understand the significant threats and challenges for the supply chain and how a digitalized logistics system can improve your overall impact and reach in the market.