Industry 4.0 Impact on Hitachi Ltd.'s Supply Chain

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INDUSTRY 4.0
HITACHI LTD.

EXECUTIVE SUMMARY
Industrial revolutions can be defined as the adoption of new and advanced technologies in any
operations. Currently, the fourth industrial revolution is running on. Before industry 4.0, three
revolutions were in use. In this assignment, a brief detail about the first three industrial
revolutions are discussed (Pedrielli, 2016). A deep study with a literature review and a case
study on the impact of industry 4.0 on the current industry is also given in this report. Hitachi
Ltd is chosen as the organisation for performing a case study. Hitachi is a Japanese multi-
product manufacturing firm which has a worldwide working area.
In this report, two problems faced by Hitachi, which are supply chain management and logistics
are discussed with their solution, generated by the implementation of industry 4.0 (Stearns,
2018).

CONTENTS
EXECUTIVE SUMMARY...................................................................................................................2
TABLE OF FIGURES......................................................................................................................... 4
INTRODUCTION............................................................................................................................. 5
INTRODUCTION TO THE ORGANISATION...................................................................................6
LITERATURE REVIEW..................................................................................................................7
CASE STUDY............................................................................................................................. 11
CONCLUSION............................................................................................................................... 17
REFERENCES.................................................................................................................................18

TABLE OF FIGURES
Figure 1 LOGO OF HITACHI............................................................................................................ 6
Figure 2: INDUSTRIAL REVOLUTIONS............................................................................................7
Figure 3 THE NEW SUPPLY CHAIN CHALLENGE............................................................................11
Figure 4 SUPPLY CHAIN DISRUPTIONS.........................................................................................12
Figure 5 PDCA MODEL OF SUPPLY CHAIN....................................................................................13
Figure 6 CONCEPTS FOR GLOBAL LOGISTICS SERVICES SUPPLIED BY HITACHI FOR VALUE CHAIN
..................................................................................................................................................... 15

INTRODUCTION
According to Stearns (2018), Industry 4.0 is related to the revolution in the industrial structure.
It is clear that as time moves it brings change. So this all revolutions made industrial processes
very easy and faster. In the previous three industrial revolutions, methods of operations had
been changed. Pedrielli (2016) argued that in the first industrial revolution brings innovation in
manufacturing by initiating the use of water and steam. In 2nd revolution use of electrical energy
for the production process has been started. Then in 3rd revolution automation takes place for
in manufacturing processes. Industry 4.0 is related to initiate innovative processes for creating
goods. It is after the step of the third industrial revolution. In this report, a literature review on
the impacts of industry 4.0 on Hitachi Ltd. has been discussed (Domingo Galindo, 2016).
According to Blackburn (2016), Fourth industrial revolution can be said as upgradation of
previous three industrial revolutions. Mainly in all the manufacturing organisations, after the
third industrial revolution starting of automation was done. Now in industry 4.0, it is achieving
its new peak by adding sensors and advanced technologies like AI, IoT, and robots. It increases
the pace of production with improving the quality of goods which results in the satisfaction of
the consumer (Liao et al., 2017).

INTRODUCTION TO THE ORGANISATION
According to Johnson and Consulting (2014), Hitachi Ltd Is a Japanese manufacturing firm which
works in the field of manufacturing. It has a worldwide network of independent subsidiaries
offering distribution services. It is a global company which has a worldwide area to serve.
Hitachi Ltd. was founded by Namihei Odaira in the year 1910. It is headquartered in the
Marunouchi, Tokyo, Japan. Currently, Hitachi is led by Hiroaki Nakanishi. As of 2019, it has a net
revenue of ¥516.5 billion. It has a workforce of 307,050 people worldwide ( Johnson, and
Consulting, 2014).
Figure 1 LOGO OF HITACHI
Hitachi manufactures many products. It works in many segments like industrial, electronics,
telecoms, machinery, escalator & elevator and so on. It is registered in the national stock
market of Japan i.e. Tokyo stock exchange.
It serves in many nations. It works for providing many useful mechanical and electrical items. It
also works for the society by doing a lot of work in the field of reducing poverty, backwardness
as the part corporate social responsibility. In 2011, Hitachi donated an electron microscope to
the five universities of Indonesia (Johnson, and Consulting, 2014).

LITERATURE REVIEW
INDUSTRIAL REVOLUTION
According to Lele (2019), Industrial revolution can be described as the adaption of new
processes innovated by the changes. It mostly impacts on the manufacturing and production
processes. The process of the industrial revolution started in the 17th century in the UK. Till that
time manufacturing was done by the people at their home with the help of hand tools. After
that industrialisation and innovation came in use, and then it changes the basic operations.
After manufacturing, it involved in the transportation, communication, banking and
organisational sectors. SPERINGER (2019) pointed out that, it improves the basic and root
operations of an organisation such as supply chain management, logistics, scheduling,
delivering and dispatching etc. Britain was the original place of the industrial revolution. It
improved the quality of products as well as the living standards of the people by adopting new
and advanced technologies in the manufacturing process. After Britain, it was implemented
worldwide and then now it comes towards the fourth industrial revolution (SPERINGER, 2019).
Figure 2: INDUSTRIAL REVOLUTIONS
Source: (Ambad, 2018)
first
industrial
revolution
production by the use of water and steam power.
second
industrial
revolutio
n
starting of mass production using electrical power.
third
industrial
revolutio
n
use of it syaytems and PLC for the automation.
fourth
industrial
revolutio
n
use of CPS and IoT systems.

INDUSTRY 4.0
According to Szozda (2017), the fourth industrial revolution is related to automation in the
manufacturing industry via the use of IoT and PLCs. It increases the use of computer software,
cloud computing and cyber-physical systems in the field of production which leads to reduce
the total production time. It brings the world to smart factories. It enhances the working
efficiency and quality of the product. It was firstly introduced in the year 2011 and originated by
the strategy of German administration for promoting automation and computerization of the
manufacturing processes. In April 2013, the final report of the industry 4.0 by the working
groups was presented. It uses advanced cyber systems such as the Internet of Things (IoT),
Distributed Ledger Technology (DLT), and Artificial Intelligence (AI)(Eraky, 2017).
It develops four design principles for the industry. These are interconnection, technical
assistance, information transparency, and decentralized decisions (Stearns, 2018).
Interconnection
It can be described as the ability of the people to connect with sensors, device, and machines
by the virtue of the internet of people or the internet of things (Stearns, 2018).
Technical Assistance
It can be described as the ability of the cyber machines to physically support the people by
delivering a range of tasks that are too exhausting, unpleasant for their human colleagues
(Eraky, 2017).
Information Transparency
This information transparency means that the availability of useful information to the operators
which is needed for taking appropriate decisions. Interconnectivity between the points allows
the operator to collect useful data and information in any instance (Stearns, 2018).

Decentralized Decisions
It can be described as the ability of the physical cyber system to make appropriate decisions for
performing a task automatically. It makes them eligible for taking decisions for performing their
own task (Azizi, 2019).
IMPACTS OF INDUSTRY 4.0
The fourth industrial revolution has so many challenges and opportunities. It impacts a lot of
business problems related to logistics, supply chain, production, and communication. It has
impacted in following fields
 In manufacturing industries, it impacts a lot. It improves the productivity and accuracy in
the manufacturing processes. Using IoT, machine learning and 3D printers make the
manufacturing faster and precise (Um, 2019).
 In the field of machine safety, it enhances the operational efficiency of the machine so
that the overall productivity of the system enhances.
 It increases the number of employment in the field of IT, cybersecurity and advances
software learning (Montanus, 2016).
 In the field of supply chain management, now it is enhanced from lean and agile
manufacturing to virtual reality. It improves the functions of logistics.
OPPORTUNITIES AND CHALLENGES FOR INDUSTRY 4.0
After the implementation of the 4th industrial revolution these can be described as
opportunities: -
 By the use of new advanced software, goods can be produced in an efficient way. It
leads to the great quality of the product.
 It reduces the total time of production in any industry. This increases the productivity of
the system by reducing the number of input resources (Montanus, 2016).

 In the field of healthcare and medication, it will improve the facilities. By the use of 3D
printer manufacturing of human organs.
 It leads any task towards the smartness by the use of smart factories, smart logistics,
smart grids and smart homes.
 It will make the life of human very comfortable by enhancing the experience of
automation in any work (Kayikci, 2018).
In implementing the fourth industrial revolution some challenges are: -
 Providing IT security to the cyber system is one of the biggest challenges for industry
4.0. It can harm the entire cycle of operation which can result in a heavy loss (Vu, 2018).
 Stability and reliability are required for the machine to machine coordination (M2M).
 After implementing the 4th industrial revolution, all the operations will perform
automatically. So it can lead to unemployment especially blue collar jobs.
 Currently, it does not have any authentic legal legislation. So it is very uncertain to
provide data security and proper use of this.
 Due to the advancement, many of the workers are not qualified up to the mark for
accepting this revolution (Seng, and Loong, 2017).
 Due to lack of knowledge and skills about the new techniques, it is difficult to identify its
benefits and also it is hard to manage and costly too.
 In digital business models, many manufacturers face problems due to network
interruptions. It leads to failure of the entire system which may result in a shutdown.

CASE STUDY
For identifying the impacts of Industry 4.0, a case study on the implementation of the industry
at Hitachi is shown below: -
Hitachi Ltd is very well known for manufacturing automotive systems, aircraft, construction
machinery, defence systems, digital media and electronic systems. It also provides services in
the field of finance like leasing, loan guarantees, invoice finance, business finance and
consumer finance etc. Manufacturing is a very vast industry and for meeting the competition it
is very necessary to adopt new technologies. So Hitachi is also using a cyber-physical system for
providing automation to the work (Johnson, 2015).
Figure 3 THE NEW SUPPLY CHAIN CHALLENGE
Source: - (Johnson, 2015)
As every manufacturing industry, logistics and supply chain management is a very big problem
in Hitachi too. So for resolving this problem, they introduced a new approach which is related
to IoT and cyber-physical system. In the era of industry 4.0, it is very necessary to identify and

resolve the disruption in the processes. In case of supply chain management of Hitachi Ltd,
there were so many disruptions as.
Figure 4 SUPPLY CHAIN DISRUPTIONS
Source: - (Seng, and Loong, 2017)
 New digital technology like 3D printing, cloud computing, artificial intelligence, internet
of things, drones etc. pushes the supply chain towards the predictive analysis and
sharing real-time data with hyper-transparency.
 The universal nature of work, development of the internet, creates new regulatory legal,
environmental, and human issues that need new networks and infrastructures.
 Fluctuations in demands and supply can happen because of the availability of raw
material, resource and quality issues, environmental disasters put extreme additional
pressure on the supply chain management (Seng, and Loong, 2017).