Studies show that, as of 2018, 73% of companies had at least one application in the cloud. This includes the 47% of companies who are using on-premise servers to handle their ERP, but using APIs to connect to the cloud elsewhere. And it’s not hard to imagine why companies are gravitating away from on-premise and towards more flexible cloud-based options—after all, the upfront costs are lower and the risk of obsolescence or costly maintenance is greatly reduced. Even if you’re still hosting critical functions like your ERP in-house, there are still benefits to be gained from cloud-connectivity in terms of flexibility, analytics integration, and visibility.
In supply chain management, as with anything else, it can often be difficult to see past the hype and figure out which technologies are worthwhile and which aren’t. With things like cloud-based ERP, blockchain-based tracking, AI, and other buzzy new technologies flooding the SCM technology market in recent years, you might find yourself wondering what features and capabilities to prioritize when choosing a software vendor. Do you really need neural nets to analyze vendor performance in the cloud in real-time, or would you be better off leveraging your resources elsewhere?
Though the manufacturing sector has traditionally not been the fastest adopter of cloud technology, there’s no denying that the demand for cloud-based apps and services in the industrial world is increasing. One estimate suggests that the cloud manufacturing market could nearly triple in just a few short years, from just shy of $40 billion in 2018 to more than $110 billion by 2024. Based on the way people talk about cloud technology, it’s easy to see why: it’s often cited among the most important drivers of the Fourth Industrial Revolution, and insiders often suggest that it has the power to revolutionize ERP, power improved demand forecasts, and improve operational visibility.
For a recent report, McKinsey tracked the progress of a group of Industry 4.0 “Lighthouses,” i.e. operations that had successfully undergone or were undergoing digital transformations in the spirit of the Fourth Industrial Revolution. So far, these manufacturers have been fairly successful at creating a smarter end-to-end value chain, and their agility, productivity, and waste reduction have by and large shown real improvements as a result.
Think back to the last birthday party you planned. How did it go? As the organizer, you were responsible for everything from getting invitations in the mail through to making sure you had enough drinks and cake for everybody. Then there’s ensuring that everybody got themselves home safely after the festivities (whether it was kids being picked up by parents or adults who may have needed a cab). But what happens next time when 10 of your invitees take it upon themselves to invite 10 additional people, not on the list? Demand for drinks and cake just shot up and you’re not ready for that. Or are you? This is an extremely simplified, yet apt, analogy for the role a production planner plays in keeping the business running smoothly and ensuring that when demand does spike there won’t be any disruptions.
Most prognosticators have pretty much agreed that Industry 4.0 is going to radically change the world of manufacturing through big data, cyber-physical systems, and internet of things (IoT) integration—but not everyone agrees on exactly what this new paradigm is really going to look like. This might seem like disagreement, but in reality it’s part of the point: Industry 4.0 is going to look different at different companies. It’s even going to look different during different seasons, or for different production flows. An easy, consistent definition and an easy set of IT expectations is anathema to the whole idea of the fourth industrial revolution.
If you ever go to Las Vegas, you should be advised that casinos heavily frown upon card counting, and it’s easy to understand why. A game like blackjack is supposed to be more or less random in terms of what cards are dealt when, which puts the house at an advantage. Over the course of several hands (before the entire deck has been reshuffled), however, a careful observer can note the proportion of face cards that have come out in order to come up with a rolling estimate of how likely or unlikely they are to come up in future hands. This puts the player at a real statistical advantage over the house—at least until the casino politely (or not so politely) asks her to leave.
Industry 4.0 technology is making its impact felt all along the supply chain as we enter the third decade of the 21st-century. Alongside IoT sensors, GPS trackers, smart pallets, and robotic picking technology, the progress made in supply chain management software has been unstoppable. Whereas once Excel sufficed to layout a strategic plan and track forecasting, today this method is becoming increasingly outdated and outpaced by more collaborative options. These new systems allow for real-time updates and enable real-time collaboration on planning documents by multiple stakeholders at the same time.
From 2018 to 2019, Gartner’s outlook on Industry 4.0 adoption seemingly became a little less sanguine. It’s certainly not the case that their opinion of the potential of this massive industrial paradigm shift has lessened in any way, but the focus of their Industry 4.0 predictions for 2018 was how CIOs could find useful models of successful digitization, while for 2019 their focus was on dealing with the gap between expectations and reality that numerous industrial businesses are encountering with new technology. Again, it’s not that the outlook on Industry 4.0 itself is any less rosy than it was a year ago, but it seems like we’re reaching the point where real implementation hurdles are beginning to show themselves.
Wouldn’t it be nice if supply chains could run themselves? Well, between automated scheduling, production machinery, and even logistics planning, you can achieve a fair approximation using the right tools. Even so, there are plenty of places along the value chain where things can go sideways. The headaches may be less frequent, but they are no less real. No matter how seemingly care-free your supply chain, there are aspects you’ll want to closely monitor to ensure that smooth running continues. Crucial to each of these is the visibility into your processes that comes with Industry 4.0 technology and a solid supply chain management solution.