Logistics 4.0

Digital Transformation of Supply Chain Management

Turan Paksoy, Cigdem Gonul Kochan, Sadia Samar Ali, Turan Paksoy, Cigdem Gonul Kochan, Sadia Samar Ali

• Publisher: CRC Press
• Year: 2020
• ISBN:
  9781000245165
• Edition: 1
• Topic: Technology & Engineering
• Subtopic: Civil Engineering
• Index: Technology & Engineering

Industrial revolutions have impacted both, manufacturing and service. From the steam engine to digital automated production, the industrial revolutions have conduced significant changes in operations and supply chain management (SCM) processes. Swift changes in manufacturing and service systems have led to phenomenal improvements in productivity. The fast-paced environment brings new challenges and opportunities for the companies that are associated with the adaptation to the new concepts such as Internet of Things (IoT) and Cyber Physical Systems, artificial intelligence (AI), robotics, cyber security, data analytics, block chain and cloud technology. These emerging technologies facilitated and expedited the birth of Logistics 4.0. Industrial Revolution 4.0 initiatives in SCM has attracted stakeholders' attentions due to it is ability to empower using a set of technologies together that helps to execute more efficient production and distribution systems. This initiative has been called Logistics 4.0 of the fourth Industrial Revolution in SCM due to its high potential. Connecting entities, machines, physical items and enterprise resources to each other by using sensors, devices and the internet along the supply chains are the main attributes of Logistics 4.0. IoT enables customers to make more suitable and valuable decisions due to the data-driven structure of the Industry 4.0 paradigm. Besides that, the system's ability of gathering and analyzing information about the environment at any given time and adapting itself to the rapid changes add significant value to the SCM processes.

In this peer-reviewed book, experts from all over the world, in the field present a conceptual framework for Logistics 4.0 and provide examples for usage of Industry 4.0 tools in SCM. This book is a work that will be beneficial for both practitioners and students and academicians, as it covers the theoretical framework, on the one hand, and includes examples of practice and real world.

SECTION 1
Introduction and Conceptual Framework

CHAPTER 1
A Conceptual Framework for Industry 4.0

(How is it Started, How is it Evolving Over Time?)

Sercan Demir,¹,* Turan Paksoy² and Cigdem Gonul Kochan³

¹ Department of Industrial Engineering, Faculty of Engineering, Harran University, Sanliurfa, Turkey.

² Department of Industrial Engineering, Faculty of Engineering, Konya Technical University, Konya, Turkey. Email: [email protected]

³ Department of Management and Marketing, College of Business and Management, Northeastern Illinois University, Chicago, Illinois, USA.

* Corresponding author: [email protected]

1. Introduction

Manufacturing and service industry has been broadly affected by the past industrial revolutions. Swift changes in manufacturing and service systems caused by industrial revolutions led to improvements in productivity for the companies. This fast-paced environment brings new challenges for the companies that are associated with adaptation to the new concepts such as industrial internet, cyber-physical systems, adaptive robotics, cybersecurity, data analytics, artificial intelligence, and additive manufacturing. These emerging technologies facilitated and expedited the birth of Industry 4.0, the latest industrial revolution era (Salkin et al. 2018).

From the invention of the steam engine to digital automated production, the First Industrial Revolution and the following revolutions have led to significant changes in the manufacturing process. As a result, ever more complex, automated and sustainable manufacturing systems have emerged. In the European Union, the industry is accountable for approximately 17% of the total GDP that creates 32 million jobs (Qin et al. 2016). The Industry 4.0 initiative has attracted stakeholder’s attention due to its ability to apply a bundle of technologies to execute more efficient production systems. This initiative has been accepted as the Fourth Industrial Revolution by many due to its high potential. Connecting physical items such as sensors, devices, and enterprise resources to the internet are major attributes for industrial manufacturing in Industry 4.0. The context of the Internet of Things (IoT) enables customers to make more suitable and valuable decisions due to the data-driven structure of the Industry 4.0 paradigm. Besides that, the system’s ability to gather and analyze information about the environment at any given time and adapt itself to the rapid changes adds significant value to the manufacturing process (Alexopoulos et al. 2016).

The organization of the rest of this chapter is as follows. In the second section, the history of the first three Industrial Revolutions and their impacts are presented. The framework of the Fourth Industrial Revolution and the newly emerging technologies that are reshaping the manufacturing are discussed in the third section. Section four provides a review of the relevant literature. The final section concludes the chapter with a discussion and suggests future research directions.

2. First Three Industrial Revolutions: Industry 1.0–3.0

In the literature, the term “industrial revolution” and “industrialization” are used interchangeably. The appearance of many industrial revolutions throughout history raises questions related to their type, nature, and concept (Coleman 1956).

The Industrial Revolution refers to the rise of modern economic growth, such as a sustained and substantial increase of GDP per capita in real terms, during the transition from a pre-industrial to an industrial society. The process of revolution by its own nature is not abrupt and rapid, but it is deep and extensive. Great Britain was the first industrial nation, and its transition took almost a century from the 1750s to the 1850s. However, the real per capita income has started growing after the 1840s over one percent per year. Many new industrial sectors had reached significant increases in productivity at an early stage. However bad harvests, frequent wars, a high population increase, and changes in the economic structure had a negative effect on the growth rate, especially in the pioneer country, Great Britain. Countries that industrialized later, overall, had a faster pace of development and a higher rate of growth (Vries 2008).

Although the industrial revolution is not considered a historical episode by itself, it was the most important development in human history over the past three centuries. The phenomenon began about two and a half centuries ago. With new methods for producing goods, the industrial revolution has reshaped where people live, how they work, how they define political issues, and more. It continues to shape the contemporary world. While the oldest industrial nations are still adapting themselves to its impact, the newer industrial societies, such as China, repeat elements of the original process but extend its range in new directions (Stearns 2012).

Industrialization was the major force that brought changes in world history that began in the 19th and 20th centuries and continues to shape the 21st century and our lives. Industrial revolutions took place in three waves. The first occurred in Western Europe and the United States beginning with developments in Great Britain in the 1770s, while the second wave hit Russia and Japan, some parts of eastern and southern Europe, plus Canada and Australia from the 1880s onward. The most recent wave began in the 1960s in the Pacific Rim, and two decades later it reached Turkey, India, Brazil, and other parts of Latin America. Each major wave of industrialization quickly engulfed other countries that were not industrialized outright and converted their basic social and economic relationships (Stearns 2012).

The first three industrial revolutions stretched over nearly a 200-year time period. Starting with the steam engine driven mechanical looms in the late 1700s, the fabric production moved to central factories from private homes causing an extreme increase in productivity. Nearly 100 years later, Ohio marked the beginning of the Second Industrial Revolution by using the conveyor belts in the slaughterhouses in Cincinnati. Following years saw the peak point of this era with the production of the Ford T model in the United States. The introduction of the continuous production lines and the conveyor belts led to the extreme increase in productivity due to the advantage of mass production. The breakthrough that enabled the digital programming of automation systems came with presentation of the first programmable logic controller by Modicon in 1969, marking the beginning of the third Industrial Revolution. The programming paradigm still governs today’s modern automation system engineering that leads to highly flexible and efficient automation systems (Drath and Horch 2014). Figure 1 presents an overview of the industrial revolutions.

Fig. 1: An Overview of the Four Industrial Revolutions.

The Fourth Industrial Revolution has emerged by means of CPS. These systems are industrial automation systems that connect the physical operations with computing and communication infrastructures via their networking and accessibility to the cyber world (Jazdi 2014).

The integration of physical operations in industrial production, information, and communication technologies is called Industry 4.0. Industry 4.0 has recently gained more attention from academics. The term “Industry 4.0” is used for the next industrial revolution, which has been preceded by three other industrial revolutions in history. The First Industrial Revolution started with the introduction of mechanical production facilities in the second half of the 18th century and accelerated over the 19th century. Electrification and the division of labor (i.e., Taylorism) induced the Second Industrial Revolution starting from the 1870s. The progress in the automation of the production process with the help of advanced electronics and information technology started the Third Industrial Revolution (the digital revolution) around the 1970s (Hermann et al. 2016).

2.1 How it began: The First Industrial Revolution

The Wealth of Nations was written by Adam Smith in 1776, at the very beginning of the First Industrial Revolution. Smith’s ideas and the views were phenomenal; however, lie did not conceive of the following; events. As workers in the industrializing countries shifted from farms to factories, societies were reformed beyond expectations in this fast-paced environment. This transformation impacted the distribution of the labor force across economic sectors dramatically. For instance, 84% of the U.S. workforce participated in agriculture, compared to an inconsiderable 3% in manufacturing in 1810. However, the manufacturing market share climbed to almost 25 percent while agriculture market share gradually diminished to just 8 percenF over the years until ehw year 1960. As of today, the agriculture market share is under 2 percent. The revolution significantly impacted people’s lives, education, the organization of businesses, the forms and practices of government (Blinder 20(06).

There have been many important industrial innovations even before the First Industrial Revolution; however, the innovations of the late eighteenth century (at the time; of tine First Industrial Revolution) can be differentiated from those that affected the processes of production. The impact of these innovations was so profound because of the extensive application of new sources of power and heat on the production processes. As a result of these innovations, fossil fuel (coal) replaced the traditional power resources such as the power of man, wind, water, animals, and the heat of a wood fire, etc. Coal became a major energy source that led to a tremendous increase in throughput and dropped the cost of basic industrial processes (Ohandler 1980).

Three basic technological innovations set the stage for the First Industrial Revolution. First, James Watt’s steam engine, patented in 1769, which permitted the transformation of heat energy into steam and mechanical energy. Second, the spinning machines of Arkwright and Crompton, ...

Table of contents

• Cover
• Title Page
• Copyright Page
• Preface
• Contents
• Section 1: Introduction and Conceptual Framework
• Section 2: Internet of Things and Cyber-Physical Systems in SCM
• Section 3: Fuzzy Decision Making in SCM
• Section 4: Machine Learning in SCM
• Section 5: Augmented Reality in SCM
• Section 6: Blockchain in SCM: The Impact of Block Chain Technology for SCM-Potentials, Promises, and Future Directions
• Section 7: AI, Robotics and Autonomous Systems in SCM
• Section 8: Smart Factories: Transformation of Production and Inventory Management
• Section 9: Smart Operations Management
• Section 10: Maturity Models and Analysis for Industry 4.0 and Logistics 4.0
• Section 11: Smart and Sustainable/Green SCM
• Section 12: Management of Digital Transformation in SCM
• Index