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Re-imaging the Supply Chain for Industry 4.0

Saj Kumar, Vice President, Internet of Things and Digital Transformation, SAP APJ | Sept. 21, 2016
A digital supply chain delivers more than speed and efficiency. When the supply chain goes digital, manufacturers can be more customer-centric, offer customised, personalised products, and overcome resource scarcity and waste.

This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.

IoT and Industry 4.0 are connecting people, products, and assets to solve problems that have plagued the manufacturing industry for decades.  Managing capital assets has always suffered from a lack of collaboration from the main stakeholders-asset operators, original equipment manufacturers and service providers. In fact, the Business Continuity Institute revealed in its "Supply Chain Resilience Report 2014" that 78.6 percent of organisations have inadequate visibility of their supply chains.

IoT and a digital supply chain provide the collaboration and insight that the stakeholders have always craved. With sensing technology and analytics that enable real-time demand networks, manufacturers can better understand customers' needs, provide custom, personalised experiences, address our dwindling resources, and prevent waste.   

The New World of Customer-Centricity

At the very end of the supply chain is its most important link-the customer-and a digital supply chain lets manufacturers understand their customers' needs. At Kaeser Compressors, a German-based manufacturer of air system products, service personnel know when a customer's equipment needs maintenance long before the customer does.

Kaeser has embedded sensors into its equipment that collect temperature, pressure level, delivered air, and machine status. These are among the millions of measurements that are analysed to understand the customer's power consumption, operational availability, as well as the safety and quality of the compressed air. To anticipate equipment failure, Kaeser uses predictive analysis to help service personnel recognise usage patterns and monitor machine health. Kaeser can anticipate wear and tear on the compressors, order new parts and avoid unplanned downtime.  

That knowledge depends on intelligent asset management, which is integral for manufacturers like Kaeser to respond quickly to customer needs.

Personalised Products for the Experience-Seeking Buyer

The digital supply chain is also letting customers express their uniqueness and individuality. Instead of purchasing standard chocolates with ingredients chosen by the manufacturer, customers are making custom orders for dark chocolate, almonds and sea salt or whatever that suits their cravings. Runners are choosing midsoles for shoes that exactly match their feet measurements, and motorcycle owners are personalising their vehicles with custom orders.

At Harley-Davidson, moving to a digital supply chain introduced an easy flow for custom orders and a personalised, one-of-a-kind customer experience that has been impossible for manufacturers until now. The motorcycle manufacturer began modernising its shop floor and digitising operations in 2009, and the journey started with integrating its back-end systems and connecting them with the headquarters, remote plants and showroom floors. Customers can practically touch the digital supply chain.

From the Harley-Davidson showrooms, dealers connect online to the ordering system, and customers design their dream bikes. Customers can choose their favourite paint color, frame design, and gas tank size.  Once the selections are made, the custom order is routed directly to the manufacturer to build.  Digitising the supply chain has dramatically increased the speed of order fulfillment. Harley-Davidson moved from a fixed, 21-day production schedule for new orders down to only six hours.


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