The supply chain paradox of Industry 4.0 | Industry Products | Deloitte Netherlands

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Industry 4.0: The supply chain paradox

High priority, low stakeholder engagement 

Deloitte conducted a survey to understand how companies invest in Industry 4.0 to enable digital transformations. The survey took place among top executives of the world’s largest companies. Besides a mix of enthusiasm and ambitious plans for the future, the survey revealed a series of disconnects between the companies’ plans and actions. In this article we explore the supply chain paradox.

March 18, 2019

Moving to an interconnected and responsive supply chain

For a long time, the supply chain has served as the lifeblood of the industrial organization. However, in recent decades supply chains have grown increasingly global and complex, a trend chiefly enabled by advances in digital and physical technologies. These technologies also allow the supply chain to become less linear, more interconnected and responsive to change. This, in turn, changes the way stakeholders communicate and transact with each other.

Indsutry 4.0: The supply chain paradox

The supply chain not seen as driver of innovation

This digital supply chain network (DSN) allows the supply chain to become a more strategic component for organizations, mainly because it enables more flexibility and responsiveness for organizations. The survey results affirm a strategic necessity to invest in the DSN. However, the supply chain is still not usually seen as a strong driver of innovation.

On top of that, the chief supply chain officer (CSCO) plays a relatively small role in shaping the decisions about digital transformation investments. Therefore a paradox may exist: organizations seem to consider the supply chain as relatively important to their digital transformations, yet they do not view it as a driver of digital innovation, nor consistently involve its leaders in strategic decisions.

Reasons why the paradox exist

So why does this paradox exist? Deloitte’s survey brought a few possibilities to light:

  • The CSCO is a new role: the CSCO may not yet have the established profile others enjoy. 
  • The supply chain may have an image problem: some in the C-suite may not yet fully accept how the supply chain has evolved and integrated with the organization’s overall business strategy.
  • The CSCO is likewise not fully integrated in the C-suite: the CSCO seems not be perceived as critical to decisions on digital technology investments. 

Improve the supply chain’s potential

In the end, the survey results underline the importance of the supply chain in future digital investments priorities, but show that the supply chain is not perceived as a driver for innovation and the CSCO still has relatively little to say. 

Want to know the steps organizations can take to reconcile this disconnect? Download the paper on the supply chain paradox via this link, or use the download button on top of the page. 

About the Industry 4.0 paradoxes

The fourth industrial revolution expands the possibilities of digital transformations and increases their importance to organizations. Industry 4.0 combines and connects digital and physical technologies to drive more flexible, responsive and interconnected enterprises. Although this revolution carries seemingly unlimited opportunities, a true digital transformation brings implications too. Think about the way it affects the organization’s strategy, talent, business models, and even the way the company is organized.  

To understand these implications, Deloitte conducted a global survey of 361 executives in 11 countries in the Americas, Asia, and Europe. The survey captures insights from respondents in aerospace and defense, automotive, chemicals and specialty materials, industrial manufacturing, metals and mining, oil and gas, and power and utilities. 

All survey respondents are director level or higher, representing organizations with revenue of $500 million or more, with more than half (57 percent) coming from organizations with more than $1 billion in revenue.

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