Digital Transformation of Supply Chains With Mobile IoT

Introduction

Over the past 40 years, logistics has evolved into a Supply Chain Management (SCM) function with more strategic and agile approach. A supply chain can be described as “the network of supplier, factories, warehouse, distribution centers, retailers, and customers, through which raw materials are acquired, transformed, produced, and delivered to the customers” (Lou, Liu, Zhou, and Wang, 2011). The supply chain networks of 1980s were influenced by globalization dynamics and changing market conditions. Since traditional supply chains heavily relied on “paper-based” processes, documentation and data handling business models; they started to face with various challenges such as overstocking, uncertainty, complexity, delivery delays, stock out and also inability to respond quickly for handling high volatility in demand.

In the course of time, more reliable data management methods with business process automation has become a significant pursuit for companies to improve the ability of adapting rapidly with volatility in competitive business environments; in other words to enhance supply chain agility and flexibility of a supply chain stakeholders. Actually, creating a remarkable business value and benefits realization over supply chain network significantly require the effort of whole network; not only a single enterprise in the chain.

In 1990s, the emergence of ERP (Enterprise Resource Planning) systems offered various functionalities for supply chains and user experience in real time; allowed to give accurate decisions and to govern all operations of the organization effectively. Besides, advancements in Information Technologies (IT) and Information Systems (IS) facilitated automation of operations and business processes regarding the supply maintenance and entire product distribution control in organizations; and provided various benefits for supply chains in terms of production cycle optimization, service level improvement, inventory optimization, enterprise productivity improvement, profitability rise, production process control, efficient logistics and more (Boiko, Shendryk, and Boiko, 2018).

The technological revolution of supply chain operations boosted the concept of Supply Chain Management (SCM). Monczka, Trent and Handfield (1994) stated that primary objective of the term Supply Chain Management (SCM) is “to integrate and manage the sourcing, flow and control of materials using a total systems perspective across multiple functions and multiple tiers of suppliers”. SCM can be also described as the strategic coordination and collaboration of business functions in order to balance supply and demand within an organization and throughout its supply chain (Stevenson, Hojati, and Cao, 2007). The organization, planning, control and realization of the goods or services flow -from design and production to final consumer- needs to be governed; namely SCM is required for achieving various benefits: improving operations, improving customer responsiveness and customer retention, fulfilling customer orders and enhancing customer satisfaction, generating quality outcomes, achieving cost effectiveness, better outsourcing, increasing profits, effective managing under competitive pressures, changing market and economic conditions; and handling complexity of supply chains (Stevenson et al., 2007; Dubey, Gunasekaran, Papadopoulos, Childe, Shibin, and Wamba, 2017).

Changing dynamics of globalization is still intensively altering the operating way of supply chains. Today, in order to have efficient SCM capabilities, the integration of IT with supply chain operations of the organization; namely “digital transformation of supply chains” is inevitable. Industry 4.0 era is forcing organizations to re-design their business models in order to reach next generation of operational effectiveness. Industry 4.0 revolution can be described as “a shift in the manufacturing logic towards an increasingly decentralized, self-regulating approach of value creation, enabled by concepts and technologies such as cyber-physical system (CPS), Internet of Things (IoT), Internet of Services (IoS), cloud computing and additive manufacturing and smart factories” (Hofmann and Rüsch, 2017).