Today with development of technology, organisations dealing in any sector, whether in manufacturing or retailing, gets opportunities to operate autonomously. In this regard, Industry 4.0, is coined to mark as fourth industrial revolution, which impacts on entire supply chain process of organisations (Gunasekaran and et. al., 2017). The report presents a critical demonstration on impact of Industry 4.0 on BMW and emphasis on supply chain management. This is a German multinational company and deals in automotive manufacturing sector. It manufactures luxury auto-mobiles and commercial motorcycles as well as offers aircraft engines. Scope of this report is mainly focuses on four main functions of supply chain- transport logistics, procurement, order fulfilment and warehouse. For this purpose, some articles and case study given by Szozda is also reviewed to evaluate impact of technology on the supply chain.
Overview of the case scenario
Over the last decades, technology has undergone a significant revolutionary progress which subsequently impact on every aspect of organisations. In this regard, one of the main radical changes is now shifted from computers to smart devices for utilisation of infrastructure services (Giannakis and Papadopoulos, 2016). It increases the possibilities of interconnection of nor only human beings with machines but also develop communication among machines. Therefore, implementation of such kind of network within operation and production environment is known as Industry 4.0. It helps organisations in increasing their transparency on entire steps of supply chain process. It includes collaboration among manufacture, suppliers and customers. BMW (Bayerishe Motoren Werke) AG is a British Multinational Company which was founded in 1916. It offers a wide range of luxury motorcycles and auto-mobiles in various countries like United Kingdom, South Africa, China, India and more. As per report in 2015, this company has become the 12th largest manufacture of motor vehicles which is near about 2,279,503 vehicles. It mainly targets to high-income group of population and young generation as they purchase such vehicles for maintaining their status and drive to get more comfort.
Industry 4.0 aid BMW Group in utilising the usage of Internet of Things, storing big data and Artificial Intelligence etc. This industrial revolution has envisaged an environment within automotive that enables smart machines to communicate with one another. In addition to this, it also helps in not only enable BMW related to automation of production lines but helps in resolving a certain level of issues with minimal human interference.
Literature review on impact of Industry 4.0 on supply chain
In manufacturing industries, cooperation among different functions related to supply chain is essential to match supply and demand curve. Due to increase usage of data processing, automation, Internet of Things and more in industry, modern factories are undergone with constant transformation (Swink and et. al., 2017). A review of the literature based on impact of technology like Industry 4.0 on supply chain concept is given below, whereby some articles are taken to draw significant result.
Article 1: According to Klaus Schwab who is a Founder and Executive Chairman of World Economic Forum, it has evaluated that concept of Fourth Industrial Revolution is driven largely due to convergence of biological, digital and physical innovation. In this regard, the past three decades of revolution includes - Steam powered factories in Industry 1.0; Application of science related to mass production and manufacturing under Industry 2.0, whereby Industry 3.0 has started into digitization (The Fourth Industrial Revolution, 2019). With such revolutions in technologies, Industry 4.0 includes artificial intelligence, robotics, genome editing, 3-D printing and more. It changes the way of operational process of organisations. Therefore, it gives opportunities to unite global communities, adapt and modernise governance models, build sustainable economics, reduce material and social inequalities and more.
Article 2: As per views of Klaus Schwab, it has evaluated that concept of Fourth Industrial Revolution will not only change the way to operate but it also modifies human's ability. It affects identity of human as well as issues associated with them (Understand the Impact of the Fourth Industrial Revolution on Society and Individuals,2019). It includes sense of privacy, consumption patterns, notions of ownership, time denoted for work and leisure etc. In context with auto-mobile sector, Industry 4.0 reducing road fatalities and insurance costs, carbon emissions and reshaping the living spaces of cities.
Article 3: According to article given by Scott Fawcett, The Divisional Managing Director of Essentra Componets, it has evaluated that Industry 4.0 revolution has redefined the traditional manufacturing process. In this regard, manufacturing industries like BMW are now moving towards more digitization to operate autonomously. To under this concept of development of industrial revolution, supply chain operation is considered as best example under automotive sector (What does Industry 4.0 mean for the supply chain network?, 2019). It is a multi-faceted ecosystem which link product-development and distribution network including manufacturing process into single transparent and digitised system. Therefore, by installing digitised and fully integrated supply chain network, BMW become able to respond towards demands of customers in more effective and efficient manner. This will lead to ultimately improve its productivity.
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Article 4: As per views of Rich Thompson, it has ascertained that rapid changes in technology has completely changed the world. It disrupts managing process of supply chains of manufacturing companies. According to 2017 report, which was conducted by Deloitte Consulting and MHI, automation and robotics were considered as best technological process that has disrupted the supply chain world (Three Supply Chain Impact of Fourth Revolution,2018). It includes top five advantages that are- driverless vehicles and drones, Internet of Things, sensors, predictive analytics and automatic identification. Therefore, development in fourth industrialisation like robotics will disrupt entire current operating practices of BMW as well as help in creating new competitive advantages.
Article 5: This article has given by Ben Barlow, it has analysed that Industry 4.0 can be described as technological revolution, which will fundamentally alter the way of operation. The impact of this revolution on supply chain could be considered as both regarding and concerning for auto-mobile industries. In this regard, positive side is demonstrated as achievement of greater success for BMW as revolution increases productivity and effectiveness of supply and logistics. But process of automation of more system, might leads to cut in personnel manner also (How might the ‘Fourth Industrial Revolution’ affect supply and logistics?,2017). This may lead to enhance expectation of customers, which create difficulties for organisations in completing the same.
Article 6: As per Jargo Calvo, it has evaluated that today companies like Apple, BMW, Tesla, Toyota and more, are focusing more on bringing autonomous system. This key technology is considered as mother of entire artificial intelligence projects. Therefore, fourth industrial revolution helps in reducing the barrier between traditional or manufacturing organisations. It includes heavy industry, IT, automobiles and electronics (Business Transformation towards the fourth industrial revolution, 2018). It has also analysed from this article that through implementing Industry 4.0, process of supply chain operation has become more smooth and transparent. This would help in delivering products from distributors to end customers more easily.
Article 7: It has given by Jonny Williamson, it has evaluated that handling 9000 vehicles and 30 million parts per day is not easy task for BMW. Head of logistics for this company is considered as heart of production system. Usage of digital technologies like Industry 4.0 has become a key factor for its logistics process. It helps in increasing the transparency under supply chain operations. For this process, BMW has concerned on four main steps which includes: obtain and record data; analyze and control; improve; automate and forecast. With the help of fourth industrial revolution, data can be easily gathered from sensors, which are located on trucks (Logistics, The beating heart of BMW, 2019). Along with this, it allows BMW for responding in quick manner towards any delays in real-time. In this regard, actions will include rerouting, bringing alternative shipping methods as well as requesting for additional orders in order to cover expected losses. Thus, these processes help in enhancing transparency within customers, suppliers, vendors and more, under supply chain operation of BMW.
Szozda's case study in context of BMW
Four industrial revolution consist main technologies- Mechanisation, water power and steam power; Mass production, assembly lines and electricity; Computers and automation; Cyber physical system respectively. For illustrating the areas, where fourth industrialisation can be implemented into modern supply chains, Szozda has given various articles. These are bases mainly on Nova Chemicals, Knapp Logistics AG, Stratatys and Bosch etc. In this regard, BMW is considered as one of the most automated factories within automotive industry. Here, latest technology like robots are used at each level of production (Industry 4.0 and its impact on functioning of supply chain, 2017). As shown in figure given below, it has analysed that companies begin to bring changes in their structures. These changes are particularly linked with supply chain operations. On the basis of research conducted by Szozda, it has interpreted that companies like BMW, now begin to introduce changes in their structures including the concept of Industry 4.0. However, such changes are not directly linked with supply chain operation, which can be illustrated by using below figure. It demonstrates an example of the supply chain of automotive industries, where electric toothbrushes are manufactured in a traditional manner, with using assumptions of Fourth Industrial Revolution.
Here, this traditional functioning model related to supply chain of companies, which produces electric toothbrushes is usually based on mass production (Dubey and Gunasekaran, 2016). It can be also known as so-called production, whereby stocks are executed in systematic manner with push concept. It consists some performing activities such as design, production and sales. In this regard, manufacturing and supply chain operations takes place as per planned activities in given period.
While as per new model as given below, planning process can be transferred to distribution area, whereby data related to sales are collected from end customers. It is considered as transition to pull model, that is operations in a supply chain of BMW to a specific customer order. In this regard, application of Industry 4.0 in a supply chain involves development of distribution channels, which is also known as omnichannel (Stevens and Johnson, 2016). It can be defined as toothbrush users, as they determine when and in what manner they want products to be delivered. It is here essential to meet needs of end customers as well as provide then uniform experience during purchasing, returning or resolving any complaint related to product.
It has concluded from this report that every new technology has directly impacted on supply chain operations and other activities. In this regard, the fourth industrial revolution is still an unexplored market whose development directions are taken as multi-branch. The business models related to functioning of supply chains operations are constantly changing. Here, same thing is applicable for end product because it is also getting increasingly individualized as well as adjusted as per expectations and demand of customers. As this report mainly highlights impact of fourth industrial revolution on automotive companies, whereby products of high value are delivered. But it also influences every manufacturing and retailing industries. It increases the transparency among suppliers, dealers, customers and more, in effective manner.
However, this refers to only beginning of an upcoming industrial revolution, that is mainly concerned on developing communication between machines as well as aggregation of data obtained from such devices to be stored appropriately. But this includes a number of risks, related to data security as well as capacity for maintaining long-distance wireless networks. Therefore, for this assistance, construction of desired supply networks, distribution channels and developing a secure communication networks for increasing capacity, will consider as a future trend. It is also referred as significant key element under the development of supply chains and industrial revolution.
- Swink, M. and et. al., 2017. Managing operations across the supply chain. New York, NY: McGraw-Hill Education.
- Giannakis, M. and Papadopoulos, T., 2016. Supply chain sustainability: A risk management approach. International Journal of Production Economics. 171. pp.455-470.
- Gunasekaran, A. and et. al., 2017. Big data an1d predictive analytics for supply chain and organizational performance. Journal of Business Research. 70. pp.308-317.
- Dubey, R. and Gunasekaran, A., 2016. The sustainable humanitarian supply chain design: agility, adaptability and alignment. International Journal of Logistics Research and Applications. 19(1). pp.62-82.
- Stevens, G.C. and Johnson, M., 2016. Integrating the supply chain… 25 years on. International Journal of Physical Distribution & Logistics Management. 46(1). pp.19-42.