“Supply Chain 4.0 – the application of the Internet of Things, the use of advanced robotics, and the application of advanced analytics of big data in supply chain management: place sensors in everything, create networks everywhere, automate anything, and analyze everything to significantly improve performance and customer satisfaction”

Over the last thirty years, logistics has undergone a tremendous change: from a purely operational function that reported to sales or manufacturing and focused on ensuring the supply of production lines and the delivery to customers, to an independent supply chain management function that in some companies is already being led by a CSO – the Chief Supply Chain Officer. The focus of the supply chain management function has shifted to advanced planning processes, such as analytical demand planning or integrated S&OP, which have become established business processes in many companies, while operational logistics has often been outsourced to third-party LSPs. The supply chain function ensures integrated operations from customers to suppliers.

Trends in supply chain management

Industry 4.0 creates a disruption and requires companies to rethink the way they design their supply chain. Several technologies have emerged that are altering traditional ways of working. On top of this, mega trends and customer expectations change the game. Besides the need to adapt, supply chains also have the opportunity to reach the next horizon of operational effectiveness, to leverage emerging digital supply chain business models, and to transform the company into a digital supply chain.

Several mega trends have a heavy influence on supply chain management: there is a continuing growth of the rural areas worldwide, with wealth shifting into regions that have not been served before. Pressure to reduce carbon emissions as well as regulations of traffic for socioeconomic reasons add to the challenges that logistics are facing. But changing demographics also lead to reduced labor availability as well as increasing ergonomic requirements that arise as the workforce age increases.

At the same time customer expectations are growing: the online trend of the last years has led to increasing service expectations combined with a much stronger granularization of orders. There is also a very definite trend towards further individualization and customization that drives the strong growth of and constant changes in the SKU portfolio. The online-enabled transparency and easy access to a multitude of options regarding where to shop and what to buy drives the competition of supply chains.

To build on these trends and cope with the changed requirements, supply chains need to become much faster, more granular, and much more precise.