Supply Chain 4.0: The new trend of industries in Brazil and worldwide

The term “Industry 4.0” was used for the first time in 2011, during the Hannover Fair, one of the most important fairs related to the theme. Since then, the world has evolved from the era of automation to the era of digitalization, in which technologies interconnect information from different stages of processes or different links in the chains in a single system. This monitoring is done in real time so that decisions are made quickly, assertively and personalized, in order to meet the needs of customers.

Figures 1 : Timeline of industrial revolutions. Source: PwC

However, customer expectations continue to grow and, in an attempt to meet these needs, logistics, which previously had an operational role, has become a strategic part of the process. In this context, along with the 4th industrial revolution, “Supply Chain 4.0” appears, transforming the supply chain into a more digital environment, with the application of Internet of Things (IoT), big data, use of vehicles and autonomous robots. This transformation is being accelerated due to the crisis caused by the Covid-19 pandemic which greatly changed the habits of the population due to social distancing and increased the volume of online purchases by 57% during the first 5 months of 2020, as mentioned in the post published on Insight ILOS about e-commerce by analyst Raphael Abinader.

In the survey carried out by KPMG, in Figure 2, it is possible to observe this priority in digital transformation by the executives of the interviewed companies. In Brazil, around 53% of the interviewees answered that they will invest in technologies aimed at digitizing processes, a considerably smaller number when compared to the rest of the world (67%), showing a certain differentiation in the strategies between Brazil and the rest of the world in terms of with regard to digitization.

Figures 2: Research strategic priorities. Source: Valor Econômico

This digitalization strategy has been widely used by retail companies and has seen positive results for US companies such as Walmart, Target, Home Depot and Lowe's. Even during the Covid-19 pandemic, these companies had sales growth of between 9 - 35% due to the omnichannel strategy adopted by them, that is, a modality that boosted sales was to buy online and collect in the respective stores.

In Brazil, Magazine Luiza, from the retail sector, has also concentrated its efforts towards digital transformation, recently acquiring the startup Stoq Tecnologia, specialized in solutions for small retailers that sell online. The retailer's acquisitions have been aimed at creating a "digital ecosystem" bringing together financial services, logistics and technology, along the lines of large Chinese groups such as Alibaba.

Supply Chain 4.0 has shown good results, especially in this period of crisis we are experiencing. Digitization is already a reality in some sectors, allowing companies to adapt to the new consumption habits of the population quickly and assertively. In this way, these companies will possibly be prepared to respond to a new change in consumer habits in the future even faster, meeting expectations and increasingly improving their results.

Want to know more about it? Digital transformation of the Supply Chain and E-commerce and Novo Varejo will be two of the 4 themes of the 26th International Supply Chain Forum, which ILOS will promote between the 13th and 15th of October. The event will take place 100% online for the first time and will feature the leading specialists in logistics and supply chain to discuss new trends.