Impact of Industry 4.0 on Supply Chain Management

This article discusses the impact of Industry 4.0 on supply chain management, including changes in planning and execution, manufacturing and procurement, and logistics. It also includes a case study on Samsung's progress with Industry 4.0.

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Contents
About the organization....................................................................................................................2
Review of literature.........................................................................................................................4
Impact of industry 4.0 on supply chain management......................................................................7
Samsung: (replication of case study)...............................................................................................9
References......................................................................................................................................12
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About the organization
(Samsung, 2019)
Name of the organization Samsung
Industry type Manufacturing
Sector Public sector
Size US$ 10.9 Billion (2017)
Major Dealing with products/service Consumer Electronics, IT and mobile
communication and Device solution
Major customers include:
 Royal Dutch Shell
Samsung heavy industry has a monopoly in providing liquefied natural gas (LNG) storage facility to
Royal Dutch Shell for the next 15 years.
 UAE government.
Samsung along with Korea electric power corporation and Hyundai have a deal to build nuclear power
plants in UAE.
 Ontario government
Government of Canadian province of Ontario has signed the world's largest renewable energy project
with Samsung.
Founded in 1938, by Lee Byung- Chul, Samsung has developed as one of the fastest emerging brands
globally. Initially, a small trading company only had 40 employees and was involved in the
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distribution of groceries in the townships. In 1947 a new office was into operation in Seoul, he also
started with sugar refinery which ran out of service soon. Again after 7 years, he builds one of the
largest woollen mills in Korea (France 24, 2009).
A true believer of industrialization had a dream to become successful in all the major sectors of
the economy. Many Ventures were set up in different sectors including insurance, retail, securities etc.
Samsung had a large amount of capital for disposal, kept aside for bringing in innovation and new
technology. By following the philosophy of large scale production, expansion and development they
ruled the electronic segment (Park, 2011).
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Review of literature
The generation of development and growth in the production and automation has led to emerging
fourth generation industrial revolution defined as “INDUSTRY 4.0”. this transformation includes
production process, efficiency management, customers’ relationship, data management
competitiveness, growth, development etc. along with the trend this topic has become one of the
most demanding topics for conducting research and deriving the results for better implication
and understanding. Therefore, this review describes the origin, revolution of industry and its
impact on supply chain management (Sreedharan & Unnikrishnan, 2017).
II. Industry 4.0 Origin and concept.
This term was introduced in 2011 by a communication promoters group of industry science
research alliance. Industry 4.0 comprises of a cyber-physical system linked with the supply
chain management and the process of manufacturing in connection with the internet of things
and development of industries. Hence, this theme has continuously addressed the process of
digitalization of the industrial production process.
Therefore, in the words of Acatech industry 4.0 is defined as the technological combination of
CPS into logistic and manufacturing with the use of internet of service and things in the
industrial process. Having implication for downstream services, creation of value, efficient
business models and working culture of an organization.
This transformation is a complex structure and there is a need to plan and implement this in a
way that brings growth and efficiency. In order to support the overall success, benefits have to be
visible in every stage of its process. The process involves step by step approach for recognition.
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The mechanism of developing a balance between cost and revenue is decided by companies and
this involves a lot of challenges. The initial performance starts with the process of digitalization
but it is not the part of industries 4.0. it is said that this revolution will decrease the cost by
approx. 10- 30%, logistic cost by 10-30% and the quality management cot by 10- 20 %. The
benefits will be;
a. Less time consumption in the marketing of products
b. Mass productivity in operations by reducing the marginal cost.
c. Immediate customer’s responsiveness.
d. Use of natural resources efficiently (Rojko, 2017).
III. Smart Factory Setup.
The reconfigurable manufacturing system is one of the latest developments and the core process
of digitalization involves the physical transformation in a reconfigurable system. In the first
step, the fixed production line is connected with the setup of the machine for a specific task. So
that only one product can be produced. In the next step, it is associated with the programmable
machines where they are operated on flexibility to produce variety but to limit their capacity.
Therefore, the reconfigurable system automatically adapts the hardware and software
components for changing market requirements. Machines used in industry 4.0 are either a cyber-
physical system or system integrated with ICT components. Programmable machines like CNC
and NC are used with the help of robotic techniques or mobile controlling device. The
production is carried out smartly because of the wireless controlling and real-time data
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collection. In some production technique, there is Machine to Machine (M2M) interaction
whereas in some there is Human to Machine interaction. (H2M) (Griffiths, 2018).
IV. IT Support
IT support is one of the crucial elements for smart factory setup. In the initial business setup,
Enterprise Resource Planning (ERP) is implemented. It helps in business planning including
sales and distribution, human resource management, supply chain management etc. at industry
4.0 the leading solution is SAP. The reason ERP became obsolete is the slow adaptation in
unplanned events. Manufacturing Execution System (MES) is commonly used as a support for
reporting, scheduling, product tracking and for high maintenance operations. All these softwares
are centralized and are not distributed for the shop floor. ERP and MES are the basic software
tools used in the company since ages having a modular structure and limited scope for a dynamic
production plan (Szozda, 2017).
V. Current Scenario of Industry 4.0
Industry 4.0 handles the real-time data collection and its analysis along with cybersecurity. It is
specialized in the internet of things applied in the business environment especially to the
manufacturing sector. There is a need to fulfil some of the criteria in order to implement the new
concept. There is no stability in the production process during the transition phase. Then comes
the issue of one-time big investment with a lot of pressure considering the high cost, it should be
segmented to stage-wise investments.
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Hacking is the major challenge hence cybersecurity needs to be connected on each level. Lastly,
in order to bring in this development process, every segment of the industry has to implement the
know-how of industry 4.0. As the definition of industry is not just limited to production but to
every segment of the industry. This industry is considered a disruptive technology that will help
to figure out the path for the upcoming generation of the industrial manufacturing system. This is
a transformation from the physical production system to a digital system. This process collects
all the momentum to and forecast and leaps into the near future. This also enables us to touch
every corner of the world just with a small click (Schuh, et al., 2018).
Impact of industry 4.0 on supply chain management
Industry 4.0 is a broad concept and various segments are still undiscovered. Considering the
supply chain management, it's business models are changing. And also the demand for the final
product is getting diversified based on the taste and preferences of the consumers. Considering
the origin and present scenario of supply chain management, it has undergone a series of
transformation along with development. The traditional concept of supply chain management
was known as lean concept whereas with the implementation of industry 4.0 the supply chain
management is working on a virtual trend (Roblek, et al., 2016).
Following are the major area where the impact has been noticed is:
1. Planning and execution.
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This phase of supply chain management (SCM) is an end to end process, where importance is
given in maintaining a balance between supply and demand. Now the decisions are backed by
more data-driven facts, there is an automatic end to end integrated solution. Challenges like
shortage of raw materials, an adaptation of new technology, forecasting the preference etc. are
minimized. Every other mechanism is automatically operated with less human interference
(Vaidya, et al., 2018).
2. Manufacturing and procurement.
With the facility of live integration of sale, inventory process, raw material consumption, and
procurement of finished goods are maintained and updated on point. Therefore, the issue of
buffer stock has been minimized. Therefore, the whole system is efficiently working (Jiang,
2018).
3. Logistics.
The warehouse of industry 4.0 has the system of automation handling of major functions like
inventory tracking, order picking, space management etc. The previous method where labour-
intensive techniques were used had a lot of drawbacks and was trapped by a slow process. Along
with reducing the cost, this technique has proven to be beneficial in less time consumption
(Arlbjørn & Freytag , 2011).
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Samsung: (replication of case study)
Samsung - progress with It.
Samsung is moving towards the driving force of the fourth generation industrial revolution with
the internet of things, artificial intelligence, machine learning and many more.
By the end of 2020, Samsung will upgrade its entire device by the aforementioned AI feature and
IoT. Hence the user will be able to control the entire Samsung device using a single smartphone
or app named smart things. In order to operate users will be able to monitor, control, and
automate their home from anywhere in the world (Gibson, 2018).
Samsung line of production is a mix of hardware and software security and customization
through Knox configure. This helps Samsung to create an end to end solution that can connect
the supply chain management tools in the production system, marketing and distribution and also
in warehousing the products. Samsung adds additional value and ROI to its solution by reducing
or minimizing the needs of single-purpose devices including a barcode scanner and enabling the
smartphones to scan the inventory, track the assets and also to initiate the task in the process.
With this revolution, the company has witnessed the smart features and the need for the dame in
the growing demand (Mashelkar, 2018). Not just this various other benefits such as large scale
production, automated packing, designing and labelling of the product have improved. With less
human intervention, the company has reduced the cost of production and also the management of
the human resource. Company has successfully implemented the procedure of industry 4.0 and
is improving by minimizing the challenges of the business environment.
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Saram – the humanoid robot; with the use of AI Technology, the company has developed a robot
named saram that is used in Samsung's manufacturing unit. Company has successfully covered
the vertical waling technology and the robot is running with AI brain that allows walking on
different surfaces self-being solid vertical. Therefore, with this featured company has
successfully used the AI feature in the production unit (Barreto, et al., 2017).
The process of industry 4.0 is totally on a digitalized platform. This is beneficial in order to
improve the efficiency and productivity in the company. Adopting the supply chain digitalization
solution has given an edge to Samsung in order to compete in this market. With the adaptation of
such modern techniques, Samsung has not only improved its production but also the ability to
serve the customers as per their expectations has improved. Therefore, a business has the
opportunity to move ahead in the market and leading the industry as one of the biggest giants.
For betterment and improvement, too many collaborations been done. This has proven beneficial
in order to promote technology hindrances. The integration of more than one technology has let
the company decide what is best for them and what attracts the customers to purchase their
product. With the advancement of technology and techniques of a working model, Samsung has
experienced high growth in the shares. Investors are having high expectations and they know the
company is growing and it will be a ruling giant by the end of 2020 (Slamecka, 2018).
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The supply chain for Samsung.
The trends to follow in manufacturing units by bringing in industry 4.0 in order to change the
company.
 There will be more customer-centric manufacturing done so as to bring the demand and
supply on equilibrium.
 The digital supply network will expand and will bring in more smart models for
transparency.
 The use of hybrid computing will touch another level by minimizing the drawbacks and
introducing cloud computing.
 The subset of artificial intelligence, machine learning will play a big role in
manufacturing, distribution and overall performance tracker.
 A number of collaborative robots will be assisting the production house. The shortage of
human resource and restriction from international standards will be abolished (Lawlor,
2019).
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Artificial
intellegence
planning
smart factory
setup
modern
mechanism
production
fast and secure
delivery
tracking AI
feature
suppliers
live tracking
and
controling
Distributors
demand
supply
equilibrium
Retailers
smart
features.
customers

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References
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Mashelkar, R. (2018) Exponential Technology, Industry 4.0 and Future of Jobs in India. Review
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