Supply Chain Trends
Industry 4.0 in Practice

Industry 4.0 in Practice

Industry 4.0—also known as the implementation of the smart factory—is taking hold around the world, and distributors are playing an active role in helping the manufacturing community implement it. The core expertise of a distributor within the context of Industry 4.0 lies in their ability to provide development support and the necessary components to develop products for the smart factory. As part of the supply chain, distributors can also contribute to establishing Industry 4.0—a task that is not as complex as many supply chain companies may think.

Industry 4.0 is expected to be a reality by 2035, including reference architecture and standardization. In particular, standardization is a topic of much discussion. While some things are already defined in the International Electrotechnical Commission (IEC) standards, these are often considered inadequate, which is why they are deemed to be a hindrance to the broader implementation of Industry 4.0. But this shortfall can be countered by using tried-and-tested processes and technical systems and well-established standards.

More Efficiency for Growth

In 2014 alone, Rutronik exchanged about two million messages with its customers by using existing systems and standards, increasing the efficiency of all parties in the supply chain. A more interwoven network such as this enables procurement processes to be largely automated, which enables them to be optimized and sped up. Liberating resources in this way allows for further growth.

An automated, bidirectional system of communication between the distributor's inventory control system and that of the customer provides the basis for this new process. Such a system contains all relevant information and services related to the procurement chain. More specifically, this means that the distributor must be able to receive the customer's data and process it internally. They must also promptly provide the customer will all required information in a form that the customer can also process automatically. This interface must be designed so that the customer receives all the data they need for their production. For this, the distributor must provide the customer with a wide range of information, from forecasts on orders, warehouse, and dispatch information to billing data; many standards are available for this.

At a technical level, a process engine on both sides is required for networking inventory control systems. For data communication, it is helpful to support all common protocols, among them AS2, FTP/FTPS, VANs, X400, SMTP (email) and more. It is also important to offer a broad selection of exchange formats, including UN/EDIFACT, VDA, XML, SAP-idoc or RosettaNet. 

To keep communication within defined channels, it is also necessary to set boundaries. Here, business partners define together which parameters, message formats, and message content is exchanged, through which channels, and at which time intervals. These should be established in a written framework agreement to provide both partners with security. Within this framework, parameter variables provide the flexibility needed to be able to react to unpredictable events.

Automated Procurement

If the procurement process runs by a system of data communication described above, the customer profits from considerably increased efficiency—where numerous manual interim steps would otherwise be needed, two thirds of the process can now be automated. For instance, in purchasing there is no longer any need for the inquiry or order process, while in goods receipt, goods no longer need to be inspected or posted. This allows the customer to save a considerable amount of their process and procurement costs and increase their efficiency. In addition, the quality of processes improves because the possibility of human error in inputs is eliminated.

SPIDER—a Network Within Industry 4.0

At our company, we call the practical implementation of this method SPIDER:  Systems for Process, Integration, Documentation, Exchange and Relationship-Management. Quite simply, this system becomes a part of the identity of the distributor in its function as a data network manager within the procurement chain. SPIDER provides numerous gateways to various applications, from mobile devices to web services, EDI, ERP, and EAI (Enterprise Application Integration).

EAI constitutes the central node of the network. Of the systems residing here, data archiving plays a major role in Industry 4.0, allowing all processes to be transparently tracked for all parties. This is also where the exchange of data is coordinated.  

All messages, including order changes, forecasts, automatic goods receipt postings, and POS reports are exchanged via the ERP gateway. Web services give the customer a comprehensive and quick at-a-glance perspective of the delivery status of their orders, previous orders, current exchange rates, and much more.

For mobile devices, apps are available to not only connect inventory control systems with that of the customer, but also to provide the customer with a front end that they can use to easily manage their consignment store, for example. When removing a product, the customer only needs to use a smartphone to scan the bar code on the packaging. The message then runs automatically to the distributor’s inventory control system, where the system issues an invoice. Similar apps are available for Kanban systems in the form of smartKanban.

Complex Component Distribution

In implementing Industry 4.0, component distributors must deal with exceptional complexity. Distributors handle millions of shipped products, hundreds of suppliers, thousands of customers, and a wide variety and volume of products in their inventory. But even systems as complex as this can be implemented using existing standards with the attributes of Industry 4.0—digital, intelligent, and unique.

Andreas Mangler is director of strategic marketing & communications at Rutronik Elektronische Bauelemente GmbH, an electronic components distributor based in Germany that serves customers around the world.  He can be reached at [email protected]

TAGS: Supply Chain
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