The Impact of Industry 4.0 on the Supply Chain Operations of Samsung

This report examines the impact of Industry 4.0 on Samsung's supply chain operations. It begins with an overview of Samsung, including its products, services, and customer base. A literature review explores the evolution of Industry 4.0, its current state, and future trends, covering topics like a...Read More

Running head: INDUSTRY 4.0
The Impact of Industry 4.0 on the Supply Chain Operations of ‘Samsung’
Name of the student:
Name of the university:
Author note:

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Table of Contents
1. The scenario for the report.....................................................................................................2
a) Which organization is it? (Type, sector and size)..............................................................2
b) Main products and/or services...........................................................................................2
c) Main customers..................................................................................................................2
2. A literature review..................................................................................................................3
3. Szozda’s case study in the context of Samsung.....................................................................6
How will the company change?.............................................................................................6
Concluding remarks.................................................................................................................10
References................................................................................................................................11

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1. The scenario for the report
a) Which organization is it? (Type, sector and size)
The case organization is Samsung, which is a South Korean based multinational
conglomerate. It is the largest business in South Korea. Samsung serves worldwide areas with
its range of different products and services like consumer electronics and communications
technology. Samsung employs more than 320,000 staff (Images.samsung.com 2020).
b) Main products and/or services
Samsung Electronics is the largest subsidiary of Samsung Company. The subsidiary
makes a huge range of products and services like TVs, virtual reality handsets, tablets, home
theatre and audio, smartwatches, monitors, printers, laptops, desktop computers, home
appliances, memory devices, security systems, etc. (Images.samsung.com 2020). Samsung
also offers many service solutions to its clients situated globally. One of these services is
‘Information and Communications Technology’.
c) Main customers
Samsung’s main customers can broadly be divided into two categories such as those
mentioned below (Images.samsung.com 2020):
1. Age Group (26-50): This age group accounts for the largest share of the target
audience of Samsung. It is because of the higher financial ability to purchase a variety
of Samsung products.
2. Age Group (16-25): This includes teenagers recognized as tech-savvy people.

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2. A literature review
THE PAST:
Carvalho et al. (2018) say that the concept of Industry 4.0 was first used in Germany
in 2012. Passive machines and robots had then significantly replaced the workforce. These
were controlled by a human being. The year could see the number of industrial robots
touching 273 for every 1000 workers in Germany. At that time, industry 4.0 was seen as an
environment where different stakeholders of a business can communicate effectively in real-
time. The technology-enabled each associated section in the network to configure things in
real-time.
Li, Hou and Wu (2017) see the world as moving towards a new development period
where respective technological sectors like the digital, physical and biological technological
sectors will produce their progress of Industry 4.0. This means the world will witness many
innovation works from these technological sectors. According to the authors, the world has
already witnessed the internet of things (IoT), digital platform, big data and cloud computing,
and artificial intelligence and machine learning from the digital technology sector. The
physical technology sector has produced innovation in forms of autonomous cars and 3D
printing. The biological has shown its innovation in genetic engineering and neuro-
technology.
THE CURRENT:
As opined by Romero et al. (2016), human-centric manufacturing had traditionally
been the essence of the manufacturing sector. The current manufacturing is still the same;
however, it also has a fair amount of machines and robots taking care of multiple works such

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as packaging and delivery services. Computer-based manufacturing mechanisms require a
human workforce for handling such systems and managing complexities arising from such
environments. Therefore, the full potential of Industry 4.0 can only be explored if Operator
4.0 is placed at the heart of the manufacturing facility. It should also be able to interact with
other machines through cognitive and physical means.
As found by Tjahjono et al. (2017), advancements in technology in the era of Industry
4.0 can result in both opportunities and challenges. Virtual and augmented realities, 3D
printing and simulation should result in opportunities. On the other hand, big data analytics,
cloud technology, cybersecurity, IoT, RFID, drones, robotics, nanotechnology, etc. can result
in opportunities as well as challenges. The clearest benefits of Industry 4.0 are increased
flexibility, efficiency, quality standards and productivity. This will also allow mass
customization enabling businesses to meet customers’ demands through new and innovative
products and services.
Li, Fast-Berglund and Paulin (2019) say that the existence of Industry 4.0 in the
manufacturing process has increased its level of complexity. The environment of humans and
Operator 4.0 working together can be problematic for companies especially SMEs. Large
scale development of Industry 4.0 environment can face many barriers such as limited
financial strengths of the business. Instead, major companies can explore a wider application
of Industry 4.0 through the 'Integrated Business Planning and Optimized Decision-Making
platform’.
THE FUTURE:
According to Morrar, Arman and Mousa (2017), Industry 4.0 might result in higher
technological advancements. It is expected that new technologies will come and result in

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technological changes. These changes might have associated impacts on the socio-economic
state of a country. The world should be moving towards a transformation where new
technologies will occupy the popular spaces of humans. With these, the need to have a
holistic approach to managing the transformation will also grow. The holistic approach will
assist in deriving innovative and sustainable system solutions instead of just technological
ones.
In the opinion of Lee et al. (2018), the fourth industrial revolution needs to be
responded in many ways to access its opportunities while also being able to control the
challenges offered. In this regard, the fluidity of the capital needs to be improved. The
authors say that the entrepreneurial characteristic of a state needs to be explored. Besides,
economic policy, as well as innovation policy all, needs an open design. The future
technology of Industry 4.0 could be cyber-physical systems (CPS), practical knowledge,
artificial intelligence, robotics, etc. Start-up, as well as established companies, would require
new combination business models to facilitate a connected environment.
Yoon (2017) says that the medical industry should look to its roots and take effective
attempts for the Industry 4.0 implementation. The time has come for the medical industry to
be one of the fourth industrial societies. If there is a spotlight only on leveraging the
information that can be accessed, the medical industry will be considered as paying
inadequate attention to building a basic Industry 4.0 infrastructure.
The workplace of the future according to Johannessen (2018) will have robots
actively doing familiar things, which humans were once doing. Within just a few years,
robots would be doing many humanly-handled activities. Farming, for example, will be
digitized and robotized. Tractors will become increasingly self-driven. Drones will monitor

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the progress of crops. Drones will also be doing precision-spraying of pesticides to protect
crops from plant diseases.
Szozda (2017) observes Industry 4.0 as the environment where integrated business
planning will be its essence. The workplace of the future would not just be limited to the flow
of product between connected business units of a network but also the flow of information.
The list of information will have customized details of a product or service as well as the
planning process. The entire process from customer placing a request to its delivery to the
end-user will all be automated. In between the supply chain, the robots will be doing many
things such as taking care of the assembly line at the manufacturer site as well as matching
final goods with the requested product specimens.
3. Szozda’s case study in the context of Samsung
This section will replicate Szozda's case study about the chosen company Samsung.
How will the company change?
Samsung is one of the global companies to have shown excellent progress towards
Industry 4.0 implementation. With Knox Configure, Samsung connects its breadths of
product lines to create end-to-end solutions. A combination of hardware, software security,
customization capabilities, etc is helping Samsung facilitate a connected supply chain to be
able to offer customized products and services to its customers (Samsung Business Insights
2020). However, since the Industry 4.0 environment is still largely unexplored, knowing
more about it should only be helpful.

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Fig 1: Supply Chain for Electric Toothbrushes
(Source: Szozda 2017)
The above is a supply chain for electric toothbrushes. It suggests that the integrated
planning process and the flow of goods and information are the essences of the connected
supply chain. Business planning exists virtually through the exchange of information across
the connected supply network. Information flow takes place in real-time. A connected supply
chain does not just pace up the production rate but also helps deliver more customized offers
(Szozda 2017).
It the context of Samsung, this should mean offering the best product to its target
customer. Samsung offers world-class mobile phones; however, it significantly lags into a
few areas. It is because of this ‘Samsung phones’ is not the most trusted choice for the
customer across different price segments. It manages to maintain good sales in the mid-price
segment in Asian countries. However, it lags to Apple's iPhone and 'OnePlus' in the premium
price segment (Jain, Seshadri and Changulani 2017). This fact suggests the need to know
more about the customer. Samsung should attain perfection in quickly reading the market
than anybody else can. This is one way to be spontaneous with market demand and offer
more customized products.

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Fig 2: Supply Chain for Electric Toothbrush using the assumptions of Industry 4.0
(Source: Szozda 2017)
The above are the assumptions of Industry 4.0 for a future supply chain for an electric
toothbrush. The supply chain shown above includes the development of distribution channels
such as to facilitate an omnichannel distribution network. In such a connected supply chain,
users will have the option to decide the place and time of product delivery. User experience
will be good if their needs are fulfilled and are offered uniform service experience during the
purchase or return of the product. Moreover, customer complaints should be resolved
quickly.
The assumptions of Industry 4.0 such as those obtained from above (Fig 2) for a
future supply chain for Samsung should have the below-mentioned benefits (Dalenogare
et al. 2018):
 Effective marketing: Marketing team will get real-time updates on any new product
launch, its features, the pros and cons as well as price ups and downs. All these pieces
of information can be used to alter the marketing action plans. The advertisement

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authenticity will also increase. Besides, customer complaints can be raised and
circulated across the supply chain. Hence, the chances of getting a faster resolution
should also increase.
 Increased production efficiency: The use of robotics in its distribution center should
help Samsung facilitate faster work done at the assembly line. Products will be
manufactured based on their specimens received online from customers. Finished
goods will be sent to the packaging and delivery department assuming it to be handled
by robots. The flow of information such as demand forecast will be automated
between Samsung and its suppliers. Hence, the efficiency to respond to the market
demand should excellently improve.
 Doorstep delivery at the customer convenience: Assuming that robotics will deliver
goods at the customer doorstep. One delivery robot can be used to deliver a
significant amount of goods to wherever the customer needs it. DoorDash, a kind of
programmed technology will send users a text message to confirm the expected
delivery time. The robot will have an in-built unlocking feature. By simply pressing
the unlock feature, users can access their products.
 Instant complaint resolution: Any customer complaint used to travel many levels in
the supply chain before it could be resolved. However, a connected supply chain with
Industry 4.0 in place will connect all these levels and generate spontaneous results.
Complaints will get circulated automatically to the concerned department and the
resolution will also be received in quick times. This means Samsung should be able to
resolve its customer complaints at a faster pace. Hence, the efficiency to address an
issue will significantly boost up.

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Since Industry 4.0 is still largely an unexplored market; it is difficult to say that the
connected supply chain will only produce the benefits. All the benefits such as those
mentioned above in the bullets will involve communication between connected devices as
well as aggregation of data between these devices. This can produce numerous risks related
to data security and the capacity of wireless networks spread over long distances (de Man and
Strandhagen 2017).
Concluding remarks
Therefore, Szozda's case study and other external resources were studied to
understand how Industry 4.0 can affect the supply chain of companies. Assumptions with
Industry 4.0 such as those made in the study helped to predict the future benefits of the
connected supply chain for Samsung. Hence, it was being found that the connected supply
chain will produce many benefits such as effective marketing, increased production
efficiency, instant complaint resolution and doorstep delivery at customer convenience.
Handling and aggregation of data at large amount may risk the data security.

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References
Carvalho, N., Chaim, O., Cazarini, E. and Gerolamo, M., 2018. Manufacturing in the fourth
industrial revolution: A positive prospect in sustainable manufacturing. Procedia
Manufacturing, 21, pp.671-678.
Dalenogare, L.S., Benitez, G.B., Ayala, N.F. and Frank, A.G., 2018. The expected
contribution of Industry 4.0 technologies for industrial performance. International Journal of
Production Economics, 204, pp.383-394.
de Man, J.C. and Strandhagen, J.O., 2017. An Industry 4.0 research agenda for sustainable
business models. Procedia Cirp, 63, pp.721-726.
Images.samsung.com 2020. [online] Images.samsung.com. Available at:
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Switching in the Smartphone Industry. Imperial Journal of Interdisciplinary Research.
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Li, D., Fast-Berglund, Å. and Paulin, D., 2019. Current and future Industry 4.0 capabilities
for information and knowledge sharing. The International Journal of Advanced
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