Why the fourth time’s the charm for your supply chain

Why does this matter for the automotive industry? Because there’s a fundamental shift happening in the business model of every automotive company and supplier today. And it starts in one place: the supply chain. Original equipment manufacturers (OEMs) are going from a traditional, linear supply chain to a networked supply chain — and from a relatively straightforward production line to a complex ecosystem of various companies, suppliers and industry players.

To plan for what’s ahead, it is critical to consider this and other increasing complexities. The first step is to look at your business model, identifying your biggest opportunity and your biggest pain point. Examine the different capabilities within the spectrum of Industry 4.0 and find a combination of capabilities to address weaknesses in your business. Those capabilities have to come from somewhere: joint ventures, new talent, M&A, outside knowledge or a fundamental business transformation altogether.

Remember, innovation is a means to an end. It’s not about randomly experimenting with ways to apply different technologies and capabilities in your business. Innovation requires:

• Discipline
• A constrained environment in which variables can be solved for
• Proofs of concept, demonstrating that the business issue has been solved before scaling and deploying across the enterprise
• Tracking of success by reviewing the business benefits before and after

This doesn’t have to be scary or a doom-and-gloom situation. On the contrary, Industry 4.0 stands to improve your supply chain through many technologies. Big data can be used for predictive analytics, which can better prepare you for changes or disruptions in the market. IoT and the cloud can enable near-real-time collaboration between suppliers, OEMs and customers. Robotic process automation (RPA) can automate monotonous and repetitive tasks, enabling the workforce to focus on work and activities that add higher value and are more stimulating. Autonomous supply chains can react to events without significant manual effort and make event response much more streamlined. And blockchain can create transparency and real-time collaboration across various tiers of the supply chain.

Some of this technology is so new that it may be hard to understand. Don’t get discouraged. Industry 4.0 means a lot for your supply chain. You can compress your product development cycles and launch products faster. You can reduce your supply chain costs. And you can increase customer order fill rates without substantially impacting cost and improve inventory and asset utilization. These are just a few examples.

Ultimately, you need to be able to respond to the onslaught of changes to your business. That means making your business flexible, agile, responsive and ready for Industry 4.0. You have to start now because the pace of change is increasing so rapidly, and the change is relentless.