How fourth in­dus­trial revo­lu­tion will trans­form tra­di­tional sup­ply chains

The Irish Times - Business - - SUPPLY CHAIN MANAGEMENT - BARRY McCALL

The fourth in­dus­trial revo­lu­tion, or in­dus­try 4.0 as it is pop­u­larly known, ex­tends far be­yond the fac­tory floor and is af­fect­ing the way goods are made, mar­keted, bought, sold and con­sumed. The in­tro­duc­tion of smart tech­nol­ogy such as ar­ti­fi­cial in­tel­li­gence, the in­ter­net of things (IoT), and big data an­a­lyt­ics will usher in an era of mass cus­tomi­sa­tion where peo­ple can or­der run­ning shoes made to suit their ex­act foot mea­sure­ments, while med­i­cal de­vice com­pa­nies will pro­duce re­place­ment joints and other pros­thet­ics cus­tomised for in­di­vid­ual pa­tients.

“It’s quite hard to make general state­ments about how in­dus­try 4.0 and its en­abling tech­nolo­gies like IoT are go­ing to im­pact sup­ply chains other than to say that it will even­tu­ally trans­form them com­pletely,”says En­ter­prise Ire­land se­nior in­no­va­tion ex­ec­u­tive David Kee­ley.

“Not only will the way sup­ply chains func­tion change, but the na­ture of the ma­te­ri­als and as­sets may change also,” he adds. “All of this makes sig­nif­i­cant value chain dis­rup­tion in­evitable. And with this will come associated risk and huge op­por­tu­nity.”

In­creas­ingly pre­dic­tive

The use of IoT and an­a­lyt­ics in fac­to­ries and sup­ply chains will re­duce waste and in­crease pro­duc­tiv­ity, he con­tin­ues. “The sup­ply chain will be­come in­creas­ingly pre­dic­tive and trace­able,”says Kee­ley. “Sup­pli­ers of de­vices and equip­ment for in­clu­sion in larger sys­tems could use IoT to stay con­nected with their prod­ucts through­out their life cy­cle. This opens up op­por­tu­ni­ties to ex­tract much more value over the long term and may lead to the trans­for­ma­tion of busi­ness mod­els with an in­creas­ing fo­cus on ex­ist­ing and new ser­vice of­fer­ings.

“Im­por­tantly, the tra­di­tional field ser­vice model will change from one that is re­ac­tive to proac­tive. Sup­pli­ers will be able to gen­er­ate new types of high-value of­fer­ings to their customers that not only dif­fer­en­ti­ate them from their com­peti­tors but also pos­si­bly change the way these types of de­vices are pur­chased.”

This closer in­te­gra­tion of the sup­ply chain is noth­ing new to Smur­fit Kappa. “In­dus­try 4.0 is al­most an evo­lu­tion of the things we have been do­ing for many years in a less au­to­mated man­ner in terms of part­ner­ing with customers and sup­ply chain man­age­ment,” says Smur­fit Kappa Ire­land chief ex­ec­u­tive John O’Lough­lin. “It’s all about trust and part­ner­ships with customers. We have been do­ing that since 1934 in dif­fer­ent ways. This is not new for us.”

There has also been a change in the mar­ket and in shop­per be­hav­iour. “In the fast-mov­ing con­sumer goods area, 70 per cent of pur­chase de­ci­sions are now made while the con­sumer is stand­ing in front of the shelf. Pack­ag­ing has evolved from a brown box in a ware­house to at­trac­tive six-colour, high-gloss packs dis­played on the shelf. Noth­ing hap­pens in iso­la­tion any­more. In­dus­try 4.0 means every­one is in­te­grated in the chain.”

In­dus­try 4.0 is not the only is­sue af­fect­ing the pack­ag­ing in­dus­try at the mo­ment, O’Lough­lin points out. “En­vi­ron­men­tal sus­tain­abil­ity is an­other is­sue,” he says, not­ing that Smur­fit Kappa brings a slightly dif­fer­ent per­spec­tive to the cur­rent de­bate on plas­tics.

“We don’t see it as a war on plas­tic. Ul­ti­mately, we see plas­tic as a con­trol is­sue – con­trol of waste, re­cov­ery and ex­cess use. We need to re­duce ex­cess and look at re­cy­clable al­ter­na­tives and vi­able re­cov­ery sys­tems.”

He ex­plains that plas­tic has its uses where trans­parency or wa­ter­proof qual­i­ties are re­quired but that doesn’t mean that al­ter­na­tives shouldn’t be ex­plored. “Re­cy­clable al­ter­na­tives is where we come in,” he says. “There is a role for ev­ery­thing. We see plas­tic be­ing used now for things like fruit pun­nets which were made of fi­bre or paper in the past. Con­sumers and re­tail­ers have dom­i­nated the de­bate up un­til now. We are see­ing more of a bal­ance of voices now. We pro­vide mul­ti­ple so­lu­tions to our customers and we use plas­tic where it is ap­pro­pri­ate.”

In­dus­try 4.0 and new om­nichan­nel shop­ping sys­tems are pre­sent­ing chal­lenges in terms of pack­ag­ing. “Pre­sen­ta­tion of the prod­uct is king now. We are see­ing growth in ecom­merce chan­nels and our box not only has to de­liver the prod­uct in a good con­di­tion to the con­sumer, it has to have a per­sonal con­nec­tion to the brand and present it well. Sus­tain­abil­ity is also im­por­tant.”

More in­te­gra­tion

In­dus­try 4.0 is bring­ing the com­pany closer than ever to customers. “We have to be part of the de­sign process,” he says. In some cases, the com­pany re­tains own­er­ship of pack­ag­ing lines in the cus­tomer’s premises and pro­vides the staff to op­er­ate them.

“From our per­spec­tive we see our fu­ture as a trusted provider of so­lu­tions to prob­lems for large and small customers. We are aware that many customers don’t want to pro­duce their own prod­ucts. They want to get their brand out there. Trend will be where there is more and more in­te­gra­tion of sup­ply part­ners. This will be driven and fa­cil­i­tated by in­dus­try 4.0.”

Smur­fit Kappa’s ex­pe­ri­ence cen­tre, where customers can try out pack­ag­ing de­signs

Smur­fit Kappa has de­vel­oped a range of smart tools to aid customers in the pack­ag­ing de­sign process. They al­low reps to sit down with customers to de­sign a box or other piece of pack­ag­ing on screen se­lect­ing from thou­sands of dif­fer­ent de­sign tem­plates and op­tions. At the end of the process the cus­tomer can avail of the com­pany’s in­ven­tive “3D Store Visu­aliser” to see their brand in a vir­tual shop­ping en­vi­ron­ment, vi­su­al­is­ing and po­si­tion­ing it for test­ing against var­i­ous fac­tors.

“They can see what their prod­uct will look like on a su­per­mar­ket shelf in Poland if they like,”says O’Lough­lin. “We also have an ex­pe­ri­ence cen­tre here where customers can come to play around with pack­ag­ing de­signs and at the end of the process we dig­i­tally print the pack­age for them to take away for fur­ther con­sid­er­a­tion. We have de­vel­oped these tools to make the process faster and more ef­fi­cient for our customers.”

This is an ex­am­ple of the on­go­ing evo­lu­tion of the con­nected sup­ply chain which Kee­ley be­lieves will be­come much longer and com­pre­hen­sive en­com­pass­ing most if not all of the prod­uct life cy­cle. “In­dus­try 4.0 will al­low sup­pli­ers to re­fine and im­prove their of­fer­ings faster than ever be­fore and they will be more heav­ily in­volved in what will be a more dy­namic, it­er­a­tive and re­spon­sive de­sign process.”

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