How Industry 4.0 can become the disruptor of supply chains

Jon Lawson

The Industrial Internet of Things (IIoT) is already changing the supply chain dynamics for thousands of businesses, and even more disruptive technology is on the way, altering the supply chain on a fundamental level. Here we take a look at some of the biggest and most disruptive technologies and trends in Industry 4.0.

The industry as a whole faces a sea change in the coming few years, as Industry 4.0 gathers pace in a market predicted to be worth US$4.4 trillion in value by 2020, according to KPMG. 

The term might sound like yet another buzzword, but in fact, represents a huge shift in the way that business operates - and how the enterprise as a whole will need to operate to remain competitive. Made up of a series of building blocks, including IIoT, AI and blockchain, Industry 4.0’s power is already visible in many areas of business, such as Amazon’s same-day delivery. And a host of innovations and new technologies will continue to drive adoption exponentially.  

Why Edge AI creates smarter networks

While AI in the cloud is a fairly established concept (and indeed is available for a limited free trial via Amazon Web Services), IIoT-powered supply chains have a data challenge to solve. A network of sensors embedded in the supply chain provide powerful data, but in serious quantity, potentially driving up network traffic to expensive and impractical levels. Edge AI offers a solution to this problem by processing data on a device, ensuring that only actionable data needs to be fed back to the cloud, reducing network congestion. 

An additional layer is a growing ability to deliver on-chip processing, such as patented by US startup AIStorm, which offers the potential to handle sensor data within the sensor itself (for example by responding to movement in a particular visual sector of a security camera), saving significant system resources, power and time. 

The result is an increasingly ‘smart’ network, with devices at the edges of the network capable of intelligent operation, as well as delivering visibility throughout the supply chain.  

How digital twins create predictive data

According to a recent study by Gartner, 13% of organisations implementing IIoT are already using ‘digital twin’ technology, while 62% are either in the process of establishing the technology or plan to do so in the next year. The analyst firm said that a major driver of digital twin uptake is that the technology is already delivering genuine business value, and has become part of enterprise IIoT strategy. 

A digital twin is a clone of physical and digital processes, a mirror that allows enterprises to model results of a process or technology change without impacting day-to-day operations. The concept combines technologies such as IIoT sensors, AI, Machine Learning and cognitive data analytics to create a powerful predictive tool. 

The digital twin can be used to predict increased demand on a particular component or product, for example, allowing upstream and downstream supply chain factors to be simulated, optimised, then actioned in advance. The result is enhanced efficiency and improved responsiveness - with all the benefits that brings. 

Indeed, Gartner predicts that before 2022, over two-thirds of companies that have implemented IIoT will have deployed at least one digital twin in production.

Blockchain: Immutable contracts

While blockchain has been the prescription for many ills, some of which are more plausible than others, in the world of increasingly automated supply chains it has considerable value. IBM’s most recent blockchain product - Trust Your Supplier (TYS) network - is designed to “improve supplier validation, onboarding and life cycle information management” by creating an immutable blockchain audit trail for supplier firms. 

Information such as ISO and tax certifications, bank account information and insurance certificates can be reviewed in seconds, replacing cumbersome manual checks and potentially enabling smart contracts to replace traditional bespoke agreements. IBM claims that the network will bestow a 70% to 80% reduction in the cycle time to onboard new suppliers, significantly enhancing the efficiency of a supply chain. Other founding participants include Cisco, GlaxoSmithKline, Lenovo, Nokia, Schneider Electric and Vodafone.

3D printing: Why wait?

Of course, some verticals have simplified their supply chains in an unexpected manner - by simply printing the parts they need in-house. Not only can this strategy pay dividends in time and efficiency, but it can also be used in conjunction with IIoT data flows to deliver far more substantial improvements. 

For example, upstream demand and inventory data can be used to ensure that production of the most vital parts is prioritised, while tiny improvements can be made on the fly as usage data is re-incorporated into base designs. This flexibility and efficiency have made commercial-grade 3D printing an increasingly popular supply chain tool in the automotive, electronics and healthcare industries. As hardware costs reduce and new materials and processes become possible, adoption will likely broaden.  

In short, the very near future will change the way the traditional industry functions on a fundamental level, automating thousands of processes throughout the supply chain. From Industry 4.0 trends like real-time IIoT networks, powered by edge AI, through to smart contracts and 3D printing, the future is already here - is your business ready for it?    

The author is Martin Keenan, Technical Director at Avnet Abacus