Industry 4.0 Internet of Everything and Digital Supply Chain Transformation Strategy

As the frontier of information technologies, digital technology and Internet of Things cover nearly all areas of supply chain, promote cooperation across organizations, change business model and improve consumer experience.

In fact, an "always online" dynamic network can better connect to business strategy and become the source of competitive strength.

A leading pharmaceutical company releases a global Real-World Evidence (RWE) platform to collect clinical and patient data from hospital and third party. Researchers can better understand patient's behavior and develop more targeted products.

A large global retailer analyzes social media address to more accurately predict consumer needs and optimize inventory (for example the heated debate of a cell phone to be released may change buyers' decisions).

A brewery uses advanced optimization and scenario analysis to better understand the implication of change in cost (such as glass) to achieve smarter purchasing decisions.

A high-tech semiconductor manufacturer uses smart glass to provide remote support to production and assembling in overseas factory through on-demand knowledge sharing.

A consumer business can handle emergencies (e.g. supply shortage, increased demand, product recall), and redirect distribution routes in real time with GIS/GPS data.

A life science company uses AR software to offer visual directions to lab technicians in repairing tasks to secure reliable runtime and reduce urgent service request.

R&D

Real-world Evidence

Production

Staff Skill Enhancement

Planning

Social Media Analysis

Delivery

Dynamic Routes

Purchasing

Strategic Purchasing

After-sales

Augmented Reality

Digital Supply Chain Mindset

What are our goal and vision?

Where will we play?

How will we win?

How do we allocate resources?

What is the plan to be executed first?

• Company's goal

• Financial target

• Non-financial target

How many supply chains do you need?How do you identify market segments based on customer, product, geography or channel?

With what do you complete...?Speed? Agility? Service?Cost? Quality? Innovation?

Where do you need to change your supply chain network to meet your strategic business goals?

Supply Chain Level – Digital Supply Chain Network

Business Strategy Level - Deloitte Monitor Strategic Waterfall Plot

What measures will you deploy to configure the digital supply chain?

• Customer

• Product

• Regional coverage

• Distribution channel

• Unique capability

• Supportive organization and system

• Strategy

• Investment

• Merger / partnership

• Change managemen

• Value proposition to customer

• Source of defensive strength

• Profit model

• Partner

• Stakeholder engagement

A company needs to think: What are the top priorities and strategies to stand out from the competitors?

Design process

optimization

Product optimization

Planning & inventory efficiency

Risk prevention &

mitigation

Supplier collaboration

Operations efficiency

Logistics optimization

Sales optimization

Aftermarket sales and services

Sensor / data driven design

enhancementsAnalytics-driven demand sensing

Analytics-driven sourcing

Augmented Reality-enhanced

operations

Augmented Reality-enhanced

logistics

Augmented Reality-enabled

customer support

Data as a product or

serviceProactive

quality sensingInventory

driven dynamic pricing

Open innovation / crowd-sourcing

Dynamic inventory &

order fulfillment

Asset sharing / resource platform

Automated production

Automated logistics

End-to-end transparency for

customers

On-demand production with

3D printingTrack-and-trace

solutionsSensor-driven replenishment

pushes

Speed prototyping technology

POS driven auto- replenishment

Blockchain-enabled

transparencyPredictive

maintenanceDirect to user

deliveryOn-demand

production with 3D printing

Ultra-delayed differentiation Proactive risk

sensingTargeted

marketing

Virtual design simulation

Real-time inventory

optimization

Cloud / control tower optimization

Sensor-enabled labor monitoring Driverless trucks

Predictive after-sales

maintenance

Sensor-driven prediction

Supplier ecosystem

Dynamic / predictive

routing

Our digital supply chain consulting services can significantly drive the value of your business.

Corporation value

Enterprise-wide opportunity: Over $100 million of value

Income

New Products$1 billion of new revenue through new data-based products and services

Sales increase11% more market share captured with marketing strategy based on consumer trends through social media analysis

Profit margins

Quality cost reductionFirst pass yield grows from <20% to >95% with sensors used

Maintenance costs reduction90% reduction of the time to repair turbine with advanced material and additive manufacturing

Asset efficiency

Demand sensingOver 12% improvement in prediction accuracy with advanced statistics and analysis

Order fulfillment$6-10 million saved per year with opportunistic order fulfillment and inventory reduction based on visual global inventory

Stakeholderexpectations

Speed to market20% shorter in design cycle for the car maker and won the automotive industry awards of the year

Risk reductionFire in foundry drop from 12 to 0 per year with temperature and pressure sensor that can automatically shut down production

Exam

ple

Our customers are asking the same question: where shall we start?

Long-term vision Start from small Quick action

Build a digital "workshop"Identify a visionary digital action leader and build a team for acceleration towards digital targets; find a governance structure model and understand

strategies necessary to execute successful change management; and make sure digital solutions are incorporated into business structure.

Embrace InnovationJoin the immersive experience (for example,

visit the IoT Lab), explore "possible art" to inspire ideas, cultivate innovation culture.

Expand the edgeSeparate from core business and build a "black action group" to initiate disruptive innovation

in a mature organization.

Prove validity (fast)Use agile iteration methods to change strategy

into prototype ASAP - "fail fast and win fast".

Build your own ecosystemWork with vendors and players in market

segments to share and peel off assets, and develop your supply chain into a "value network".

Choose 1-2 strategiesPrioritize possible strategies and choose 1-2 of

them to validate business logic.

Copy success storiesPromote success stories for support and

enterprise-wide spread.

Supply Chain Transformation

Sample Tactics

ContactJohn SongLogistics & Transportation Sector LeaderDirector, ConsultingDeloitte ChinaTel: +86 21 2316 6192Email: johnsong@deloitte.com.cn

Eric WangAssociate Director, ConsultingDeloitte ChinaTel: +86 21 2316 6969Email: eriwang@deloitte.com.cn

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