How Smart Supply Chain Management is Adding Value in Industry 4.0?

supply chain adding value

Making progress towards Industry 4.0 in the supply chain sector by integrating digital technologies and business process automation has become the forefront of many organization’s long-term plans. This includes the introduction of emerging technologies, such as machine learning, the Internet of Things (IoT), advanced analytics, robotics, and cloud computing, to improve supply chain efficiency, quality control, data-driven decision making, and move towards sustainable practices. Gartner predicts that around 75% of commercial supply chain management application vendors will incorporate AI, data science, and advanced analytics by 2026.

No matter the company's size, supply chains hold all the production processes, from procurement of resources to the final product delivery to the end-users. Even minor flaws in the supply chain can put halts in the entire process. The rapid advancement of logistics software has resulted in supply chain management evolving into an elaborate process centered on demand prediction and maximizing operational efficiency. This trend of "smart supply chain" aims at leveraging the goals of Industry 4.0 with the increasing accessibility of modern technologies, changing customer demands, and growing environmental concerns. In this article, we discuss what a smart supply chain is, understand a smart supply chain example, list the benefits, and highlight how it aligns with the principles of Industry 4.0.

What is a smart supply chain?

A smart supply chain imbibes digital initiatives to maximize operational efficiency across all supply chain stages, from the procurement of raw materials and extending to production, distribution, and customer fulfillment.

What sets a smart supply chain from a conventional one is more than modern-day technologies such as IoT, robotics, data analytics, AI, and automation. It's also real-time access to data, a cloud-based approach to data storage, and visibility among stakeholders through better integration and connectivity with the use of these technologies.

Conventional supply chains had a static and linear approach, along with complicated operational workflows with increased participants. To sum it up, they were unsustainable. The principles of sustainability are also at the nexus of a smart supply chain. By integrating eco-friendly technologies, optimizing transportation routes, reducing waste, and monitoring energy consumption, smart supply chains strive to minimize their environmental impact.

Example of a smart supply chain management

Adaptability is the key to smart supply chain management. An example would be one that is quick to adapt to disruptions. Suppose a supplier is unable to deliver goods due to a natural disaster. In that case, a smart supply chain can find an alternate supplier using supply chain management (SCM) software to identify potential alternate suppliers and a business intelligence (BI) tool to analyze supplier performance and identify potential alternate suppliers. In addition, it could be integrated with other departments of the company, such as sales and marketing, to better plan for resource management and budgetary allocations. This could result in an agile, digitized, resource-efficient, and resilient supply chain.

In a nutshell, this could result in an agile, digitized, resource-efficient, and resilient supply chain.

Benefits of smart supply chain management

Here are the benefits of a smart supply chain:

  1. Optimize the flow of goods and materials

    With smart supply chain management, companies can connect all the elements of their supply chain in real-time and have oversight of the flow of goods and materials. These elements (or components) include suppliers, manufacturing facilities, warehouses and distribution centers, transportation and logistics, and customers.

    With Industry 4.0 technologies, such as predictive analytics, big data, and machine learning, companies can increase their overall equipment effectiveness, streamline Stock Keeping Unit (SKU) management, and lead to operational certainty.

  2. Improve communication between suppliers and customers

    Utilizing collaborative planning, forecasting, and replenishment (CPFR) systems can improve communication between suppliers and customers in a smart supply chain. This system depicts the importance of supply chains, where suppliers and customers can share inventory levels, demand forecasts, and production plans to optimize inventory levels and order statuses.

  3. Demand forecasting

    Smart supply chains leverage predictive analytics to anticipate future demand patterns, identify potential disruptions, and make proactive decisions. By analyzing historical data, market trends, and external factors, predictive analytics enables more accurate demand forecasting and inventory management, reducing stockouts and overstocking.

  4. Better quality control

    Data analytics can improve quality control by identifying and correcting quality issues before they become problems in smart supply chains. Analyzing historical data, process parameters, and product attributes can help determine the factors contributing to quality problems. Using performance data, they can also monitor quality trends over time, allowing them to adjust their processes accordingly.

What is the role of a smart supply chain in Industry 4.0?

To sum it up, a smart supply chain can help meet the requirements of Industry 4.0 with the use of sensors and data analytics to improve visibility and optimize the flow of goods. It can help reduce purchasing costs, production costs, and storage costs by improving efficiency and enabling companies to respond quickly to changes in demand. Here's how it aligns with the core principles of Industry 4.0:

  • Connectivity and Integration: It embraces real-time connectivity and integration across stakeholders and components of the supply chain ecosystem.

  • Data-driven Decision Making: It leverages data analytics and advanced technologies for informed decision-making.

  • Agility and Flexibility: It enables quick changes and customization to respond to market dynamics.

  • Optimization and Efficiency: It focuses on optimizing operations and maximizing efficiency.

  • Customer-Centricity: It integrates customer data to deliver personalized experiences and enhance satisfaction.


Embracing this transformative era is vital for your supply chain's success. Waste no time in upgrading to a smarter supply chain and reap the benefits of increased efficiency and competitiveness.

At Rawcubes, we take pride in building data intelligence through knowledge graphs to enable advanced analytics to meet the true spirit and innovation of Industry 4.0. Get in touch to know more about our solutions.