Industry 4.0 – the Future of the Supply Chain

How do supply-chain processes look like in the industry 4.0 era?

The editorial staff of Trend Report, a business magazine and supplement of the prestigious financial newspaper Handelsblatt, spoke with Lars Schmermbeck, Regional Channel Manager DACH Region at ZEBRA TECHNOLOGIES, and Hans-Jörg Tittlbach, ICS Group CEO, about future value chains. The following interview was published on 26 October 2015 in the Handelsblatt/Trend Report.

All experts agree that Industry 4.0 will change logistics. Mr. Tittlbach, what is a logistics process in the Industry 4.0 era?
Hans-Jörg Tittlbach: Logistics in the age of industry 4.0 is essentially based on dynamic, autonomous processes with smart shipments and load carriers. Let me show this with the example of a package that is shipped to a customer. The package is equipped with intelligence; it knows where it is and recognizes independently delays in the shipment process. It communicates its status to the back office and ERP system, like our Stradivari software. In the event of a delay, it is able to trigger redundant process that redirects the package to alternative routes or shipping options – without human intervention. In important cases, for example, a replacement package is sent on its way.

What are the concrete benefits of self-controlling processes?
Tittlbach: Through improved transparency and control, in-time and on-demand will work much better than today. Back to our package: The recipient will not only know the date of delivery, but also the time window. Second and third delivery attempts no longer occur, since the recipient can decide when and where to receive the package. These are processes that are in theory already available today.

Why are these processes not yet a reality?
Tittlbach: The primary reason is that many areas lack a proper standardization, integration and collaboration of IT systems. Logistics involves a large number of partners with very heterogeneous IT landscapes, including sub-contractors who work virtually as freelancers. Basically, an umbrella is required that spans the entire process chain. It is important to highlight the technical capabilities which devices and software interfaces already offer today. It is just that they need to be used, coordinated and integrated. At ICS, we work with high-tech partners such as Zebra Technologies, who have taken huge steps forward to support such processes.

Mr. Schmermbeck, how does the integration of intelligent devices in a supply chain look in practice?
Lars Schmermbeck: For us as manufacturers, the Internet of Things (IoT) in the warehouse and logistics is based on three main factors. The first is high-performance wireless networks with a permanent active connection to the data systems in the back office. The second factor is SmartSensors such as RFID chips or accordingly adapted barcodes, NFC and Bluetooth beacons. They are used to support localization technology, detection of product data, monitoring of product status, finding articles and route optimization in storages. The third important factor is an integrated back office system, which is important to achieve full transparency for a simplified data analysis.

Is this all about the location and routing of goods?
Schmermbeck:Not at all. Smart sensors can monitor whether the temperature requirements are complied with during transport, for example. It's not just the merchandise. The IT infrastructure also monitors itself. Today, often several hundred devices are used in a logistics chain. If so far only 70% are effective however, because batteries are being charged or scanners are not working properly, there is need for action. The devices deployed in the logistics chain such as scanners and mobile terminals also have smart sensors and communicate with the integrated back office system. They report their technical condition. The simplified data analysis provides complete transparency: How many and where are my products? How and where do I use our equipment and how effective are they? That's the IoT in today's world: I take the devices out of the chain before they no longer function and thus prevent a failure from negatively impacting productivity.

What opportunities does online connection of the device offer?
Tittlbach: Online device connection enables mobile device management by means of a remote management platform. The management platform displays whether devices are working properly or not, allowing users to intervene accordingly. One can even go further, by bringing new functionalities via a central location to hundreds or thousands of devices. Another development step are managed services that make it possible, for example in printers, to intervene before failure of cutters or other mechanical parts, and preventively service the device before failure.
Schmermbeck: This is an essential approach in our close collaboration with ICS. Mobile Device Management or Operational Visibility Platform only work when the experience of a solution provider such as ICS is combined with the expertise of a manufacturer, such as us.

Mr. Tittlbach, which competitive advantages do your customers have from smart technologies?
Tittlbach: Our customers benefit from a much higher transparency of their supply chain and higher reliability in the delivery processes – both from suppliers and client side. The delivery risks can be significantly reduced and control of the overall process is enhanced. It is useless if you agree, for example, on-demand deliveries for a production line with a supplier, but the logistics process lacks dynamism because intelligent IT is not available and no counter-measures can be taken when there are disruptions. In these cases, normal processes do not work. Delivery disruptions sometimes inflict very high collateral damage. Through the use of smart technologies in conjunction with consistently intelligent processes in Stradivari, our customers can cut losses to a minimum. The upshot is increased ROI and greater customer satisfaction.

Read the interview in ePaper Trend Report, Oktober 2015.