A Lucas Systems customer, a distributor of chemical consumables for aerospace and aviation, recently highlighted how adopting “Supply Chain 4.0” had become essential as many of their clients moved toward this new standard. By providing clients with supply chain transparency and optimisation through technology, they found a winning strategy.
So, what is Supply Chain 4.0, and how can your warehouse or distribution centre achieve its goals?, asks Andrew Southgate, V.P. Business Development, EMEA at Lucas Systems. Supply Chain 4.0 transforms traditional supply chains by integrating digital technologies, data analytics, and automation to boost efficiency, responsiveness, and flexibility. As part of the “Fourth Industrial Revolution,” it enables companies to meet the dynamic demands of today’s markets. Let’s explore its main goals and steps to achieve them.
Foundational goals of Supply Chain 4.0
Supply Chain 4.0 transforms business operations by leveraging advanced technology to boost efficiency and performance. Key goals include streamlining operations to reduce costs and improve productivity through automation, waste reduction, and data-driven decisions, resulting in leaner, more competitive supply chains.
Another objective is enhancing visibility with real-time tracking, allowing full insight into goods movement from production to delivery. This transparency helps businesses identify bottlenecks, mitigate risks, and respond quickly to changes in demand or supply conditions, making them more resilient and adaptable.
Customer-centricity and sustainability are also central to Supply Chain 4.0. By precisely meeting customer needs, businesses can improve service and create tailored experiences. Additionally, optimising logistics and reducing resource use minimises environmental impact, aligning supply chains with the growing demand for responsible, sustainable practices.
Steps to achieve Supply Chain 4.0 goals
Leverage big data and analytics – Leveraging big data and analytics provides companies with critical insights into supply chain performance, customer behaviour, and market trends. Advanced analytics enable more accurate demand forecasting, helping maintain optimal inventory levels by analysing historical data, seasonal trends, and external factors. This precision reduces holding costs and ensures products are available when and where needed.
Beyond forecasting, big data drives smarter decisions across the supply chain. Warehouse managers can assess labour performance, optimise pick routes, and improve equipment use. In distribution centres, analytics reveal bottlenecks in fulfilment or transport, allowing adjustments that boost throughput and reduce delivery times.
Implement automation and robotics – Automation and robotics, such as AGVs, robotic picking systems, and warehouse execution systems, can dramatically speed up warehouse tasks, boosting order fulfilment speed and accuracy. AGVs transport materials autonomously, reducing manual handling, while robotic picking systems use AI to quickly retrieve items, minimising errors and improving consistency.
Automation is especially valuable for repetitive tasks prone to human error. Automated sorting, packing, and transport ensure quality and reduce labour costs. The customer mentioned in the opening paragraph drove process optimisation to support their 25% growth objective by implementing multi-modal warehouse optimisation software using voice and RF scanning. They realised a 35% efficiency gain, a 60% improvement in throughput, and achieved 99.9% accuracy.
Utilise artificial intelligence (AI) – AI in distribution facilities enhances efficiency by scheduling picking and replenishment based on demand patterns, keeping high-demand items readily available and reducing resource waste and transport costs. Machine learning (ML) further refines supply chain planning by analysing historical data to predict demand and adjust inventory.
For example, AI and ML optimise warehouse slotting by creating adaptive models that learn facility layout and predict task times, continuously optimising as conditions change. This software-based automation can increase productivity by 5-20%, improve space utilisation, and enhance ergonomics and safety for workers.
Enhance digital connectivity – Enhancing digital connectivity through seamless integration of supply chain systems—such as WMS, TMS, and ERP—is essential for efficient, accurate decision-making. Integrated systems automatically trigger inventory checks, picking, and transportation arrangements, reducing processing times and minimising errors.
Digital connectivity also enables collaboration with suppliers, transportation partners, and customers. For example, real-time updates from suppliers help warehouses plan better and reduce wait times. Cloud-based platforms further facilitate this by providing a central hub for real-time data sharing, allowing stakeholders to access updated information anytime. This visibility enables proactive issue resolution, improving service and customer satisfaction.
Build sustainability in operations – Achieving Supply Chain 4.0 goals requires warehouse and distribution companies to prioritise sustainability by minimising their environmental footprint through optimised logistics and resource use. Strategies like minimising packaging waste, using recyclable materials, and reducing excess inventory all contribute to a more sustainable supply chain. For example, Lucas Systems has partnered with a local university, Carnegie Mellon to solve logistics industry packaging and sustainability challenges. These efforts align with growing industry and consumer demands for eco-friendly practices, helping companies enhance resilience and social responsibility while also reducing costs.
Develop a skilled workforce – As automation, AI, and IoT become central to warehouse operations, employees need targeted training to use these advanced systems confidently and efficiently. For example, warehouse workers who once manually picked orders may now operate alongside robotic picking systems, and training helps them understand how to monitor and troubleshoot these systems. By investing in skill development, companies ensure that their workforce can adapt to and maximise the value of new technology, enhancing productivity and accuracy throughout the supply chain. In fact, a Lucas Systems study found that 88% of respondents believe investing in technology is investing in workers.
Beyond technical skills, fostering a culture of continuous improvement and innovation is essential. Companies can encourage employees to identify areas where processes can be optimised, whether that’s through suggesting improvements in workflow, identifying potential issues with equipment, or providing feedback on new digital tools. For instance, a culture that values employee insights might enable warehouse associates to share observations about bottlenecks in the picking process, which can lead to more efficient workflows.
By adopting these strategies, warehouse and distribution companies can achieve the goals of Supply Chain 4.0, leading to more efficient, responsive, and sustainable operations.
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