Reshaping Supply Chains In The Era Of Disruptions

Sustainable Investment

By Guilherme F. Frederico

Supply chains are currently being challenged as never before, in this era of cumulative and sequential disruptions. This requires integrative and holistic thinking from practitioners and academics in order to overcome the challenges of supply chain management. This article calls for an integrative approach to the subjects of Supply Chain 4.0, sustainability, and resilience. These three integrated aspects are predicted to generate a big transformation, which is required to meet the upcoming supply chain challenges.

Supply chains have never before been challenged as they are being nowadays. Pandemic, climate changes, and war have drastically affected global supply chains. These events have exposed the relevance of supply chain management for the global economy, and the consequential effects are bringing significant impacts, such as goods inflation, a potential food and energy crisis, and significant shortages of various supplies for industries of different sectors.

The disruptive technologies of Supply Chain 4.0 may create potential improvements in the performance of supply chain processes, allowing supply chains to become more resilient.

At the same time that supply chains are facing their most challenging period, many opportunities are under discussion in order to improve and transform supply chain operations in the aftermath of the disruptions. This is perhaps the most promising time for a big transformation of supply chains, in which decision makers and academics have a great responsibility to lead change and make visible the role and relevance of supply chain management for the global economy.

Themes like Supply Chain 4.0, resilience, and sustainability are currently the most discussed topics in academia and industry. Each one of these topics has its own subjects of discussion. Indeed, they are complementary to each other and industry decision makers and academics should be able to view them from a holistic perspective as the main aspects to be addressed in a supply chain strategy.

Supply Chain 4.0

Supply Chain 4.0 has emerged from the advent of Industry 4.0 technologies, which have seen adoption since 2011. Supply Chain 4.0 is a concept that involves implementing a set of disruptive technologies, both physical and virtual (e.g., Internet of Things, robotics, big data analytics, augmented reality, blockchain, additive manufacturing, artificial intelligence), to support supply chain processes and improve their performance. These technologies are being adopted in supply chains in order to create interconnected, self-executed, and self-controlled supply chain processes (i.e., planning, sourcing, manufacturing, and delivery). Once this new strategy is rolled out in supply chains, many benefits may be achieved, contributing to more resilient and sustainable supply chains.

Supply Chain 4.0 and resilience

Discussions around finding the best integration between humans and technologies for a better society are also ongoing, and are now being referred to as “Supply Chain 5.0”.

The disruptive technologies of Supply Chain 4.0 may create potential improvements in the performance of supply chain processes, allowing supply chains to become more resilient. These technologies, when working together and properly interoperable, have the capacity to generate significant breakthroughs in terms of visibility, transparency, flexibility, and efficiency, increasing the capacity of supply chains to respond to events that cause disturbance. They also foster collaboration amongst supply chain members (e.g., suppliers, focus companies, and retailers), contributing to rapid action plans and other joint initiatives related to contingency, and response plans with quick decision-making based on real-time data in the event of an unexpected situation. Also, supply chain processes (e.g. manufacturing and delivery) may become more responsive with the integration of virtual technologies (e.g. big data analytics and artificial intelligence) with physical technologies (e.g. 3D printing and robotics), reducing manufacturing time, increasing flexibility, and improving last-mile delivery.

Supply Chain 4.0 and sustainability

Climate change has demonstrated its potential to damage the world. Supply chains play a crucial role in this issue, since they are responsible for the production of goods and the provision of services. This has challenged the leadership in supply chains to look for strategies that make supply chain processes more sustainable, and hence aligned with the SDGs (Sustainable and Development Goals) established by the United Nations. Following this new trend of supply chain operations, Supply Chain 4.0 may help organisations by enabling more sustainable supply chain processes. First, disruptive technologies contribute to reducing waste in supply chain processes, also making them more efficient in terms of energy consumption. This is because supply chain processes may become more intelligent through the use of technologies such as robotics, 3D printing, and artificial intelligence, which allow the processes to be leaner and more efficient. Second, besides improvements in supply chain processes, disruptive technologies are also able to change the products of the supply chains by producing more smart goods and providing smart services which can significantly benefit the environment in terms of energy efficiency and the reduction of pollution.

supply chain

Final remarks

This new era of supply chain management, which has emerged from cumulative disruptive events, requires integrative thinking from decision makers and policymakers. Although digital transformation is currently the main driver of discussion among practitioners and academics, its integration with the themes of supply chain sustainability and resilience is paramount and will allow a big transformation in the current status of supply chains. Moreover, discussions around finding the best integration between humans and technologies for a better society are also ongoing, and are now being referred to as “Supply Chain 5.0”. It is important to emphasise that the implementation of disruptive technologies itself is not the only thing to be considered in a Supply Chain 4.0 strategy. It is essential to consider the supporting pillars for management and capability that will assure the effective implementation and use of these technologies. This includes people properly trained to implement and operate them, effective coordination and project management skills involved in the roll-out of this new strategy, adequate IT infrastructure in terms of hardware and networks, full leadership support, and strategic orientation. Also, Supply Chain 4.0 may follow a different path depending on the organisation concerned. In this regard, it is relevant to align the organisation’s maturity with its Supply Chain 4.0 strategy by implementing suitable technologies for the specific situation.

About the Author

GuilhermeGuilherme F. Frederico, PhD is a Professor of Operations, Supply Chain and Project Management at the School of Management, Federal University of Paraná, UFPR, Brazil and Visiting Research Professor of the Centre for Supply Chain Improvement at the University of Derby, UK. He is the author of Operations and Supply Chain Strategy in the Industry 4.0 Era and has published articles in the international journals (e.g., Supply Chain Management, Benchmarking, The International Journal of Logistics Management, Business Process Management Journal, Operations Management Research), conferences (e.g., IEOM, POMS), and magazines (Supply Chain Management Review, Logistics Management, Performance Magazine). Prof. Frederico is also an area editor of the Operations Management Research Journal (Springer). His research interests are related to Supply Chain 4.0, Industry 4.0, maturity in supply chain and operations management, performance measurement in supply chains, knowledge and information management, and supply chain and operations strategy. Prof. Frederico has more than 20 years’ experience in supply chain and operations management, having also worked in strategic positions in global companies of manufacturing and services industries.

References

  • Frederico, G.F., Garza-Reyes, J.A., Anosike, A. and Kumar, V. (2020) “Supply Chain 4.0: Concepts, Maturity and Research Agenda”, Supply Chain Management. Vol. 25, No. 2, pp. 262-82. https://doi.org/10.1108/SCM-09-2018-0339
  • Frederico, G.F. (2021) “Towards a Supply Chain 4.0 on the post-COVID-19 pandemic: A conceptual and strategic discussion for more resilient supply chains”, Rajagiri Management Journal. Vol. 15, No. 2, pp. 94-104. https://doi.org/10.1108/RAMJ-08-2020-0047
  • Frederico, G.F. (2021) “From Supply Chain 4.0 to Supply Chain 5.0: Findings from a Systematic Literature Review and Research Directions”, Logistics, Vol. 5 No. 3. https://doi.org/10.3390/logistics5030049

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.