Supply Chain Management (SCM) is the process of managing the entire operation from arranging the raw material to supplying the final products and services (Jacobs, Chase and Lummus, 2014; Christopher, 2016). This requires better integration between different parties such as suppliers, companies, customers and producers etc. through which competitive edge of the business can be obtained. In this regard, the current report is based on the supply chain management of Sembcorp industries and development of industry revolution 4.0 in supply chain system. For this purpose, a critical review has been done to analyze the industry revolution from inception to today. At the end, a replication has been done for the Sembcorp industries on the basis of Szozda’s paper and the process of supply chain has been reviewed from traditional way to modern base.
KEY FRAMEWORK OF THE ORGANIZATION
Overview of the company
Sembcorp industries is an integrated energy player of Singapore which is a leading sector of Marine, Utilities and Urban development group. The industry is a global energy transition across main five continents. Moreover, the industry offers the solutions for the utilities of value chain as well as energy systems and has major emphasis on the gas & power, merchant & retail sectors and renewables and environment etc. Sembcorp industry has strong availability of total assets over the figures of S$22 billion. Further, the industry is listed in the Singapore stock exchange board and holding a leadership position in the urban development, marine and offshore engineering of entire market place. Apart from this, the industry has strong and balanced energy portfolio around 12000MW along with 9 million cubic metres of water on daily basis. Further, more than 7000 employees are associated with Sembcorp industries (Sembcorp Industries, 2018).
Main products and services
Sembcorp industry has created a strong energy and product portfolio involving solar power assets, thermal power plants, renewal wind, energy from waste facilities and biomass energy etc. Moreover, mainly the industry deals in major four offshore and marine engineering in four key sectors such as repairs and upgrades, specialized ship buildings, rings and floaters and end sector is offshore platform etc. Besides this, Sembcorp industry has an integrated energy platform through which it serves the customers by offering the energy and utilities value chain (Sembcorp Industries, 2018; Sembcorp marine ltd, 2018).
Major customers of the company
Sembcorp has several customers such as industrial, municipal and the industry is known as reliable provider of water and energy solutions for both types of customers. Moreover, the industry also offers the energy services to regular customers along with long-term strategic alliances, local enterprises and industrial sites. On the other hand, merchant and retailers are also the customers of Sembcorp industries that are directly procured energy and water solutions for further processing and end-use of the resources (Sembcorp, 2017).
Concept of industry 4.0
Industry 4.0 is the fourth generation of industrial revolution which expanded from normal to advanced technologies (Szozda, 2017). It is a collaborative name of technology which is given on the basis of recent trends of automation, exchange of data in different industries such as manufacturing, transportation, communication etc. (Drath and Horch, 2014). Moreover, Stock and Seliger (2016) stated that the industry 4.0 involves several key sectors like cloud and cognitive computing, internet of things, cyber-physical systems etc. The technology has been converted into more advanced machineries, flexibility, rapid than older automation, manufactures the high-quality products and services which is helpful to maximize the number of customers by expected delivery of goods (Szozda, 2017). Apart from this, autonomous robots, simulation, big data and analytics, cyber security etc. are the major pillars to build the industry 4.0 (Boston consultancy group, 2018).
Demonstrating development of the concept of industry 4.0- Inception to present
According to Lee, Bagheri and Kao (2015), in industry 1.0 all the workings of factories were based on the manual machines which are operated by the hands instead of energy and power. In this context, the companies were dependent on the steam engines to manufacture the products; here, in industry 4.0 the factories it become less dependent on the manpower due to development in the technologies, production of a large number of quantity of goods and services by using equipment (Lee, Kao and Yang, 2014). In this regard, Lasi et al. (2014) stated that development in technology is helpful for the organizations and manufacturing companies because it maximizes the quality of products as well as satisfy the customers by offering the demanded and high-rated products. Besides this, Szozda (2017) argued that industry 4.0 is not only helpful to enhance the manufacturing capacities, even it also has positive impact on the supply chain of companies. By improvement in technologies, the organizations became more efficient supplier of goods and services in a quick manner along with minimum time and cost perspectives (Almada-Lobo, 2016). It shows that the industry revolutions have been developed from normal technologies to additional aspects and affects the business supply chain management. Further, the dependency on workforce has also been reduced in the factories through upgradation in technologies.
Figure 1: Development of industry 1.0 to industry 4.0
(Source: Weidmüller Interface GmbH & Co. KG, 2018)
In the year of 1900, industry 2.0 has been emerged with greater expansion in the technologies in comparison to industry 1.0. In this phase, the use of technologies has become smarter to work and mechanical production has been changed for the manufacturing of goods in more soft way than industry 1.0 (Liao, Deschamps, Loures and Ramos, 2017). In this regard, Xu, Xu and Li (2018) mentioned that in industry 2.0, there was no greater innovations has been taken place although the upgradation has developed new chances and opportunities for the companies to perform better and reduce the manual work at a large extent. By considering the additional requirements, a new industry revolution has been developed in 1970 which is knows as industry 3.0. In industry 3.0, machineries have been deployed on the place of manual operations and electronics as well as computer embedded technologies has been emerged in the manufacturing and supply chain processes (Weidmüller Interface GmbH & Co. KG, 2018; refer figure 2). Besides this, Contreras, Garcia and Diaz (2017) asserted that the third generation of industry development was associated with computerized technology which has a major contribution in the improvement of product quality. Furthermore, robotics has been used by the factories to enhance the production process along with implementation of further changes in the organizations. Therefore, it reflects that the changes in industry 2.0 to 3.0 has immense effects on the product quality and supply chain system because it has reduced the time span of supply chain and maximizes the product quality by adopting modern technologies.
Figure 2: Phases of industry revolution
(Source: Deloitte AG, 2014)
Apart from all of these, the current era is the scenario of industry 4.0 which is more advanced in technology and intelligent system of networks that are emerged to bring the required changes in the industry (Ivanov, Sokolov and Ivanova, 2016). Moreover, the fourth generation is associated with developments in software technology, mechatronics, networking and electronics etc. (refer figure 2) (Brettel, Friederichsen, Keller and Rosenberg, 2014). By reviewing the aspects of industry 4.0, Deloitte (2014) asserted that fourth generation has occurred the changes in physical system as well as information flows in the supply chain. Moreover, the entire processing of production, purchasing and distribution has changed the supply chain processing. However, Jacobs, Chase and Lummus (2014) argued that industry 4.0 has occurred the different key issues in the supply and transformation in the digital world due to data theft as an effect of long-distanced wireless networks. On contrary, Szozda’s (2017) asserted that industry 4.0 is helpful in producing the low-cost and quality products and minimizes the waste in production cycles. Furthermore, flexibility in production and distribution cycle of goods and services has been improved to a great extent (Roblek, Meško and Krapež, 2016). Hence, it shows that the emergence of industry 4.0 is beneficial for the organizations because it has major contribution in all aspects of the goods and services such low cost products, higher quality, greater advancement in technologies. Moreover, it enhances the flows of information and data in supply chain.
Figure 4 and 5 of Szozda’s case study has been replicated in context of Sembcorp industries’ supply chain which is provided in the respective case study of Szozda’s of industry 4.0 and its impact on the functioning of supply chain. Supply chain of the company reflects the free flow of information and the processing of receiving the raw material, goods and services and final products from origin to end users (Szozda’s (2017). In this context, a traditional supply chain of SembCorp industries has been described for the reproduction of energy products before the implementation of Industry 4.0 as follows-
Figure 3: Traditional supply chain of Sembcorp industries
(Source: Szozda’s, 2017)
According to figure 4, the supply chain starts from the manufacturers and ends with customers before implementation of industry 4.0 in the Sembcorp industries. The company had followed a set of standards for the transition of energy supplies in the competitive marketplace. Owing to the figure 4, it has been examined that the information flows from manufactures to suppliers and on the basis of those information, suppliers provides the material to manufacturers. Moreover, the production of energy remains in continuous process and perform all the activities in a line such as suppliers> manufacturers> distributers> retailers> customers. On the other hand, product flows from suppliers to final consumers with completed process and estimations regarding farecasting of the energy sales as solar energy, bio energy etc.
For example, for the biomass energy, Sembcorp industries used to receive the data from manufacturers that they can deliver the required product on time with adequate quality or not. If they found that manufactures are supportive then further processing tend to took place. In this context, the suppliers for the bio energy may include coal and fuel suppliers, material suppliers, containers suppliers for the producing the bio energy etc. On the other hand, suppliers deliver the bio energy to different reliable distributors which are known as mediators and they demand for the commission to deliver the products to retailers. At the end, the retailers would sell the biomass energy products to urban consumers for the final use in factories. Therefore, it shows that traditional supply chain of Sembcorp is quite lengthy and consume more time from production to final delivery of the bio energy as well maximizes the all over cost.
Owing to the scenario of traditional supply chain of Sembcorp industries, a new technology has been implemented to cut the supply chain to increase the efficiency (refer figure 5 of cited in Szozda’s, 2017). For this purpose, industry revolution has been accepted by the respective company in the form of industry 4.0 in the supply chain as follows-
Figure 4: New supply chain after industry 4.0
(Source: Szozda’s, 2017)
There is a significant difference between traditional and new approach of the supply chain that information not only derived from the retailers but also might be collected from the products. The product provides the data regarding consumer behaviors, demands so that future research and development can be done as per the collected data of the products. By considering this, Sembcorp can change the supply chain process from traditional way to advanced manner by adopting the different types of equipment, new suppliers and distributors and retailers etc. so that risk and negative impact on the business might be minimized. In this context, by applying industry 4.0, for bio energy, Sembcorp has varied suppliers including material suppliers, contractors related to engineering, construction and procurement and original equipment manufacturers etc. and all the suppliers will be upholding by code of ethics of business (Sembcorp, 2017). Apart from this, with the help of the industry 4.0, different distribution channels are considered for the supply of bio energy so that time as well as cost associated with the supply chain can be reduced to a great extent (Szozda, 2017). Further, produced bio energy can be stored in warehouses and stock management for the future use. However, this facility was not existing in the traditional approach of supply chain. Finally, on the basis of customer’s information, the energy is be produced and the entire system has been changed.
On the basis of report, it has been identified that industry 4.0 has brought several changes in the supply chain of the industry; Sembcorp because the traditional supply chain was so lengthy and takes more time to deliver the products from manufacturers to end users. Further, it has also been concluded that industry 4.0 has tremendous impact on the image of the company and companies can effectively increase the efficiency of operation through the equal focus on the quality as well as quantity of the products and services. Further, it can be summarized that the revolution has been started from 1780 with the involvement of steam engine whereas in the currently it reaches at advanced machinery, technologies and equipment for the better productivity. On the other hand, with the help of the Szozda study, has been found that industries accepting rapid changes in the supply chain management.
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