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Summary
The industrial landscape of the 21st century is changing under the influence of various contemporary factors. Historically, humanitys approach to most of its activities across different sectors has aligned with the development of societal, economic, and technological aspects. Today, the third component has taken a leading position, as progress dictates a paradigm shift in industrial development. This age is characterized by the intense digitalization of most processes that occur on two levels. First, existing aspects of business see an influx of new technology that preserves the processes while altering the way in which they are executed. Second, new, previously unseen variables are introduced, modifying the landscape of supply and distribution chain management profoundly.
Therefore, todays industrial landscape is characterized by the profound influence and use of modern technological solutions. This tendency has acquired its specific name of Industry 4.0, reflecting the scale of transformation that can be described as the fourth industrial revolution. While the concept itself has become well-established in professional literature and practical experience, its specific elements remain in the state of further elaboration. This dissertation addresses supply chain management as an integral component of Industry 4.0 in its present condition. More specifically, it aims to determine the exact nature of how digital transformation of the operational environment affects supply chain management, as perceived by academic experts and practicing managers of the field. Chapter One introduces the scope of the research, along with its primary elements, objectives, and questions to address.
Research Statement
The primary purpose of the present research is to explore the nexus between advanced technological tools characteristic of Industry 4.0 and supply chain management as its integral component. This area of knowledge is essential for the effective development of industrial relations within the current paradigm shift of profound digital transformation that occurs on all levels, from individual small business to entire industries across national borders. The practical significance of the study is considerable, as the overall discussions surrounding Industry 4.0 appear too generalized to dictate a similar paradigm shift in supply chain management (SCM). Being an integral component of the overall industrial framework, SCM retains its particular priorities and regulations that deserve additional exploration in light of the Fourth Industrial Revolutions. Spoken differently, the aspects that are highlighted for Industry 4.0 do not necessarily reflect the current state of the subject matter for supply chain management. Technological solutions that are found highly efficient for product distribution may simply be irrelevant for SCM and vice versa. As such, the core principles of supply chain management dictate the direction and priorities of the present research.
In a way, this dissertation is approached as an origin point of more profound discussions that will provide a comprehensive framework upon which further research can be based. The design of the study reflects the key synergy of theoretical findings and practical application. It is channeled through the methodological combination that is used for it. The theoretical component is ensured by a rigorous examination of the contemporary body of academic literature. Considering the novelty of the subject, the research undertakes to synthesize the relevant information that is scattered across the current body of knowledge. Through the examination of key parts present in literature, the dissertation is to provide a uniform framework of reference that is evidence-based and informed by the leading experts opinions.
Next, the practical component ensures the applicability of the research to the actual environment of todays supply chain management. The design implies that the theoretical discussions are equally valuable with the views of the managers engaged in modern SCM on a daily basis. The dissertation embeds the contribution of SCM experts into its synthesized framework, drawing comparisons between theoretical perceptions and actual situations on sites. This approach to research is expected to prove its efficiency through the synergy of theory and practice, transforming overall findings into a specific, useful paradigm that will reflect the current state of supply chain management in light of the Industry 4.0 development.
The interest toward the subject matter is justified by its extreme importance for the functioning of the globalized society. In the 21st century, markets have been growing, reaching unprecedented levels of scale and scope within the global economy. With the development of instant communication and rapid transportation, a variety of supply and distribution processes became facilitated. Thus, most businesses have grown accordingly, reaching nationwide or even international levels. In fact, it has never been as feasible to operate global supply and distribution networks across state borders and continents. In the current economic environment, most companies aspire to reach an international level, winning their shares of multiple segments of the globalized market. As a result, consumers benefit from better selection of products, while corporations see major contributions to the economic aspect of business.
However, such networks may be difficult to operate from the perspective of efficiency. On the one hand, modern technological solutions serve to improve communication, transportation, storage, and utilization of products. The overall conditions of the globalized market are easier, as many complex tasks are now being handled by technological tools with higher computing power, as well as analytics and prediction potential. On the other hand, the variety of these solutions expands along with the continuous digital progress. The mere reliance on advanced technology does not necessarily translate into a digital transformation. For this complex transition to occur, the solutions are to be used wisely and efficiently. This situation is only possible through the profound exploration of available options, analyzing them in light of specific industrial objectives faced by the particular element of the overall chain.
In this regard, the sphere of SCM appears to be lacking attention and coverage within the framework of Industry 4.0. The present discussion is generalized, and it does not focus on the details of what supply chain management needs to achieve in order to complete its digital transformation in a true sense. The present research aims to eliminate this gap in knowledge, addressing supply chain management as a specific element of the overall industrial revolution that is observed today on a global level.
Research Question and Objectives
As established within the contemporary body of literature, the efficient implementation of smart Industry 4.0 tools for supply chain management requires more profound knowledge of its attributes applicability in this context. Therefore, the projected research will address the following research question:
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What specific Industry 4.0 tools are applied in supply chain management?
To provide evidence-based answers to the specified research questions, the proposed study aims to accomplish several research objectives:
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Review the current body of knowledge to understand how Industry 4.0 and supply chain management interact;
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Synthesize a fundamental theoretical framework through the review of contemporary literature;
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Obtain practical knowledge of the Industry 4.0 tools implementation in supply chain management;
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Appraise the practical implementation of the Industry 4.0 tools in supply chain management in comparison to the theoretical framework of reference;
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Synthesize practice-oriented guidelines for the Industry 4.0 tools use in supply chain management;
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Outline the direction of further research within the specified area of knowledge.
Background of the issue
Industry 4.0 is a highly complex notion that serves to reflect the influx of innovative technology into the various spheres of human activity. Tjahjono et al. (2017) state that the term itself was coined to describe the dawn of the so-called Fourth Industrial Revolution. New solutions enable the formation of global networks that are assisted by the unparalleled computing capacity of the equipment (Ardito et al., 2019). In a way, Industry 4.0 is a unique nexus of human expertise and superior technology that complement each other, enabling smart production and supply management. In terms of the SCM, the impact of the new industrial reality is a concept that requires in-depth analysis. Tjahjono et al. (2017) note that the emphasis of modern supply chain management is laid on the transparency of all phases from the order placement to its ultimate completion. Theoretically, smart tools enabled by Industry 4.0 are to contribute to this objective through better assessment, communication, transportation, and evaluation opportunities.
On the other hand, the topic under review is highly complex and broad, which impedes the development of precise theoretical frameworks and practical guidelines. In its current understanding, it encompasses an array of industries and tools that enhance their operational efficiency. For example, the list provided by Hofmann et al. (2019) comprises IoT, Internet of Services, multi-agent CPS systems, big data, real-time algorithms, blockchain, and other solutions that can be implemented within the scope of Industry 4.0. At the same time, Shao et al. (2021) add that these principles are adequately developed for marketing and production operations today, whereas their application in supply chain management remains at the stage of infancy (para. 1). As such, rigorous research is required to advance the understanding of Industry 4.0 and its impact on the SCM. While the necessity of smart solutions is not questioned within the proposed research, the examination of specific tools and their contribution to supply chain management appears indispensable. Ultimately, the key problem within the field is the lack of complete understanding of which Industry 4.0 instruments are more efficient for the SCM.
Theoretical Significance
From the theoretical perspective, the contribution of the present dissertation consists of synthesizing the dispersed information that is presented within the contemporary body of academic knowledge. First of all, supply chain management is an integral component of overall industrial activities that shape the global economy. Indeed, Industry 4.0 is a complex notion that includes a variety of elements that remain interrelated within its framework. For the proper functioning of industrial processes, supply and distribution links must function in a synchronized manner that also aligns with the strategic vision and operational execution in light of external and internal variables. However, this interrelation does not imply that the understanding of Industry 4.0s principles suffices to arrange each of its elements in the correct manner. On the contrary, a deductive approach to theory is required in order to build a resilient economy, capable of yielding profits for all parties involved. By this deductive approach, the present research implies a transition for the whole to its elements in a theoretical sense.
At present, a large part of the academic body of literature concerns Industry 4.0 as the core notion. While this approach is justified by the novelty of the overall subject matter, a paradigm shift toward its specific elements is needed to advance the field and sustain the economic growth. As long as the discussion is limited to Industry 4.0, it remains too generalized to provide a meaningful framework of reference for the field of supply chain management. In other words, a major theoretical gap is observed, since this framework leaves serious blank points for SCM specialists. Having to apply the generalized perspective on Industry 4.0 to supply chain management leads to a variety of interpretations that create inconsistencies within the field. This research aims to eliminate the gap by providing a single framework that synthesizes such dispersed experiences into a universal paradigm upon which the sphere of SCM can rely for further development. As a result, the professional area will benefit from the clarity of its theoretical component, yielding major improvements and quicker rates of its contribution to economic growth.
Practical Significance
From a practical perspective, the history of academic research has seen numerous examples of inconsistencies between theory and practice. This idea is not limited to the matter at hand, or industrial management studies at all. In fact, the inconsistencies in question occur across a variety of spheres, from healthcare to military commandership, as instilled by normal psychological and social processes. First of all, the theory-practice gaps may occur because of the novelty of the subject. In most cases, theory is the first step toward a full understanding of a notion, which creates ground for the further practical implementation of the ideas. Theorists describe new processes that may appear sporadically within the industry, they attribute meaning and order to otherwise chaotic developments.
As long as the stage of theoretical description is not completed, the domain of practice has no framework of reference to rely on, and the inconsistencies persist. Second, even the developed theoretical paradigms take time to implement. In other words, a paradigm shift in theory happens before a similar transition in practice. Finally, the inconsistencies may be caused by such a notion as feasibility. Spoken differently, the processes and principles that appear logical or efficient on paper, may not necessarily be coherent with the practical experience.
In the case of SCM, people who actually work on these tasks within Industry 4.0s framework on a daily basis may hold different opinions on the efficacy and usability of specific solutions, as compared to the theoretical perception. The design of the present research seeks to eliminate the gap by taking into consideration both perspectives on an equal basis. The developed theoretical framework is subjected to a cross-examination with the insights provided by professional experts in a successful attempt to find common ground between the two major domains of research. As a result, the final theoretical framework is adapted to the practical environment, providing guidelines that are not only research-backed but also tested in a practical environment. Thus, further researchers and experts can rest assured of its efficiency and applicability.
Benefits of the study
As can be inferred from the presented information, this research is expected to provide an array of benefits for the understanding of supply chain management in its modern form. The primary enabler advantages consist of an effective unity of theory and practice that drives the directly of this study. The research does not view these two key components as separate entities with their own laws and principles. Instead, theory and practice are viewed as inseparable facets of the same entity within the context of supply chain management. More specifically, the research produces a single, uniform framework of reference that is theoretically grounded in the contemporary body of academic literature, while being adjusted to the practical experiences of current experts engaged in SCM procedures. This way, both facets of unity work in a combined effort to help the sphere of SCM complete its digital transformation and enter the age of Industry 4.0.
In this regard, the principles of supply chain management are not opposed to their mother-concept of industrial activities. On the contrary, SCM is viewed as an integral component of Industry 4.0 that works in sync with its other elements, ensuring the sustained economic growth that benefits all parties involved in this exchange of goods services. However, the research adapts the postulates of Industry 4.0 to the specific tasks faced by supply chain managers in order to introduce the benefits of digital transformation into the framework of contemporary economic relations. In light of the novelty of the subject and the theoretical gap currently associated with it, the present research will make a meaningful contribution to the understanding of how supply chain management should develop in the age of the fourth industrial revolution.
Validation and limitation of the study
The validity of the research will be enabled by several points. First of all, the sample of the research, in both theory and practice, will serve to reflect a diversity of perspectives and mitigate the impact of researcher and participant bias. Second, the nexus of up-to-date knowledge and current practical insights will solidify the relevant nature of the project. Third, the study will be conducted in compliance with the principles of academic integrity and research ethics. All participants of the practical phase will be informed of the objectives and expected outcomes of the project, providing their informed consent. The interviewees will remain anonymous, as well, which will simultaneously contribute to the objectivity of responses and ethics of the project. In addition, all theoretical knowledge will be properly attributed to each source of information. As for the limitations of the envisaged study, the main one is related to its qualitative design. While it is justified by the early development stage of the body of knowledge, this project will serve as the foundation for the subsequent studies required to provide detailed practical guidelines.
Literature review
Introduction
In light of the novelty of the discussed concept, namely supply chain management in the age of Industry 4.0, a strong theoretical background is required prior to embarking on the practical investigation of the subject matter. A review of the literature has been completed as an integral component of the present dissertation, aiming to assert the theoretical foundation of the discussion. Furthermore, this format accounts for one of the key components of the overall methodology of the project. More specifically, this review reflects the theoretical aspect of the prior knowledge accumulated within the framework of the present research. Preliminary investigations have revealed that this knowledge lacks particular consistency, which is explained by the overall recency of the central issue. As established prior, the core of the discussion revolves around Industry 4.0, in general, providing an overarching overview of the concept. At the same time, Industry 4.0 contains an array of specific components, among which SCM is a prominent one. Each of these components adheres to its own rules, prioritizing different benefits of the digital transformation. As such, a deductive approach, in which the body of research proceeds from generalities to particularities is required.
The review of the literature provided within the scope of the present research aims to address this situation by synthesizing otherwise scattered information within the contemporary body of knowledge. More specifically, preliminary investigations have shown that modern works contain valuable information regarding the benefits and applicability of Industry 4.0 tools for supply chain management. However, this data lacks precision and systematization, remaining an element of the overall discussion rather than SCM-specific research. In this regard, the scope of the literature selection and examination procedures has been considerable, comprising a series of queries that address different components of the overall problem. This particular chapter serves to solidify the background of the discussion, providing key information and variables for the subsequent development of the topic. The findings are categorized in accordance with their thematic groups. When combined, these thematic groups create a full image of supply chain management in light of Industry 4.0 today. Based on them, an overall theoretical framework is to be developed and applied in Chapter 4.
Industry 4.0 as a concept
The identification of Industry 4.0 as a concept is necessary to establish the general context of the discussion. The work completed by Ghobakhloo (2020) explains the logic behind this term and its understanding. More specifically, the author elaborates on the numerical part of the notion, which implies the onset of the fourth industrial revolution. As per the title, an industrial revolution implies a major shift in the understanding and process of industrial relations in all their complexity. This shift can be conditioned by a series of factors, among which the emergence of new technological solutions is one of the most prominent aspects. Ghobakhloo (2020) notes that an industrial revolution is characterized by fundamental transformations and exponential development that introduce a new reality of the business environment. With new means of production, distribution, and communication becoming more prevalent, the landscape of the economy changes drastically. As a result, companies are required to accept the new reality and adapt to it, as failing to do so will entail dire consequences for the organizational performance. The present environment meets the aforementioned criteria, making Industry 4.0 a reasonable, well-grounded notion.
Considering the importance of Industry 4.0 for the global economy, this concept is being increasingly recognized on a worldwide scale. According to Rojko, this notion has been adopted by the German government, making the new paradigm shift acknowledged and backed by the authorities. This approach reflects the general understanding of Industry 4.0, implying that scholars and governments perspectives align on this subject matter. As Rojko (2017) notes, Industry 4.0 as an initiative consists of a rapid and profound digitalization of the economy on a profound level that will encompass production, logistics, distribution, and customer relations. The development of the technological solutions used within industries creates new opportunities for the market players. Customization and personalization of experiences are some of the key attributes discussed within the framework of Industry 4.0. Companies no longer need to rely on a general image of the target audience. With new avenues of customer interaction and communication, bespoke experiences become the key descriptors of flexible, thriving companies of the 21st century. The organizations that can tame this technology to build meaningful links between them and their audiences are more likely to master the environment of Industry 4.0.
According to modern researchers, the tools of Industry 4.0 respond to the elevated technological needs of todays economic activities. Vaidya et al. (2018) specify this idea by referring to the concepts of digitalization and intelligentization as the prioritized outcomes of the industrial development of the 21st century. In todays environment, these two notions deserve additional exploration. In the case of digitalization, the situation is clearer, as the notion is widely spread in the economic discourse. It implies the introduction of new technological solutions that can be implemented to facilitate the processes that were otherwise longer or less convenient. However, this term is often confused with a related notion of technological transformation. Vaidya et al. (2018) note that the confusion is to be addressed and avoided. More specifically, digitalization is the process of adding technology to existing business processes. On the contrary, digital transformation is about the way business is done, in general. It is not limited to the modification and improvement of existing processes: it creates new ones.
Finally, the term intelligentization appears interesting for the subject matter. It highlights another key aspect of the subject matter: business processes are to be not only quick or technological, but also smart. Digitalization for the sake of digitalization is counter-productive and often detrimental to organizational performance. Instead, transformations need to be justified, pointed, and efficient in order to help the industry reach a new level that corresponds with the principles of 4.0. Thus, intelligent, reasonable solutions that actually make the work more efficient and productive.
The importance of Industry 4.0 as an actual industrial revolution was bound to attract increased attention of researchers and experts across the globe. One of such studies was completed by Oztemel and Gursev (2020) who explored the notion in all its varieties that are present in todays economic environment. The authors acknowledge that the subject matter is not exactly recent per se. Indeed, technological advancement in the context of industrial performance has remained a topic of heated discussions since the dawn of the high-tech era in the late 20th century. Nevertheless, the degree of the new solutions influence on the economy struggled to pass the revolutionary threshold until recently.
Once the progress reached a truly global status with new tools being capable of instilling lasting and profound transformations, the fourth industrial revolution became a reality. However, the discussion by Oztemel and Gursev (2020) remains centered on the means of production as the backbone of the economy. This approach reflects the imperfection of contemporary Industry 4.0 research. While production is an essential component and a vital business process, it is impossible to consider it the definitive representation of Industry 4.0. Supply chain management, customer relations, and distribution networks are equally important, which is why the deductive exploration of the subject matter is essential for advancing the knowledge on it.
The aforementioned threshold between overall progress and an industrial revolution reflects the depth of the transformations that are associated with Industry 4.0. Most works within the contemporary body of knowledge are in accord regarding the comprehensive and profound impact of Industry 4.0 on the global community. Aside from the technological and economical benefits experienced by the market players, there are social and environmental effects, as well. For example, Bai et al. (2020) review this matter as an essential enabler of sustainable economic practices that are needed for the preservation of the future of humanity. This concept maintains an active presence in todays discourse surrounding industrial activities.
Within this context, economic practices, including SCM, aside from being efficient, profitable, and technologically enhanced, also need to be mindful of the environment and the Earths resources. In this regard, Bai et al. (2020) consider economic sustainability as a key benchmark for compliance with the Industry 4.0 principles. This concept is applied and observed across different contexts, including but not limited to automotive, electronics, food and beverage, and textile, apparel and footwear industries (Bai et al., 2020, para. 1). With the use of Industry 4.0, complex hybrid solutions are introduced that bring a new level of sustainable efficiency into their industries. As a result, the four components that define Industry 4.0 can be formulated as follows: efficiency, technological superiority, profitability, sustainability.
Overall, the spread of Industry 4.0 solutions remains truly global, which aligns with its perception as the fourth industrial revolution. New technology is not only revolutionary, but comprehensive, improving peoples work and personal lives on various levels. The research completed by Javaid et al. (2020) is a case in point, as it describes the application of Industry 4.0 tools in the age of the COVID-19 pandemic. The outbreak of the novel coronavirus has paralyzed economic activities, meaning that industrial entities had a strong incentive to combat this emergency on a global scale. The tools that are normally associated with the transition toward Industry 4.0 have found their application in this difficult period serving social, healthcare, trade, and communication purposes.
The Internet of Things technology that normally helps industries track their performance across the supply chain or determine their customers preferences have been repurposed to track the infection spread and support containment protocols. Detection and diagnosis of COVID-19 have also been facilitated with the help of high-tech solutions (Javaid et al., 2020). Through these activities, industries and society have found a positive common ground for cooperation that contributes to the formation of mutual trust. In addition, the extraordinary contribution of Industry 4.0 to the global fight against COVID has solidified its position as the next logical step of industrial evolution.
As a result, the development of Industry 4.0 aligns with the expectations in terms of their comprehensiveness and globality. As formulated by Xu et al. (2018), these rapid advances mark the transition to a brand new generation of industrial activities in production, logistics, and distribution assisted by modern technology. Their work refers to governmental initiatives that support the recognition of Industry 4.0 as a new reality. More specifically, Germanys future-oriented High-Tech Strategy 2020 Action Plan directly embeds Industry 4.0 as one of the overarching goals of the countrys strategic development. Furthermore, China, as one of the worlds leading economies, has laid a substantial emphasis on these next-generation principles. According to Xu et al. (2018), the countrys long-term plans revolve around its status of the worlds greatest workshop through a nexus of technology and expertise. Industry 4.0 is a major enabler of this plan, providing the nation with sufficient resources to attain said level. The policy includes such smart tools as the Internet of Things, blockchain, Enterprise Architecture, cloud computing, and industrial data integration. The existence of these strategic programs reflects the key status of Industry 4.0 advancements.
As the investigation of the contemporary body of literature shows, Industry 4.0 discourse is often limited to abstract suggestions and forecasts. This idea is developed by Dalenogare et al. (2018) who mention that the body of research confirms the status of Industry 4.0 as the next stage of the global industrial development. However, aside from the philosophical reasoning that surrounds the concept, the authors acknowledge the lack of precision and specific details regarding the input of the new solutions. In other words, little is known about how industries see the potential contribution of the Industry 4.0 related technologies for industrial performance, especially in emerging countries (Dalenogare et al., 2018, p. 384). This idea outlines the priorities of Industry 4.0-related research, which is expected not only to describe but to prescribe, as well. It does not suffice for modern companies to know that a digital transformation is occurring and they are expected to follow the lead. They should also understand why this is happening and why there is a necessity of said transformation.
For this purpose, researchers are encouraged to look beyond definitions and descriptions, analyzing the subject matter from a perspective of its profound processes. This approach is supported by Culot et al. (2020), whose study ventures behind the definition of Industry 4.0 (p. 1). First of all, the authors of the article establish the fact that there is no common definition of the fourth industrial revolution that would be shared a
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