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Supply chain modernization underlies effective digital strategy

Hitachi sees traditional supply chain management as a road block to disruption

The broad Industry 4.0 conversation focuses on how the internet of things and data analytics can add value to foundational sectors like manufacturing, transportation and retail. But linking together those industries, connecting the company that makes a product and the customer that buys it, is the supply chain. And modernizing management of the flow of goods is a key piece of business success in a digitized, service-based economy, according to Hitachi.

In a paper published earlier this year titled “Supply Chain 4.0: A Luxury or a Necessity?,” Hitachi calls out the success of companies, including Netflix, Tesla, Microsoft and Amazon Web Services as more than just product innovation, but also “a digitized, efficient and customized supply chain” that matches consumer consumption trends by providing “convenient and inexpensive options.”

According to the paper, a traditional supply chain follows a “plan and control” model whereas Supply Chain 4.0 follows a “plan, do, check and act” approach enabled through digitalization. Rather than dated, partial information sets, managers of a modern operation can access data sets “digitally interlinked and based on a 360-degree view of the supply chain. Individual and overall feedback loops contribute to ongoing and simultaneous communications.”

Here the company bullets out the differences between legacy and modern supply chains:

Image courtesy of Hitachi.

The authors of the paper suggest using real-time data analysis to match supply and demand; innovation in relationships with suppliers and other stakeholders; and easy customization to address different types of businesses.

“The longer businesses wait to make the transformation, the more likely the competition will leapfrog over them,” the authors conclude. “Thus, for most organizations, Supply Chain 4.0 is not a luxury that can be put off, but a necessity that requires immediate attention and adaptation within the business today.”

To get a better understanding of Hitachi’s perspective on digital transformation, check out this three-part interview with Greg Kinsey, vice president at Hitachi Vantara:

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