Industry 4.0 refers to the trend of combining digital and physical technologies with emerging and traditional strategies to improve efficiencies and create new opportunities across sectors. Many experts (including Deloitte, McKinsey, and Hitachi, PTC, Siemens, and many others) are urging manufacturers, retailers, and distributors to fully embrace the Fourth Industrial Revolution — which is coming together due to AI, IoT, robotics, cloud computing, and machine learning.
As the term continues to grow into the public consciousness, many manufacturers, distributors, and retailers are just beginning to understand what Industry 4.0 means for them and how Industry 4.0 will impact shipping and logistics, one of the most challenging issues in today's consumer-centric landscape.
Understanding Industry 4.0
Believe it or not, the manufacturing space (and the retail and packaging sectors by association) have undergone massive technological restructures like Industry 4.0 more than once. Depending on whom you ask, we've revolutionized up to six times. According to a 2014 section in the Harvard Business Review, we've seen two significant reformations in the past 50 years. The first was the shift from purely manual manufacturing to IT-enabled manufacturing in the 1970s and 1980s. The second was the explosion of the internet — which delivered new modes of open communication and connectivity.
But, unlike those first two disruptions, Industry 4.0 isn't as concise. IoT is bridging devices together, giving us unparalleled visibility and reach. AI is changing the way we predict and understand our businesses. Machine learning is revolutionizing how we utilize and analyze data to make informed decisions. Robotics are reducing manual touchpoints and increasing efficiencies on the manufacturing floor and in distribution warehouses. Some of the significant opportunities that Industry 4.0 promises come in the form of data that heightens awareness of competitiveness can be enhanced through better supply chain management, which often begins and ends with packaging.
How Industry 4.0 is Changing the Shipping and Packaging Ecosystem
As brand owners find ways to deliver higher-value solutions to consumers, manufacturers, and distributors alike are facing a significant amount of pressure. Retailers crave faster delivery methods, lower price-per-unit, and higher efficiency to keep up with growing consumer demands. Here are some ways that Industry 4.0 will deliver value to manufacturers, consumers, retailers, and distributors through streamlined shipping logistics.
- Increased Speed to Market
In 2014, McKinsey called same-day delivery the next logical evolutionary step in packaging logistics. Over 65% of retailers plan to offer same-day delivery in the next two years, and 56% of consumers are starting to expect a same-day delivery option. We like to call this the "Amazon Effect." Amazon recently upped its Prime shipping model to same-day-delivery, which is enabled by all of the wonderful technology that makes Industry 4.0 tick.
Not only has Amazon created fulfillment centers in the backrooms of Whole Foods locations to bridge gaps between distribution centers, but they leverage robots and AI to predict and solve issues in the supply chain. For manufacturers and retailers, these emerging strategies increase shipping pressures. Given the importance of speed to market, manufacturers and distributors are leveraging technologies like robotics, and auto-boxing technologies, and employing supplier provided managed services that result in faster shipping methods and remove frictions from the supply chain.
- Better-fit Packaging
The future of enhanced competitiveness through packaging is tied to packaging automation, intelligent distribution center networks, and smart packaging, and material selection. But we're at a standstill. A large chunk of businesses still don’t understand what Industry 4.0 means in terms of execution (i.e., what does it mean outside of the alphabet soup of acronyms?)
Perhaps one of the most accessible areas to start making changes (and thus spark the revolution) is better-fit packaging. The concepts that drive Industry 4.0 are deeply entrenched in lean methodologies and waste reduction. Smart material selection and fit-to-size automation can enable companies to realize some of the benefits contained in full-scale digital transformation without having to adopt expensive technologies and upheave traditional structures immediately. Leveraging the capabilities of Certified Packaging Specialists to conduct Packaging Use Audits, and packaging engineers and designers who can optimize packaging for form, fit and function are becoming especially valuable to companies who want to enhance their competitiveness.
- Decreased Price-Per-Unit
Of course, no industrial revolution-style makeover of the supply chain is complete without reduced cost. In terms of packaging, this means reduced cost-per-unit and increased efficiencies. Machine learning can cut out wasteful spending and reduce road bumps in the supply chain. Data lakes can help businesses understand and utilize analytical data to make profound changes — such as better maximizing production windows, minimizing scrap production, and utilizing marketing data effectively. Direct costs, indirect costs, and inventory related process costs can all be reduced through packaging management programs that uncover the hidden costs in packaging saving time, money and improving cash flow. Down the road, these reduced costs and increased working capital can be reinvested into the consumer experience to enable faster delivery and higher-quality packaging, thus compounding profits year-over-year. Of course, many businesses may see the initial benefits of Industry 4.0 and consider it a revolution. But the winners will be the brands that reinvest savings into further transformation.
How SupplyOne Can Help You Enable Industry 4.0
Industry 4.0 brings with it many profound changes. SupplyOne can help. With best-in-class packaging automation, better-fit packaging, and full-service package manufacturing, SupplyOne can help you make thoughtful changes to your packaging and packaging supply chain that deliver tangible value today — not tomorrow. Are you interested in learning more about how we can enable you on your road to Industry 4.0? Contact us.