What is the supply chain 4 0

Logistics 4.0: supply chain management in transition

The requirements for supply chain management have changed fundamentally in the past decades: The use of new technologies as well as the transparent supply chain that can be traced in real time are becoming state of the art. Companies that want to remain competitive are required to adapt their supply chain to this environment .

Thanks to globalization, modern supply chains span the entire globe, product life cycles are getting shorter, customer demands on shipping speed are increasing and instead of series production, the trend is towards batch size 1. It is a huge upheaval for the supply chain manager in recent years motivated by new solutions.

Pressure on the supply chains is increasing

Companies are under great pressure from global changes in supply chains. This is also confirmed by 52 percent of the logistics decision-makers surveyed for the 10th Hermes Barometer. You say that the requirements for optimizing the supply chain have risen sharply. As a result, more than three quarters of the companies surveyed (78 percent) follow a systematic and comprehensive approach to optimizing their supply chain.

In practice, however, many companies still work in old structures: Instead of communicating with supply chain partners in real time via the cloud, Excel lists are maintained - the possibilities of modern SCM are not yet used. "Our experience shows that there are sometimes large gaps - between the claim to keep pace with digitization and at the same time to take customers and partners with us on this path," says Ralf Boelicke, Head of Department Solution Design at Hermes International, a division of Hermes Germany .

Networked communication

Ralf Boelicke, Head of Department Solution Design at Hermes International.

The creation of a networked communication architecture between the supply chain partners is an important step towards optimizing the SC and with regard to the realization of Logistics 4.0. More and more companies seem to understand that too. “We know from our practice that, for example, the use of cloud solutions for cross-player supply chain communication is increasing. Such systems allow the transparent transmission of data and documents in real time, regardless of e.g. the respective IT systems of the partners ”, says Boelicke.

However, transparent communication is not only trend-setting between supply chain partners. Communication should also be open and transparent within a company. It is important to break with old silo thinking and take a holistic view of the supply chain: All departments directly involved in the supply chain should pursue a common, defined goal. The creation of new responsibilities can support this process.

Use new planning methods and technologies

In order to meet the growing requirements and to ensure the necessary agility in the supply chain, companies are increasingly relying on demand-oriented supply chain management. With the help of demand-driven material requirements planning (DDMRP), companies can respond more quickly to changing conditions and also reduce costs. With the help of the DDMRP approach, a very good delivery capability with short lead times is possible. (For more information on the DDMRP approach, see here.)

But the use of new technologies can also reduce the complexity and uncertainty within the supply chain. At Hermes Germany, internal experts monitor developments in this area: They constantly analyze which technologies will be expedient for the logistics service provider in the future and can generate added value. "In concrete terms, we use big data very successfully to forecast quantity forecasts more precisely and to improve resource planning in the individual branches," explains Boelicke.

Logistics 4.0: the supply chain of the future

With the introduction and widespread implementation of the new 5G mobile communications standard, the development towards Logistics 4.0 will accelerate once again. With the help of 5G, the countless data in a supply chain can be used even better in the future. Because AI and IoT applications require unrestricted data transfer in order to be able to fully exploit their potential.

The future of SCM is digital. However, it is precisely at this point that numerous companies need to improve in order to remain competitive. Experts believe that many companies consider themselves more developed than they actually are. “We often experience that simple means and extremely high manual effort are used. When we talk about fully automated IT systems that require a high degree of digitization, we get very mixed reactions, ”confirms Boelicke.

Against this background, querying the status quo and developing a strategy for realizing the “supply chain of the future” are sensible steps to uncover any potential for optimization. Companies that want to make their supply chain fit for the future should put their processes to the test and, under certain circumstances, overcome old structures in order to secure long-term competitive advantages. Service providers such as Hermes International are fully at their customers' side.


You can download the 10th Hermes Barometer on the subject of “Need for optimization in the supply chain” free of charge here download.