Industrial IoT Is Key to a Resilient Supply Chain

Many lessons were learned in the past year regarding supply chain, and clearly not all of them were pleasant. The SAP Digital Supply Chain organization was in constant discussion with customers, partners, and analysts absorbing how things were changing and trying to understand what needed to be adjusted.

What exactly, we asked, does the supply chain of the future need to look like? The answer we came to was that customers need to build resilient and sustainable supply chains. To do so, they need to:

  • Become more agile to sense, predict, and respond to disruptions
  • Increase productivity through the digitalization of industrial companies (Industry 4.0)
  • Improve connectivity with business partners to enable next-level collaboration
  • Run sustainable business practices

Before the word COVID was on everyone’s lips, SAP had made a commitment to be an industry leader in Industry 4.0, or the Industrial Internet of Things (IIoT). SAP has long been a recognized leader in digital supply chain, For better visibility in the market around our capabilities with Industry, we created a strategy, called Industry 4.Now. As 2020 unfolded, we recognized the timeliness of it.

Customers that had already begun the journey of digitalizing business processes started accelerating their planning and projects as the global economy was brought to a virtual standstill within weeks. Manufacturing companies began aggressively looking at Industry 4.0 to transform the value chain, which typically starts with smart manufacturing and can go as far as creating new business models. For example, GEBHARDT Group, an international provider of intralogistics solutions, established real-time condition monitoring for its customers when launching its Galileo IoT platform. It was in this way that the company moved away from being a simple supplier of conveyor technology toward becoming a comprehensive service provider. Industry 4.0 has the potential to move from a factory-focused initiative to a company-wide business strategy to drive productivity across all supply chain processes.

Industry 4.Now helps move digitalization to a company-wide, competitive business strategy combining manufacturing automation with enterprise business execution. This includes intelligent product engineering, managing intelligent factories, and assets leveraging advanced logistics coupled with people empowerment. We combine SAP solutions for design, manufacture, delivery, and operation in one holistic offering, bringing enterprise business data together with data derived from machines, sensors, and devices facilitating the ability to automate processes with embedded artificial intelligence (AI) and increase visibility and efficiency. Sounds powerful, doesn’t it?

ALBIS PLASTIC GmbH, a leading company in the distribution and compounding of technical thermoplastics and thermoplastic elastomers, has connected production lines with predictive quality management. ALBIS PLASTICS GmbH can now identify quality risks before they arise and understand complex interdependencies in production by intelligently connecting and visualizing IoT data. These intelligent insights are also used for future product development.

We’re only in the beginning of the adoption of Industry 4.0 and IIoT, and many companies are running pilots and proof of concepts. It starts with planning, and the ability to sense demand changes and trigger fast, flexible execution on shop floor, logistics, and asset management. Building an agile environment means being able to adapt processes for agility. Companies need to consider their engineering, manufacturing, and planning systems and integrating them; this is horizontal integration. For vertical integration, it is tying together the other components – hardware, automation equipment, and data lakes – which requires standards and a common reference architecture to make it easier and faster to connect the various components.

To give another real-world example, German automotive company Continental has been working with SAP to utilize IoT in its Industry 4.0 efforts. Its project started around 2017 and found manufacturing solutions from SAP fit its needs. Connecting different production machines with IoT capabilities was one of the key elements of the project, much of which the success experienced could be attributed to sticking with standards. The company found in its project the challenge of connecting various software providers together, and to close the chain standards were absolutely necessary.

Yet another company, Weidmueller Group, is a leader in automation and connectivity creating products for manufacturers and machine builders and serve a wide swath of industries. The company wanted to gain more performance efficiencies with its Industry 4.0 project with SAP, utilizing modern, digital, and integrated machinery and solutions. Its project began with the goal of an integrated shop floor and looking at how to bring in vertical integration.

The project began in 2017 with first go-live in 2019 and was based on more than 300 data points on machine health, performance, production, and down times, among other things. One of the early results was the reduction of manual effort by up to 50% after eliminating the need for employees to walk to each machine. The integration between machines driven by IoT, the company was able to create greater transparency and productivity. The vertical and horizontal integration proved a good fit, with ease to adapt best practices and business processes for their business. Weidmueller also found the easy integration with mobile devices – in its case Apple devices – with SAP solutions worked very well.

Increasing productivity with Industrial IoT as part of our Industry 4.Now strategy is an essential step toward creating resilient and sustainable supply chains.


Franz Hero is head of SAP Digital Supply Chain Development.
This article originally appeared on SAP BrandVoice on Forbes.