Industry 4.0: The New Building Block of Manufacturing

Team o4s on June 9, 2022

After the first industrial revolution which involved the introduction of mechanical production, the second which took place with science and mass production, and the third which focused on digitalization, it is time for the fourth installment of the industrial revolution i.e. Industry 4.0 to make a buzz now.

What is Industry 4.0?

The fourth industrial revolution refers to the digitalization of production and manufacturing procedures. Industry 4.0 uses smart technologies such as artificial intelligence, 3-D printing, miniaturized sensors, etc. along with real-time data to increase productivity and profitability, simultaneously cutting down the costs of manufacturing.

The new concept that is taking the world by awe is a successor to the 3rd industrial revolution that bought computers in the manufacturing industry. However, unlike the 3rd industrial revolution, Industry 4.0 focuses on helping the organization to manage and succeed by ticking off what’s necessary and what’s not on their checklist.

How is Industry 4.0 supporting Organizational Supply Chain?

Industry 4.0 has been launched, keeping in mind the objective of making supply management better, faster, and more reliable. With the introduction of smarter technologies, high-end quality management systems, and real-time tracking, the 4th industry revolution shall bring a positive change to the supply chain. Let’s understand how.

Better Asset Tracking

Asset tracking has always been a primary concern across various industries, including businesses of all scales. With the technological advancements, deploying labor for asset tracking shall be reduced, facilitating transparency and elimination of manual human errors in the system. Hence, offering an improvised and on-time service delivery to the customers.

Time Efficient Deliveries

A highly managed data and supply chain network will provide a boost to organizational deliveries. The companies will be able to respond to consumers’ demands and need efficiently and easily. Reduced downtime of machines and lower losses lead to time-efficient deliveries, roping in higher profitability for the company.

Better Control & Management

Industry 4.0 brings in better transparency with its real-time data management systems. Accumulating the entire data in a single place not just reduces time investment, but also, space and other operational expenses.

Cons of Industry 4.0

Besides benefitting the supply chains of organizations, just like the flip side of a coin, there are a few possible repercussions too:

Internet of Things (IoT) stands as a major security concern. Until packed with high-end security processes, online data management seems to be under a major data security threat.

Workers and labors involved in IT industries adapting manufacturing 4.0 will be required to undergo specialized training to match the required skillset

Customizable and complex production requiring non-repetitive tasks shall be a major concern as machines are not believed competent enough for customizable tasks

What does the future hold?

By far, except for a few cons, the introduction of Industry 4.0 seems to be a profitable and efficient change in the manufacturing world. As per experts, the change is expected to bring high monetary benefits for industrialists. Specialists suggest that the industry will be investing approximately USD 500 billion by 2020, and with this technology, they shall earn a value up to USD 1.28 trillion.

How Industry 4.0 correlates with product serialization?

Enforcing greater product visibility through a tech-enabled supply chain provides great support to Industry 4.0. Together, they facilitate absolute visibility not only across the entire supply chain but throughout the product lifecycle. Product serialization helps companies build an ecosystem where there is higher product traceability.

Companies can easily and conveniently track their product’s movement across the supply chain via primary and secondary linking of packages. This makes it way easier to detect territorial product diversions, and faulty returns while providing a leeway to optimize inventories. Furthermore, they help optimize process quality, and inventory planning, boost productivity and lower costs as well as reduce waste incurred due to lower awareness levels. The collection of real-time updates on activities, along with the continuous processing of aggregated data allows manufacturers to run advanced analytics and predict future trends based on historic demand-supply patterns. Thus, facilitating efficient strategic decision making.

Resolving Supply Chain Issues with Retailer’s Data

O4S on September 7, 2021

The competition in the retail space is fierce now than it has ever been. Consumers have a wide range of options available at their disposal. Add e-commerce platforms to the mix, and you have a situation where brand loyalty goes for a toss. With the rise in consumerism and the availability of options, brands need to gear up for changing times. More emphasis has to be laid upon strengthening the supply chain so that it becomes efficient enough to ensure that the right product is available at the right place at the right time.

The supply chain is the backbone of the retail industry besides other industries. It is a crucial link that aids in the availability of the goods to the end consumer. It is crucial to have an efficient supply chain for smoother operational processing, simplifying purchase, inventory management, and warehousing functions. A reliable supply chain reduces transportation costs and helps the retailer in offering a variety of goods at a reasonable price. It also plays a pivotal role in giving a competitive advantage in the market.

The Issues

Due to a large number of SKUs and the scale of supply, often it becomes challenging to manage the supply chain. This leads to issues concerning procurement, warehousing, availability, and delivery of goods to the last leg of the supply chain including the retailers. The biggest nightmare for the retailer is perhaps going out of stock. Retailers have to manage the stock levels for multiple brands which can become cumbersome, resulting in a lack of stocks for some brands.

Retailers are the key stakeholders that hold all the data that will reveal 360-degree insights about your products. It is essential for brands to repeatedly review the supply chain and streamline the processes for a shorter supply chain. Besides increasing efficiency, it will also help in reducing the supply chain cost.

The supply chain also faces issues during the last-mile journey which can vary from maintaining the authenticity of the goods due to lack of traceability to ensuring rapid movement. The inadequate communication between retailers and brands causes major discrepancies in the supply. The problem can be solved by using retailers’ data and analyzing it to get the required information.

The Solution

Retailers are the point of contact between the organization and the customers. They are the ones who directly interact with your end consumers and have a true understanding of the actual needs and wants of the consumers. Their feedback can provide you with valuable information related to the product, including the reason for sales or a failed sale. This can contribute immensely while developing a new product and will also help in enhancing the existing one as per the actual needs of the consumer.

Retailers have first-hand information about the likes and dislikes of the various consumer segments, and they also have access to vital information such as consumer demographics and purchase history. Brands can make use of this information to segment their target audience further and supply products that are as per the preferences of the consumers. All your organizations need to do is get the data available with the retailers.

This data can be useful in tracking the purchase history of consumers which can act as a base for predicting future sales trends. Demand forecasting is another tool that can be utilized with the data obtained from retailers. This can also help in creating a robust supply chain with reduced time to reach the market.

The point of sale refers to the place where the actual transaction is carried out. Software such as the POS system carefully scrutinizes the sales data of the retail outlet and generates insights about the product movement. It helps in understanding the pace at which the products are moving from the shelves. These reports will give you timely insight into the optimal time and hours of the sale. Regular reports will enable you to time your supply accordingly.

The retail data can be used for the formation of a collaborative network between the suppliers and the retailers. There will be a shift in the focus from ‘on the shelf availability’ to ‘on-demand availability’. The product cycle timing can be modified by using retail data as it unearths the pace at which the products are moving. So, the lead time to manufacture a product may need alterations to suit the customer demand during peak season.

Managing vendors is a significant issue that crops up while operating a supply chain of organizations with multiple products and vast geographical areas to cover. Ensuring the timely delivery of goods is a major responsibility. Through constant consumer feedback, brands can analyze the desirable products and ones that need changes to have better control over the supply chain.

Retail data can be of great importance to determine consumer insights as well as aid in resolving critical supply chain issues. Utilizing the retail data is set to be the next trend in the coming years. Retailers are expected to increasingly make use of the data to manage and sustain their supply chains and businesses.

It is crucial for organizations to ensure that retailers and distributors are motivated enough to share the data. This can be achieved through Trade Promotions that are designed to benefit both the organizations and retailers. The latter is incentivized for sharing the data while the former get data that can be used for a wide variety of purpose.

Data is the solution to solving a wide range of supply chain problems and developing supply chains that provide a competitive edge. Trade Promotion-related solutions designed by O4S are the ideal solutions that empower your brand to leverage the data and incentivize the stakeholders in the supply chain.

Indian Economy Towards Digitalization and Its Impact on Retail

O4S on July 5, 2019

Ever since the evening of November 8, when PM Narendra Modi announced demonetization to curb black money, digitalization has become a talking point. However, it is essential to understand that digitalization has been around for over a decade, and it does not only mean financial digitalization. From ordering food to shopping for your kid’s next birthday gift, everything can now be done digitally. India is rapidly moving into digital space with 460 million people connected online which is second only to China. In Q1 2018, 30 million units of smartphones were sold in India, resulting in an approximate addition of 20.5 new mobile users every second. Indian users consume 76 PB of data a year which is 1.1x that of China and 1.7x of the USA. With 12 billion mobile app downloads a year, India is only a step behind China in terms of app downloads.

The digital revolution is expected to create over USD 1 trillion digital economies by 2025 as per an IT Ministry report. In the fiscal year 2017–18, the digital economy generated about USD 200 billion of economic value which was about 8 percent of India’s GVA. Digitalization is prevalent in every sector in India, from agriculture to banking. According to a study conducted by Assocham & EY, 16.9 million tons of farm produce worth USD 6 billion was sold via e-NAM (National Agriculture Market) platforms in 2017–18, while railways have installed Wi-Fi in over 675 stations. Moreover, e-commerce is expected to grow at a CAGR of 23% by 2021, and the mobile wallet transactions have reportedly increased 40 times in comparison to 2013.

The Indian economy is fast pacing towards digitalization and bringing huge opportunities for several stakeholders. However, digitalization is a cross-industry and cross-company process that requires changes on a broader scale. The government of India over the last couple of years has pushed schemes such as “Digital India”, Aadhaar, Jan-Dhan Yojana, DigiLocker, and PAHAL, all of which focus on promoting a digital economy. While these schemes may have been created to ensure benefits reach poorest of the poor, it has transformed rural and semi-urban citizens’ approach towards technology. These new users equipped with a smartphone are changing the trends of several industries including that of retail.

Major Changes in Retail

Digitalization has not only changed the customers, but it has also impacted the operating standards of retail companies. Retail companies have been rapidly adopting digital ways to keep pace with the fast-changing retail space in India. Some of the top changes that digitization has brought are as following:

Price Sensitivity

The digital transformation has ensured the customers can compare the products with a single click and see through any price discrepancy. Top retailers have been historically charging higher due to the convenience and customer service offered in the store. The advent of digital e-commerce has made these traits obsolete, at least in the minds of the customer. Today, the customer thinks if they can get the same product for a lesser price by ordering it from the comfort of their home, then why should they go to a physical brick and mortar store.

Data

Since everything is now digital from customer information to logistics, a large quantity of data is generated daily. E-commerce companies can know exactly what the customer browsed, which product they added to cart and deleted later, which other product a customer searched, and what they purchased, and time spent on the site. These huge chunks of data need to be analyzed and turned into actionable insights. These insights will then help the retailers in modifying their actions to customize their offering to improve sales. Digitalization has ensured that data has become an extremely vital parameter for retail companies.

Logistics Optimization

With everything else from product pricing to website layout open to being copied by your competition, logistics can set you apart from the rest. Digitalization has had a huge impact on the logistics industry which was earlier at the mercy of transporters. Today, retailers can track every movement from the time a product leaves the factory to it reaches the customers. This ability to track the product empowers retailers to optimize the logistics to improve delivery time and delight their customers. The optimized supply chain also results in monetary savings.

Product Authenticity

While digitalization has introduced several benefits in the retails industry, there have been a few downsides. The most concerning part has been the introduction of fake products in the supply chain. Several instances have surfaced wherein customers received a fake product or did not receive any product at all. Fake products could enter your supply chain due to prevailing untraceable return management systems. There is always a possibility that some bad actors in the supply chain such as super-stockist, distributor, or any other stakeholder will replace the original product with a counterfeit product.

Even though not all companies have employed an easily available solution, some of the early adopters have introduced product verification features. The supply chain tracking applications are equipped with features such as product serialization, control procedures, return restriction, etc. which enable you to prevent counterfeit products from entering the supply chain. It also allows the customer to scan the products and verify whether the product is original or counterfeit. This gives ‘peace of mind’ to your customers and turns them into your brand ambassadors.

What Next for Retail?

The changes that digitalization will bring in retail are inevitable, and it will change the game for brick & mortar retailers too. The concept of a convenience store that offered products at slightly better rates is in need of a serious overhaul. Retailers need to shift the focus on their strengths and provide an unbeatable in-store experience to the customers. This could be in the form of interactive screens, providing theme-based shopping experience, and using technology to improve the shopping experience further. Retailers can also embrace digitalization and become part of promotions, research projects, and trading expos held by several brands. This would allow you to compete with digital platforms while still retaining your USPs and playing on your strengths.

Digital transformation is disrupting industries and forcing companies to innovate business models. Depending on the present stage of the company, some of the newer business model that can be followed include subscription model, hypermarket model, experience model, on-demand model, freemium model, and the pyramid model, among others. It is essential to understand that digitalization will change all aspects of retail, be it strategy, front-end, or back-end. It falls on the modern retailers to be agile in responding to changing retail space, and lead rather than play catch-up.

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