Smart supply chain: what exactly is logistics 4.0 all about?

The 21st century has seen rapid changes in technology in the form of automation and increased connectivity. Cutting-edge technologies, like artificial intelligence and advanced robotics, have revolutionised various processes and industries, especially in manufacturing. The term industry 4.0 denotes the transition to digital manufacturing or the fourth industrial revolution.

What does this revolution mean for logistics, supply chains, and the businesses seeking to capitalize on it? How is industry 4.0 applied in the logistics industry? How has DHL Express digitised its supply chains to transform its logistics operations? The following sections address these questions and more. 

What is industry 4.0?

Industry 4.0 captures the computerisation and automation of manufacturing processes via smart technologies such as artificial intelligence, machine learning, big data and advanced analytics. The introduction of smart machines is a significant feature of this fourth industrial revolution, as various processes are made more efficient with a lower margin of error. Via networking and the sharing of information, the potential of industry 4.0 may be realised in many sectors, including logistics and supply chain.

What is logistics 4.0?

Logistics 4.0 is the adoption of industry 4.0’s principles, procedures, and technologies to create smart supply chains. Supply chain management is complex and requires the timely performance of each function of the process. With digitised supply chains and interconnected stakeholders that share data and information, supply chains can now be organised in more transparent and efficient ways. 

For example, through the use of sophisticated big data and data analytics tools, logistics companies can predict delays and find alternative routes instantly – ensuring customers receive their orders on time always. Another prime example is the application of blockchain technology in this sector, enabling process automation, reducing paperwork and enhancing traceability. 

How can industry 4.0 solutions support supply chain management?

Streamlining supply chains and ensuring the safe and reliable transfer of goods is crucial to improve global operations. Applying artificial intelligence to supply chains enhances efficiency and cuts costs. 

While AI-powered tools will not eradicate supply chain issues, according to a research study by McKinsey & Company, AI-enabled supply chains cut costs related to logistics by 15%. They also improve inventory levels by 15%. Another study by the same consulting firm shows that more than 50% of organizations that incorporated AI in logistics and supply chain operations reported an increase in revenue.

Supply chain 4.0 incorporates a range of smart solutions and contains a range of benefits:

• Analytics tools empower warehouse managers through pattern identification and demand forecasting. This helps employees make informed decisions on inventory stocking, thus improving warehouse supply and demand management.
• AI in the form of route-optimisation platforms and GPS tools optimises delivery routes when multiple products are being delivered to different locations.
• Machine learning improves the durability of expensive logistics equipment by carrying out regular maintenance checks and recommending repair and optimisation based on real-time data.
• AI-enabled tools in logistics can also negotiate better shipping rates and manage carrier contracts to increase revenue and cut costs.

Why is industry 4.0 important for Indonesia businesses?

The Indonesian government is keen to lift the export-to-GDP ratio to 10% by 2030 through its Fourth Industrial Revolution (4IR) blueprint. The success of this will entail the creation of seven million jobs, many of which will occupy high-value positions in an increasing knowledge economy. Looking at the direction the country is headed, it comes as no surprise then that local businesses should jump on the bandwagon and reap the benefits of industry 4.0 as we have described above. By transforming operations and therefore improving productivity and competitiveness, businesses can find themselves moving up the value chain, positioning themselves not just as a leader in their respective markets but also as a brand that is innovative and forward-looking. In addition, businesses working in line with the government’s 4IR goals will have direct access to investment in technology and research and development, furthering their individual pursuits of industry 4.0.