Today we’re dusting off our supply chain crystal ball and are going to give you a glimpse of what inventory management may very well look like ten years from now given the advancements made in just the last five years or so. Logistics 4.0 is combining with Industry 4.0 to lead to massive disruptions in how the manufacturing value chain is run. IoT sensors, RFID tags, and AI are allowing for more automation, and advanced analytics are giving planners unparalleled transparency into the supply chain. This combination is potent in its ability to allow for more accurate forecasting and planning adjustments down to the day or even hour. In the future, these practices will eventually reach even wider adoption, becoming ubiquitous across sectors and allowing inventory management to ditch the pen and spreadsheet once and for all.

Lean manufacturing is a topic of choice these days. Discussions abound on everything from what works and what doesn’t, to how to make what’s not working work for you, to how to implement each individual segment of a lean architecture in a particular niche of the manufacturing world. That’s not our goal today. Instead, we want to cover one specific piece of the lean puzzle—every part every interval, or EPEI. We want to ensure you have a clear picture of this methodology, what it is and isn’t, whether it’s something you should consider implementing at your factory, and, finally, how Industry 4.0 is affecting its place in the value chain. Many of the issues addressed below are applicable to lean manufacturing more widely, so you can take the information presented and apply it to your situation and see how emerging technology might help your bottom line.

Let’s say that you’re a manufacturer creating widgets for large scale distribution in your region. Though the widgets are vitally important to your clients, they’re incredibly complex and difficult to produce, meaning that even when everything is going smoothly within your operations, the yield for any given production process has a high degree of variability. No matter how effectively you replicate your process each time, differences in source material quality and production conditions mean that some number of finished goods are going to have flaws that prevent them from going to market. 

Anyone who has ever rented a moving van for a day knows how hard it is to move furniture safely and efficiently. Loading a table and chairs into the back of a truck without getting them scuffed up is difficult enough—imagine trying to do the same thing on an industrial scale. But, for many in the furniture industry, moving goods that are designed to spend most of their lives sitting in one place is just a daily fact of life. Unsurprisingly, this tends to come with a lot of challenges that many logistics planners outside the furniture industry don’t have to face. 

If you work in supply chain management or manufacturing, you probably hear the words “agile” and “lean” thrown around a lot. Both of them seem to be good things, and they both appear to be ways of cutting costs and improving operations, but beyond that one sometimes feels like they’re being used interchangeably. To make matters worse, both terms seem to have been coopted by the tech industry, making it harder than ever to figure out what each of these terms actually means in an industrial context.

Ford’s groundbreaking assembly line, which we normally think of as a watershed moment in the history of manufacturing, was just as important as a moment of negotiating customer expectations. In this case, Ford’s goal wasn’t so much to revolutionize the burgeoning automotive industry as it was to change the narrative around cars in the minds of his future customers. Where automobiles had previously been largely reserved for the wealthy, Ford wanted the general public to stop thinking of them as a luxury and start considering them to be an attainable goal for working class buyers. In order to create this new narrative, he needed to find a way to first make it reality. How? By making cars cheaply enough that they could be purchased (the story goes) by the very factory workers who were helping to build them.

In baseball, the pitcher and the catcher must communicate via signs in order to implement a strategy to get the batter out. Depending on the strategy, the various fielders may need to position themselves closer to or farther away from home plate (if the pitcher is trying to induce a ground ball out or a fly ball out, for instance), which means that the strategy must be agreed upon beforehand and disseminated amongst the entire squad—not just the pitcher and the catcher. Picture the alternative: the pitcher decides on his own what approach to take, and the catcher is stuck trying to catch whatever is thrown at him without any advanced notice; meanwhile, the fielders don’t know what to expect, so they’re not able to position themselves appropriately. As a result, a batted ball is likely to result in chaos. 

Let’s pretend that you and a friend are both mixologists at an upscale cocktail lounge. On weekends, there tends to be a rush of patrons late in the evening who ask for drinks faster than you can produce them. As a supply chain or logistics manager in real life, in this scenario you might be tempted to suggest that you and your fellow bartender start creating a buffer stock of drinks before the big rush, so that people can receive their drinks as soon as they order them. Unfortunately, you can’t really know what drinks people will order in advance (to say nothing of the fact that the ice will melt), so creating a buffer stock is impractical. You can, however, do some prep in advance, like preparing garnishes and simple syrup. When the rush comes, you’re still slammed, but you’re able to create drinks more efficiently.

Baseball may not be the most popular sport in many parts of the world, but when one considers all of the analytical and statistical breakthroughs the game has made in the past two decades, it really deserves to be a favorite of supply chain managers in the Industry 4.0 era. Since the dawn of the “Moneyball” era, scouts, commentators, and prognosticators have developed new, increasingly complex ways of measuring past performance and forecasting future outcomes. Because everything that happens in the game of baseball, from a stolen base to an outfielder dropping the ball, can be represented numerically, entire seasons can be simulated in granular detail, and insights can be gained from those simulations. By integrating these systems with real-time game data, we can now make an ongoing estimate of the win probability of each team in the middle of each contest.

Let’s say you’re an amateur baker, and you’ve just agreed to participate in a pie bakeoff with some of the other bakers in your town. You have a few pie recipes that you like, but because the stakes are suddenly much higher than usual, you want to create a new recipes that improves on your existing ones, in order to better compete with your opponents. Most likely, this is going to mean finding new or old recipes to adjust and adapt, and then taking those adapted recipes and producing test batches of them, trying out the results, and producing new test batches with the tweaked recipes. This process, needless to say, would be incredibly time and resource intensive—not least of all because baking is an extremely fickle business, and it’s often difficult to predict the results of changes in ingredients or cooking time.