29 July 2021 | Technology

Time to Level Up: Building Digital Resilience with Supply Chain 5.0

Supply chain 5.0 will use data to reap the business benefits of a more symbiotic human-and-machine relationship.

Building a digital supply chain that is “future-proof” is impossible. Disruptions are unavoidable and can have a long-lasting impact on growth, success and your bottom line. 

Over recent years, several technologies, including automation, have emerged that are changing traditional ways of working. On top of this, mega trends and customer expectations changed the business-to-business (B2B) landscape, the rules and the players.  

Disruptions are unfortunately the new norm, and supply chains are not impervious to its effects. But besides the need to adapt to these changes, supply chains have the opportunity to reach the next level of operational effectiveness to leverage emerging digital supply chain business models and digitize. 

 

Looking at where many organizations are: supply chain 4.0 

Supply chain 4.0 involves the application of the Internet of Things (IoT), advanced robotics and the application of advanced analytics of big data in supply chain management. 

These technologies, when effectively integrated, allow better performance on supply chain processes in terms of efficiency, integration, collaboration, responsiveness, flexibility, quality and transparency. These integrated technologies aim to create cyber-physical systems over the supply chain’s processes. 

The digitization of the supply chain enables companies to address the new requirements of customers, the challenges on the supply side and the remaining expectations in efficiency improvement. So, supply chain 4.0 is 

  • Fast 
  • Flexible (real-time planning = flexible reaction to changing demand or supply situations) 
  • Granular 
  • Accurate (end-to-end transparency) 
  • Efficient 

Supply chain 4.0 clearly separates humans and machines. However, some visionaries are disseminating the idea of the Fifth Industrial Revolution: the reconciliation between humans and machines. 

It might be strange to discuss this topic when we’re still in supply chain 4.0, which dictates that the more automated the work, the better performance is achieved. However, the question is: Could we extract the maximum benefits from both machines and humans? This is what supply chain 5.0 answers. 

 

Looking at where we can take you: supply chain 5.0 

Supply chain 5.0 caters to the hyper-personalization and hyper-customization of customer needs, which requires the right mix of human creativity and machine efficiency. It puts people back into the heart of manufacturing, allowing them to focus on more creative tasks and cognitive problem-solving. 

 

“…while robots are excellent at manufacturing standard products in standardized processes in a high production volume, adding this so-called special something to each and every product is a challenge where robots require guidance.” 

Universal Robots 

 

That something special that only humans can deliver is the ultimate customer experience. However, digital waste prevents supply chains from leveraging the potential of supply chain 5.0. It is crucial to understand these sources of waste and develop solutions to avoid it in the future state: 

  • Data capturing and management. Often, available data is handled manually (data collection in a system, paper-based data handling, etc.) and not updated regularly. 
  • Integrated process optimization. Many companies have implemented an integrated planning process, but often, this is done in silos and not all information is leveraged to achieve the best planning result possible. 
  • Physical process execution of humans and machines. Nowadays, warehousing, assembly line replenishment and transport management, for example, is often done based on gut feeling, not leveraging available data.  

When you control the data, you control the systems. And unstructured data is a critical factor: If the data is incorrect, you have a garbage in, garbage out problem. 

That’s why getting the data right is critical for workflow automation, reporting and artificial intelligence (AI). 

 

Your unstructured data problem 

Supply chains run on manual trade transactions, everything from special pricing agreements and customer orders to requests for quotes and invoices. This unstructured data must be transformed into structured data to achieve massive gains in efficiencies and automation. 

  • Approximately 50% of orders come through email, which feeds an OMS or ERP 
  • Service requests for CSR work often comes through email 
  • Most AP invoices come through email, which feeds financial systems 
  • RFQs typically start a Configure/Price/Quote (CPQ) process
  • Unstructured documents often kick off a workflow or RPA. 
  • Most companies can’t deliver EDI, and do not want to rekey information into a website 

To build resilience into your supply chain, without changing people and/or asking your customers or suppliers to change their processes, you have to tackle the data. Start with these best practices: 

  • Break down silos: Destroy silos and distance your organization from digital waste to gain visibility into the supply chain. 
  • Start small and scale: You don’t have to make big, risky investments. Start small and prove value with solutions that provide quick wins. 

Learn more about supply chain 5.0.