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TheDigitalSupplyChain
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TheDigitalSupplyChain
Editedby BartL.MacCarthy
NottinghamUniversityBusinessSchool,UniversityofNottingham,UnitedKingdom
DmitryIvanov
BerlinSchoolofEconomicsandLaw,SupplyChainandOperationsManagement,Berlin,Germany
Elsevier
Radarweg29,POBox211,1000AEAmsterdam,Netherlands
TheBoulevard,LangfordLane,Kidlington,OxfordOX51GB,UnitedKingdom 50HampshireStreet,5thFloor,Cambridge,MA02139,UnitedStates
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Notices
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ISBN:978-0-323-91614-1
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TypesetbyTNQTechnologies
DimitrisMourtzis,JohnAngelopoulosandNikosPanopoulos
3. Smartwarehouses asociotechnicalperspective
4. TheInternetofThings anemergingparadigmtosupportthedigitalizationof
HamedBaziyad,VahidKayvanfarandAseemKinra
5. Thecloud,platforms,anddigitaltwins Enablersofthedigitalsupplychain GongtaoZhang,BartL.MacCarthyandDmitryIvanov
6. Algorithms,Analytics,andArtificialIntelligence:harnessingdatatomakesupply chaindecisions
XavierBrusset,DavideLaTorreandJanBroekaert
7. Theimpactofdigitalizationoncontemporaryandfuturelogistics
StephenPettit,YingliWangandAnthonyBeresford
8. Blockchaintechnologiesinthedigitalsupplychain
HorstTreiblmaier,AbderahmanRejebandWafaaA.H.Ahmed
3.3Barrierstoblockchainadoptioninsupplychains
4.Industrialapplicationsofblockchain
ManagingtheDigitalSupplyChain
9.
KonstantinaSpanaki,ErisaKarafiliandStellaDespoudi
11. Digitalpurchasingandprocurementsystems:evolutionandcurrentstate
KarstenCox
1.Introduction theriseofdigitalprocurementsystems
2.Thedevelopmentofdigitalprocurementsystems
2.1Earlycomputer-assistedpurchasingwithMRPandspreadsheets
2.2TheintegrationofprocurementandsupplychainmanagementthroughElectronicDataInterchange(EDI)andERP 183
2.3Characteristicsofcontemporarydigitalprocurementsystems P2PandS2P
2.4Stateoftheartinpractice
3.Researchperspectivesondigitalizationofprocurement
3.1Researchondigitalprocurementsystemsadoption:technologyreadiness
3.2Theneedforwiderresearchoncontemporarydigitalprocurementsystems
4.Hitachicasestudy
4.1StartofHitachi’sdigitalprocurementsystemjourney
4.2HitachiRailGroup:implementingJaggaer
4.3Pilotstudy:supportingtendersonhigh-speedbidprojects
5.Lookingahead:thefutureofdigitalprocurementsystems
5.1Furtherautomationofdigitalprocurementsystems
5.2ThefutureofS2Pdigitalprocurementtechnology
5.3Dataintegrityandcybersecurityinfuturedigitalprocurement
12. Measuringandmanagingdigitalsupplychainperformance
AshishKumarJha,NishantKumarVermaandIndranilBose 1.Introduction
13. Theartofcybersecurityintheageofthedigitalsupplychain:detectingand defendingagainstvulnerabilitiesinyoursupplychain
SangYoonCha 1.Introduction
DigitalSupplyChain sectoralcases
14. Digitalretail keytrendsanddevelopments
LinaZhangandMikkoHa¨nninen
2.Thereshapingoftheretailvaluechain
3.Platform-basedretailecosystems
Digitalizationinthetextilesandclothingsector
RudrajeetPalandAmilaJayarathne
1.Introduction
16. Digitalizationinproductionandwarehousinginfoodsupplychains
FabioSgarbossa,AnitaRomsdal,OlumideEmmanuelOluyisolaandJanOlaStrandhagen
aninnovationprojectbetweenafoodsupplychainandacademia
17. Automotivesupplychaindigitalization:lessonsandperspectives
NathalieFabbe-CostesandLucieLechaptois
1.Introduction
2.OverviewofSCdigitalizationintheautomotivesector
2.1Era1 Industry2.0andfragmentedoperationsdigitalization 1950 1970s
2.2Era2 towardinternalandlocalSCdigitalization(localintegration) 1980s
2.3Era3 towardextendedinterorganizationalSCdigitalization 1990s
2.4Era4 totalintegrationandinterconnectedSCsdigitalization 2000s
2.5Era5 Industry4.0,fullSCdigitalization fromthe2010s
2.6Thecoevolutionofinformationsystemsandautomotivesupplychains
3.LessonsfromtheSCdigitalizationofacarmanufacturer
3.1UnderstandingtheSCdigitalizationstrategyandprocessesofacarmanufacturer
3.2LessonsfromtheSCdigitalizationprocessexperience
4.Conclusions
18. Digitalizationoftheinternationalshippingandmaritimelogistics industry:acasestudyofTradeLens
WafaaA.H.AhmedandAlexaRios
19. HowcanSMEsparticipatesuccessfullyinIndustry4.0ecosystems?
GuilhermeBrittesBenitez,Ne ´ storFabia´nAyalaandAlejandroGerma´nFrank
4.Startingcollaboration anOpenInnovationapproachforIndustry4.0technology solutionprovisioninsupplychains
5.Reshapinglinearsupplychainstobecomeinnovationecosystems
6.Expandingrelationships aSocialExchangeviewininnovationecosystemsfor Industry4.0technologysolutionprovision
7.Fromsupplychainstoaplatform-drivenecosystemstructure
8.Maturingtechnologies aBoundary-SpanningperspectiveforIndustry4.0platforms
9.AconceptualmodelforIndustry4.0technologysolutionprovision
ResearchfrontiersintheDigitalSupplyChain
20. Networkscienceforthesupplychain:theory,methods,andempiricalresults
1.Introduction
2.Anoutlineofsupplynetworkanalysis
2.1Dataselectionorgeneration
2.3Descriptivenetworkanalysis
2.4Mathematical,simulation,andstatisticalanalysis
3.Datasourcesforsupplynetworkanalysis
5.Structureofsupplynetworks:theory,methods,andempiricalresults
21.
22. Digitalsupplychainsurveillance:concepts,challenges,andframeworks
AlexandraBrintrup,EdwardElsonKosasih,BartL.MacCarthyandGuvenDemirel
1.Introduction
23. Sustainabilityandthedigitalsupplychain
AhmadBeltagui,BrenoNunesandStefanGold
1.Introduction
5.4DigitaltechnologiesinEVsandEVsupplychains
6.Globalfoodsupplychains
Reconceptualizingsupplychainstrategyforthedigitalera:achievingdigital ambidexteritythroughdynamiccapabilities
EricLambourdie ` re,ElsaCorbinandJe ´ roˆmeVerny 1.Introduction
2.2Organizationalambidexterity
2.3Supplychaintheoryfoundationsandevolution
2.4Contemporarysupplychainchallenges
2.5ThesupplychainofthefutureandtheshiftingtheoreticalfoundationsofSCM
2.6Newdigitaltechnologies(NDTs)tocreatehigher-ordercapabilitiesforsupplychain components,processes,networksandflows(SCMCs,SCMPs,SCNSs,andSCFs)
3.Conceptualframeworkandsystemofrelationships
4.Buildingdigitalsupplychaincapabilities(DSCCs)
4.1Supplychainvisibilitycapabilities(sensing)
4.2Supplychainagilitycapabilities(seizing)
4.3Supplychainflexibilitycapabilities(transforming)
4.4Dynamicsupplychaincapabilitiesasaprerequisiteofsupplychainambidexterity
4.5SupplychainambidexterityandDSCCs
4.6TherelationshipbetweenDSCCsandbusinessperformance
7.Conclusionsandfurtherresearch
Contributors
WafaaA.H.Ahmed,DepartmentofOperationsManagementandInformationSystems,NottinghamUniversity BusinessSchool,TheUniversityofNottingham,Nottingham,UnitedKingdom
JohnAngelopoulos,LaboratoryforManufacturingSystemsandAutomation,DepartmentofMechanicalEngineeringandAeronautics,UniversityofPatras,Patras, Greece
NéstorFabiánAyala,OrganizationalEngineeringGroup (NúcleodeEngenhariaOrganizacional NEO), DepartmentofIndustrialEngineering,Universidade FederaldoRioGrandedoSul,PortoAlegre,Rio GrandedoSul,Brazil
HamedBaziyad,DepartmentofInformationTechnology, FacultyofIndustrialandSystemsEngineering,Tarbiat ModaresUniversity,Tehran,Iran
AhmadBeltagui,AdvancedServicesGroup,AstonBusinessSchool,Birmingham,UnitedKingdom
GuilhermeBrittesBenitez,OrganizationalEngineering Group(NúcleodeEngenhariaOrganizacional NEO), DepartmentofIndustrialEngineering,Universidade FederaldoRioGrandedoSul,PortoAlegre,Rio GrandedoSul,Brazil;IndustrialandSystemsEngineeringGraduateProgram,PolytechnicSchool,PontificalCatholicUniversityofParana(PUCPR),Brazil
AnthonyBeresford,LogisticsandOperationsManagement,CardiffBusinessSchool,CardiffUniversity, Cardiff,Wales,UnitedKingdom
IndranilBose,NEOMABusinessSchool,Reims,France
AlexandraBrintrup,TheInstituteforManufacturing, UniversityofCambridge,Cambridge,UnitedKingdom
JanBroekaert,SKEMABusinessSchool,UniversitéCôte d’Azur,Nice,France
XavierBrusset,SKEMABusinessSchool,Université Côted’Azur,Nice,France
SangYoonCha,DepartmentofIndustrialEngineering, SeoulNationalUniversity,Seoul,RepublicofKorea
KittyKayChan,ColumbiaUniversity,NewYork,New York,UnitedStates
ElsaCorbin,InstituteofTechnologyofMartinique, TransportandLogisticsManagementDepartment, UniversityofFrenchWestIndies,Campusof Schoelcher,Schoelcher,Martinique
KarstenCox,HitachiInformationControlSystemsEurope Ltd,Derby,UnitedKingdom
GuvenDemirel ,SchoolofBusinessandManagement, QueenMaryUniversityofLondon,London,United Kingdom
StellaDespoudi,SchoolofEconomicSciences,University ofWesternMacedonia,Grevena,Greece;AstonBusinessSchool,AstonUniversity,Birmingham,United Kingdom
NathalieFabbe-Costes,AixMarseilleUniv,CRET-LOG, Aix-en-Provence,France
AlejandroGermánFrank,OrganizationalEngineering Group(NúcleodeEngenhariaOrganizacional NEO), DepartmentofIndustrialEngineering,Universidade FederaldoRioGrandedoSul,PortoAlegre,Rio GrandedoSul,Brazil
StefanGold,FacultyofEconomicsandManagement, UniversityofKassel,Kassel,Germany
EricH.Grosse,DigitalTransformationinOperations Management,SaarlandUniversity,Saarbrücken, Germany
MikkoHänninen,CapgeminiInvent,Espoo,Finland
DmitryIvanov,BerlinSchoolofEconomicsandLaw, SupplyChainandOperationsManagement,Berlin, Germany
AmilaJayarathne,DepartmentofMarketingManagement,UniversityofSriJayewardenepura,Gangodawila, Nugegoda,SriLanka
AshishKumarJha,TrinityBusinessSchool,Trinity CollegeDublin,Dublin,Ireland
ErisaKarafi li,SchoolofElectronicsandComputerScience,UniversityofSouthampton,Southampton,United Kingdom
VahidKayvanfar,DepartmentofIndustrialEngineering, SharifUniversityofTechnology,Tehran,Iran
AseemKinra,DepartmentofGlobalSupplyChainManagement,UniversityofBremen,Bremen,Germany; DepartmentofOperationsManagement,Copenhagen BusinessSchool,SolbjergPlads,Frederiksberg, Denmark
EdwardElsonKosasih,TheInstituteforManufacturing, UniversityofCambridge,Cambridge,UnitedKingdom
EricLambourdière,InstituteofTechnologyofMartinique,TransportandLogisticsManagementDepartment, UniversityofFrenchWestIndies,Campusof Schoelcher,Schoelcher,Martinique
DavideLaTorre,SKEMABusinessSchool,Université Côted’Azur,Nice,France
LucieLechaptois,AixMarseilleUniv,CRET-LOG,Aixen-Provence,France;RenaultSA,DepartmentofSupplyChain,Guyancourt,France
MatthewLiotine,UniversityofIllinoisatChicago,Chicago,IL,UnitedStates
BartL.MacCarthy,NottinghamUniversityBusiness School,UniversityofNottingham,Nottingham,United Kingdom
DimitrisMourtzis,LaboratoryforManufacturingSystems andAutomation,DepartmentofMechanicalEngineeringandAeronautics,UniversityofPatras,Patras, Greece
BrenoNunes,CentreforCircularEconomyandAdvanced Sustainability,AstonBusinessSchool,Birmingham, UnitedKingdom
OlumideEmmanuelOluyisola ,NTNU Norwegian UniversityofScienceandTechnology,Departmentof MechanicalandIndustrialEngineering,Trondheim, Norway
RudrajeetPal,TheSwedishSchoolofTextiles,DepartmentofBusinessAdministrationandTextileManagement,UniversityofBorås,Borås,Sweden
NikosPanopoulos,LaboratoryforManufacturingSystems andAutomation,DepartmentofMechanicalEngineeringandAeronautics,UniversityofPatras,Patras, Greece
StephenPettit ,LogisticsandOperationsManagement, CardiffBusinessSchool,CardiffUniversity,Cardiff, Wales,UnitedKingdom
AbderahmanRejeb,DepartmentofManagementand Law,FacultyofEconomics,UniversityofRomeTor Vergata,Rome,Italy
AlexaRios,RegionalEuropeanProductExpert,Logistics andServices,TradeLens,Maersk,TheHague,the Netherlands
AnitaRomsdal,NTNU NorwegianUniversityofScienceandTechnology,DepartmentofMechanicaland IndustrialEngineering,Trondheim,Norway
FabioSgarbossa,NTNU NorwegianUniversityof ScienceandTechnology,DepartmentofMechanical andIndustrialEngineering,Trondheim,Norway
KonstantinaSpanaki,AudenciaBusinessSchool,Nantes, France
JanOlaStrandhagen,NTNU NorwegianUniversityof ScienceandTechnology,DepartmentofMechanical andIndustrialEngineering,Trondheim,Norway
HorstTreiblmaier,SchoolofInternationalManagement, ModulUniversityVienna,Vienna,Austria
NishantKumarVerma,IndianInstituteofManagement Bangalore,Bengaluru,Karnataka,India
JérômeVerny,NEOMABusinessSchool,Mont-SaintAignan,France
YingliWang,LogisticsandOperationsManagement, CardiffBusinessSchool,CardiffUniversity,Cardiff, Wales,UnitedKingdom
SvenWinkelhaus,TechnicalUniversityofDarmstadt, Darmstadt,Germany
GongtaoZhang,NottinghamUniversityBusinessSchool, UniversityofNottingham,Nottingham,United Kingdom
LinaZhang,NottinghamUniversityBusinessSchool China,UniversityofNottinghamNingboChina, Ningbo,Zhejiang,China
Preface
Digitalizationisoneofthemostdramaticandimpactfulmegatrendsoccurringacrossbusiness,industry,andcommerce. Digitaltechnologies,systems,andplatformsareaffectinghowwecollaborateandexchangeinformationacrossasupply chain,andhowweintegrate,manage,andcontrolsupplychainoperations.Digitalizationpotentiallyenablesastrong digitalthreadconnectinganentirephysicalsupplychain.The DigitalSupplyChain examinesandanalyzesindepththe impactofdigitalizationonthedesign,management,andcontrolofcontemporaryandfuturesupplychains.
In Chapter1,MacCarthyandIvanovprovideanoverviewoftheprincipaltechnologiesandsystemsthatofferthemost promiseinlinkingthevirtualandphysicalworldstoimprovesupplychainperformance.Theseincludesmartfactories, smartwarehouses,smartlogistics,cloud-basedsystems,anddigitalplatforms,aswellasthecomputationalengines poweredbyAnalytics,DataScienceandArti ficialIntelligence.Emergingtechnologieslikelytoinfluencefuturesupply chainsarealsodiscussed,includingBlockchain,DigitalTwins,InternetofThings,5G,Edge,andFogcomputing.The chapterdescribesanevolvingspectrumfromdigitallyimmaturetodigitallyenabledanddigitallytransformedsupply chains.Thetransformativeeffectsofthedigitalizationofsupplychainswillaffectsupplysystemsindiverseways providingnotonlymanynewopportunitiesbutalsogivingrisetomanychallengesindatarichsupplychainecosystems. Theremainingchaptersofthebookdevelop,expand,andcriticallyanalyzeallofthethemesdiscussedintheintroductory chapter.
Inthesecondpartofthebook, Chapters2 8 describe,analyze,andcriticallyappraisethebuildingblocksandenabling technologiesforthedigitalsupplychain.In Chapter3,Mourtzis,Angelopoulos,andPanopouloscharttheevolutionof digitalmanufacturingfromtheearlyapplicationsofcomputersinindustrytotoday’sdigitallyrichSmartManufacturing ecosystems.Theyhighlightthekeycomponents,frameworks,andarchitecturesoftheSmartFactory,acornerstonefor Industry4.0(I4.0),andtheinteroperabilitychallengesitpresents.In Chapter4,WinkelhausandGrosseapplyasociotechnicallenstounderstandandanalyzethecombinationofhumanandtechnologycomponentsneededincontemporary SmartWarehousingsystems.In Chapter5,Baziyad,Kayvanfar,andKinraexaminetheemergingIoTparadigmandits supportingtechnologiesthathavethepotentialtofacilitatesmartmanufacturingandenablefutureDigitalSupplyChains. In Chapter6,Zhang,MacCarthyandIvanovreviewkeycomputingadvancesthatunderpinandenabletheDigitalSupply Chainandhavethepotentialtotransformfuturesupplychains,namely,theCloud,Platforms,andDigitalTwins.In Chapter7,Brusset,LaTorreandBroekaertintroducethecomputationalapproaches,algorithms,analytics,andAIthatcan beharnessedtounderpindata-drivensupplychaindecision-making.In Chapter7,Pettit,Wang,andBeresfordtracethe impactofdigitalizationonthelogisticssectoranddiscusshowdigitallyenabledlogisticscanimprovesupplychain transparency,operationalefficiency,andresponsiveness.In Chapter8,Treiblmaier,Rejeb,andAhmedreviewthedrivers, inhibitors,andindustrialapplicationsofoneofthemosticonicdigitaltechnologiesthatissettoinfluencethemanagement andcontroloffuturesupplychains theBlockchain.
Thethirdpartofthebook, Chapters9 13,addressesopportunitiesandchallengesinthemanagementoftheDigital SupplyChain.In Chapter9,Spanaki,Karafili,andDespoudianalyzethesignifi cantchallengesinensuringdataqualityand achievingeffectivedatagovernanceintheshareddataarchitecturesthataccompanythedigitalizationofthesupplychain. In Chapter10,Chanconsidersoneofthemostdominantsupplychainmanagementchallenges traceability anddiscusseshowtodesignrobustdigitalsystemstoensureproductscanbetracedandtrackedacrossthesupplychain.In Chapter11,Coxexaminestheevolutionofdigitalsupportforbothroutineandstrategicactivitiesinpurchasingand procurement,oneofthemostcriticalsupplychainmanagementfunctions.In Chapter12,Jha,Verma,andBoseusean informationprocessingperspectivetoexamineopportunitiesandapproachesformeasuringandmanagingperformancein theDigitalSupplyChain.In Chapter13,ChareviewsthestateofknowledgeonSupplyChainCyberSecurityfromboth practitionerandacademicperspectives,providingguidancefordetectionanddefenseagainstthemanypotentialvulnerabilitiesattheinterfaceofthedigitalandphysicalworlds.
Manychaptersthroughoutthebookprovidedetailedexamplesofpractice.Part4,encompassing Chapters14 20, examinesdigitalizationofthesupplychaininsiximportantbusinessandindustrialsectors.In Chapter14,Zhangand Hänninenfocusonretailing,examininghowdigitalizationhasaffectedretailstrategy,front-endretailoperationsand ful filmentsystems,andtheback-endlogisticsthatsupportcontemporaryomnichannelretailing.In Chapter15,Paland Jayarathneexaminetheimpactofdigitalizationinthegloballydispersedtextilesandclothingindustry.Theyexaminethe impactofdigitalizationacrossthewholeproductlifecyclefromdesignthroughmanufacturing,retailing,andthereverse circulareconomy.In Chapter16,Sgarbossa,Romsdal,Oluyisola,andStrandhagenlookattheimpactandchallengesof digitalizationonproductionandwarehousinginfoodsupplychainsthroughfourlivecases.In Chapter17,Fabbe-Costes andLechaptoislookattheautomotivesector,acriticalindustryintheglobaleconomythatisundergoingdisruptive change.Theyexaminetheevolvinghistoryofdigitalizationbytracingthe “digitaljourney” ofamajorcarmanufacturer.In Chapter18,AhmedandRioscriticallyassessoneofthemostprominentcurrentBlockchain-basedlogisticsplatforms, developedbyamajorshippingorganizationandamajorITproviderforshippingdocumentation.Theyexamineitseffects ontheinternationalshippingecosystem.In Chapter19,Benitez,Ayala,andFrankexaminetheopportunitiesforSMEsto developtheirdigitalcapabilitiesthroughengagementwithtechnologyprovidersonI4.0initiativesusingextensivecase evidencefromBrazil.
The finalpartofthebook, Chapters20 24,presentsstudiesatthefrontiersofresearchintheanalysis,design,and managementoftheDigitalSupplyChain.In Chapter20,Demireldiscussestheapplicationofnetworksciencetoanalyze thestructureanddynamicsofsupplychains.Hesurveysthestateofknowledgeondatasources,methods,andresultsfor advancedsupplynetworkanalysis.In Chapter21,LiotineanalyzesthecomputationalchallengesofscalingaBlockchain solutionforproducttraceabilityinthepharmaceuticalindustry,proposingviablesolutionsfortrackingexceptional transactions.In Chapter22,Brintrup,Kosasih,MacCarthy,andDemirelexamineboththeopportunitiesandchallengesin conductingdigitalsurveillanceofsupplynetworks.Theypresentdigitalsurveillanceframeworksthatcanadaptandapply AImethodsandalgorithms.In Chapter23,Beltagui,Nunes,andGoldconsiderthesustainabilityofdigitallyenabled supplychains,showingwheredigitalizationcanbebeneficialbutalsonotingthepotentialfornegativeconsequencesfrom digitalizationinthecontextoftwocontrastingsupplychains electricvehiclesandthebeefindustry.In Chapter24,the concludingchapter,Lambourdiere,Corbin,andVernyexaminewhatdigitalizationmeansforthestrategicmanagementof supplychains.Theyargueforadynamiccapabilitiesperspectivethatcanachievedigitalambidexteritytoenhancevalue creationinsupplychainsanddrivecompetitiveadvantage.
Transformingbusiness,industry,andsupplychainstoadoptandutilizedigitaltechnologieswillresultindisruptive changeacrossmanysectors.Thetransformationpresentsformidablechallenges,butdigitaltechnologiesarealreadyhaving verysignificanteffectsinreengineeringandrearchitectingsupplychains.Thestudiesreportedinthisbookprovideinsights andanalysisontheimpactofdigitalizationacrossthesupplychainlandscapesofmanysectors,citingthelatestandmost seminalworkthroughout.Thedigitalizationofbusiness,commerce,andindustrywillaffectsupplychains,supplynetworks,andbusinessecosystemsindiversewaysacrossdifferentindustriesandsectors.Thebookprovidestheessential groundworkforfurtherexploration,analysis,andevaluationoftheDigitalSupplyChainbybothresearchersand practitioners.
BartL.MacCarthy DmitryIvanov
PartI Introduction
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Chapter1
TheDigitalSupplyChaindemergence, concepts,definitions,andtechnologies
BartL.MacCarthy1, * andDmitryIvanov2, **
1NottinghamUniversityBusinessSchool,UniversityofNottingham,Nottingham,UnitedKingdom; 2BerlinSchoolofEconomicsandLaw,Supply ChainandOperationsManagement,Berlin,Germany
*Correspondingauthor.E-mailaddress: bart.maccarthy@nottingham.ac.uk
**E-mailaddress: dmitry.ivanov@hwr-berlin.de
Abstract
Advancesintechnology,rapidglobalization,tradeliberalization,andincreasedregulationhaveshapedsupplychainsinthelastfour decades.Weexaminetheimpactofdigitalizationoncontemporaryandfuturesupplychains.Digitalizationpotentiallyenablesastrong digitalthreadconnectingandmirroringanentirephysicalsupplychain.Weprovideanoverviewoftheprincipaltechnologiesand systemsenablingtheDigitalSupplyChain,includingSmartFactories,SmartWarehouses,SmartLogistics,Cloud-basedsystems,and digitalplatforms.WediscussthecomputationalenginesenabledbyAnalytics,DataScience,andArtificialIntelligenceandtheemerging technologieslikelytoinfluencefuturesupplychains Blockchain,DigitalTwins,InternetofThings,5G,Edge,andFogcomputing.The technologiesofferingthemostpromiseinlinkingthevirtualandphysicalworldstoimprovesupplychainperformancearenoted.We describeanevolvingspectrumfromdigitallyimmaturetodigitallyenabledanddigitallytransformedsupplychains.Weprovideboth narrowandbroaddefinitionsforfutureDigitalSupplyChains.Thetransformativeeffectsofthedigitalizationofsupplychainswillaffect supplysystemsindiverseways.Data-richsupplychainecosystemswillprovidemanynewopportunitiesbutwillalsogiverisetomany challengesthatrequirecontinuedanalysisandevaluationbyresearchersandpractitioners.
Keywords: Blockchain;Digitalsupplychain;Digitaltwins;Internetofthings;Smartfactory;Supplychainanalytics;Cloud computing.
1.Atransformativedecade
TheCovid-19pandemichasbroughtwideattentiontosupplychains,stimulatingstrongmediainterestintheirdesignand operation(Bown & Irwin,2021).Ithashighlightedtheglobalnatureofsupplychains,theirdiversityandcomplexity.The publicisnowawareofsociety’scriticalrelianceonthemanufacturing,transportationandlogisticsnetworksthatprovide theessentialplumbingfortheglobaleconomy(IFG,2022a).Businessandindustryemphasizesupplychaindesign, managementandcontrolmorestronglythanever(Alickeetal.,2021).Policymakers,regulators,andgovernmentshave takennote(IFG,2022b; TheWhiteHouse,2021).Supplychainsaretrulyinthespotlight.
Supplychainmanagementseekstoconnect,coordinate,andmanageallofthevalue-addingstagesinmanufacturinga product(Ivanovetal.,2021).Technologicaladvances,rapidgrowthinglobalsourcingandglobalmarkets,tradeliberalization,andincreasedregulationhaveshapedsupplychainsoverthelastfourdecades(MacCarthyetal.,2016).The pandemicandotherdisastershaveheightenedtheemphasisonguaranteeingsecurityandresilienceofsupply(Handfield etal.,2020).Theurgentneedforsustainabilityinsupplysystemsisevidentacrosssocietyandgovernments.Sustainability reportinghasrisenstronglyincorporateagendas(Elalfyetal.,2021).Technologicaladvancementscontinuetoshapethe operationallandscape(Dosi & Nelson,2010) whatweproduce,howandwhereweproduce,andhowwesourceand supply.Wefocusononeofthemostdramaticandimpactfulmegatrends thecontinuedandrapiddigitalizationof commerce,whichhashadaprofoundeffectonthemodernworld,notleastonsupplychainsandallaspectsoftheir management(Hoe,2019; Stanketal.,2019).
TheDigitalSupplyChain. https://doi.org/10.1016/B978-0-323-91614-1.00001-0 Copyright © 2022ElsevierInc.Allrightsreserved.
Thelastdecadehasbeentransformativeintermsofadvancesincommunicationandcomputingtechnologies the connecteddecadeinwhichtheworldhasmovedfromanalogtodigital.Mobileaccesstoinformationandserviceshas becomeubiquitous,andmobilecommercecontinuestogrow(MordorIntelligence,2021).UtilizationoftheCloud,not onlyfordatastoragebutalsoforcomputinginfrastructure,software,andservices,hasacceleratedrapidly,providingnew architecturesforcorporateInformationTechnology(IT)andenablingenterprisestoscaleuprapidly(Attaran & Woods, 2019).Digitalandcommunicationtechnologiesareallpervasive(Porter & Heppelmann,2014),e.g.,inproducts,in factoriesandwarehouses,andinretailoutlets.Potentially,allobjectscannowinteractdigitallyacrosstheInternet(TranDangetal.,2020).Itisnotjustthepurelydigitalrealmthathasseentechnologicaladvances.Industry4.0(I4.0)initiatives havebroughttogethermany “techingredients” toenablenewindustrialandmanufacturingsystems(Culotetal.,2020). Therehavebeensignificantdevelopmentsin fl exibleandsmartautomationandwarehousing(Boysenetal.,2019), providingthephysicalinfrastructurethatisessentialtosupporttheplatformeconomy(Parkeretal.,2016).
Digitalizationhashadmajortransformativeeffectsonmanysectors.Itisrede finingthemorphologyoftheInformation Systems(IS)landscapewithinorganizationsthatparticipateinsupplychainsandhorizontallyacrosssupplychains.Digital technologies,systems,platforms,andalgorithmsareaffectinghowwecollaborate,exchange,integrate,manage,and controlacrossthesupplychain.Transformingindustryandsupplychainstoadoptandutilizedigitaltechnologiespresents formidablechallenges(Hoe,2019; Preindletal.,2020),butthetechnologiesarealreadyhavinganeffect.Wehighlighttwo exampleshere onerefl ectsincrementalbutsignificantdigitalchange,theotheratransformativesectoralchange.
RoboticProcessAutomation(RPA),sometimescalledIntelligentProcessAutomation,referstothereplacementofroutine businessactivitieswithsoftware(CzarneckiandFettke,2021,Chapter1; Siderska,2020).InRPA,arobotreferstosoftware(a “bot”),whichtypicallyautomatesanactivityorprocesspreviouslycarriedoutbyaperson.Asnotedby CzarneckiandFettke (2021,p12),RPAisanumbrellatermcovering “abroadrangeofconceptsthatenableprocessestobeexecutedautomatically.” Theunderlyingtasksareusuallyroutine,repetitive,andrule-based,allowingautonomousexecution.RPAimplementations shouldnotrequirefundamentalchangestoanorganization’sITarchitectureandshouldbedeployablewithminimumcoding effort.Clearly,RPAisaimedatproductivityenhancementsandreductionincostsbutmayalsodrivequalityimprovementsby reducingerrorsandbyprovidingstandardized,repeatable,andreliableexecutionofprocesses.
RPAisappliedwidelyinserviceandadministrativecontextsinsectorssuchas finance,banking,andinsuranceand mayallow “quickwins” (Berrutietal.,2017; Hartley & Sawaya,2019).However,thereismuchpotentialforwider deploymentforrepetitivetasksindesign,manufacturingandsupplychainoperationssuchasPurchase-to-Pay(P2P) systems(Hartley & Sawaya,2019; Pfeiffer & Fettke,2021,chap.16; Cox,2022).Manydevelopmentsmaybeexpected, includingfurtherincorporationofAI,machinelearning(ML),andnaturallanguageprocessing(Rizketal.,2021),asis happeningwiththerapidlydeveloping “chatbot” applicationsthatrespondtoonlinecustomerenquiriesthroughtextor speechinsectorssuchasretail(Kalkumetal.,2020).Althoughincremental,theeffectsofthesetechnologiesmaybe significantwhendeployedatscale,withstrategicimplicationsfororganizationsdeployingRPAinthecontextofadigital transformation(Berrutietal.,2017; Lacity & Willcocks,2021).
Theimpactofdigitalizationontheretailsectorhasbeenstronglydisruptiveoverthelasttwodecades(McKinsey & Company,2020).Traditionalstore-basedretailingdominatedinthepostwarerawithcustomersfulfilledfromstoreinventoriesreplenishedfromtheretailer ’sdistributioncenter(DC)(seethetoprouteshowningreenin Fig.1.1).Theretail
FIGURE1.1 Amultitudeofdigitallyenabledomnichannelretailfulfilmentoptions. AdaptedfromIshfaq,R., & Raja,U.(2018).Evaluationoforder fulfillmentoptionsinretailsupplychains. DecisionSciences,49(3),487 521.
sectorwasoneofthe firsttobeaffectedbythegrowthanduseoftheInternetinthe1990s.Manytraditionalretailers introducedseparateonlinechannels,butthiswasalsotheeraofthebirthofpureplatformretailersincludingAmazon.Fast forwardtotoday’somnichannelretailing customerscanplaceordersthroughavarietyofvirtualandphysicalchannels, includingsmarthometechnologiessuchasGoogleAssistantandAmazonAlexa(Roggeveen & Sethuraman,2020).The retailerseekstoexploit flexibilityinitsdistributionandsupplynetworktosatisfyaheterogeneouscustomerbasewitha diverserangeoffulfi lmentoptions,illustratedin Fig.1.1.Theseincludein-storefulfi lment,clickandcollectservices,and homedelivery(Ishfaq & Raja,2018).
Aclickandcollectcustomerorderingonlinecouldbeful filledusinginventoryfromthestorefromwhichtheycollect theorder,fromanotherstoreintheretailer ’snetwork,fromacentralDCthatalsofulfi llsthestore,orfromadedicated Direct-to-Consumer(DTC)fulfilmentcenter(Marchetetal.,2018).Similarly,homedeliverycustomerscanbefulfi lledin differentways.Manyothervariantsandoptionsarepossible,includingpickupandreturnkiosksandful filmentthrough thirdpartypremises.Acustomerthat findstheirdesiredproductisoutofstockinstoremayalsoavailofthemultiple fulfilmentoptionsofferedbytheretaileriftheproductisavailablesomewhereintheretailer’snetwork.
Theretailermanagesthecomplexityarisingfrommultipleorderingandfulfi lmentoptionsthroughdigitalizationat everylevelacrossthenetwork,fromorderplacementtoorderreceipt.Theretaileranditspartnersinlogisticsrequirestrong digitallyenabledoperationalprocessesthatperformaccuratelyatscaletoensureahighlevelofcustomerserviceatamuch finerlevelofgranularitythantraditionalstorereplenishment.
Theretailexamplethrowsupfurtherfeaturesofdigitallyenabledsupplynetworks competitionandnewentrants. Platform-basedretailerssuchasAmazonhavehadaverysignificanteffectontheretailmarket.However,byutilizingtheir storenetworks,warehousinganddistributioninfrastructure,andtheirsupplychainmanagementskills,traditionalretailers havevaluableresourcesthatenablethemtocompeteinthislandscape(Brynjolfssonetal.,2013).Thetraditionalretailermust decidewhichfulfi lmentservicestooffertobecompetitive.Theymayusemanufacturersorotherdistributorsandvendorsto satisfyordersplacedonline,particularlyforbigticketand/orslow-movingitems so-called ‘dropshipping’ (Yuetal.,2017). However,themanufacturermayalsoseethisasanopportunitytomarketandselldirectlytocustomers,asisshownbytherise indirectsellingandsupplyinsomesectorsthatisfurtherintensifyingthecompetitivelandscape(Ranganetal.,2021).
Theimpactofdigitalizationonthesupplychainhasbeenlongpredictedbyconsultancies(IBM,2010; Accenture, 2014; Mussomelietal.,2016).Somehavepredictedthedawnofautonomousand ‘self-thinking’ supplychains(Alicke etal.,2022; Calatayudetal.,2019) visionaryperhaps,butanindicatorofpotentialchangestocome.Inthisopening chapter,weexaminetheantecedentsandemergenceoftheDigitalSupplyChain,showinghowandwherethevirtualand physicalsupplychainworldsinteract.WedescribethebuildingblocksfortheDigitalSupplyChain,outliningthemajor technologies,systems,andsubsystems,bothexistingandemerging,thatareengenderingchangeandenablingdigitalizationacrossthesupplychain.Wedescribeanevolvingspectrumspanningdigitallyimmature,digitallyenabled,and digitallytransformedsupplychainsandprovidebothanarrowandabroaddefinitionforfutureDigitalSupplyChains.We notetheopportunities,implications,andthemanychallengesinsupplychaindigitalizationandconcludewithabrief overviewofthebook.
2.EmergenceoftheDigitalSupplyChain
Asupplychainencompassesallthevalue-addingstagesinproducinganddeliveringaproduct.Ingeneral,nooneparty ownsthesupplychain,althoughtherearedominantandpowerfulplayerssuchasretailers,brandowners,andoriginal equipmentmanufacturers(OEMs)presentinmostchains.Theinformation flowingbackthroughthesupplychainresultsin ordersbeingplacedanddeliveriesbeingmadewithappropriateleadtimesandstockinglevelstoensurehighcustomer servicelevels(Ivanovetal.,2021).
Althoughtheimportanceofsecuringsupplyhasbeenevidentthroughouthistory,thetermsupplychainmanagement didnotemergeuntilthe1980s(Ellram & Cooper,2014).Theimportanceofintegratingthelinksinthesupplychaingoes backtotheworkofJayForresteratMITinthelate1950sandhisidenti ficationofdynamiceffectsanddistortionsin uncoordinatedsupplysystems(Gearyetal.,2006).Theoperationalworldwitnessedmajorchangesinthelasttwodecades ofthe20thcenturyasthepaceofglobalizationaccelerated.Globalsourcingandglobalmarketsbegantoemerge,assisted bytheexpansionofinternationaltransportationnetworks,containerization,andthegrowthofChinathatchangedthe configurationandgeographyofmanysupplysystems(Guerrero & Rodrigue,2014).Newapproachestothedesign, management,andcontrolofsupplychainsmirroredthesechanges.
Inthe1980s,lessonsbegantobelearnedfromJapanaboutthedesignandmanagementofeffectiveandeffi cient productionsystemsandsupplychains(Schonberger,2007).KanbanandJust-in-Time(JIT)approachesemphasizedthat highlevelsofstationaryinventoryindicatedinefficienciesandhighlightedthebenefitsofproductionsystemsresponding directlytodownstreamdemandsignals.ThesearekeyconceptsinJapaneseinspiredLeanthinkingthatalsostressesthe
importanceofstrongvalue-addingbusinessprocessesandtheeliminationofwaste(Womack & Jones,1994).Fromits emergenceintheauto-sector,Leanhasbecomeadominantparadigminthedesignofoperationalandsupplysystemsofall types(Janoski & Lepadatu,2021; Rossiteretal.,2011).Additionally,pioneerssuchasDemingandJuranhighlightedthe importanceofqualitymanagementasabedrockforhigh-performingoperations(Ehigie & McAndrew,2005).Japanese approaches,inparticulartheToyotaProductionSystem,establishedthegroundrulesforqualitymanagementpracticesin industrialoperations(Liker,2004).Inthe21stcentury,therehasbeenmuchgreaterappreciationoftherisksandvulnerabilitiesingloballydispersedsupplychains.Supplychainriskmanagementhasdevelopedstronglyinacademic researchandasapractitionerdiscipline(Hoetal.,2015; WEF,2021a),ashassustainability.Increasedconsumerand societalawarenessoftheenvironmentalandsocialimpactsofproductionandconsumption,morestringentregulatoryand reportingrequirements,andtheoverridingglobalconcernsofclimatechangehavehighlightedtheimportanceofsustainability(Elalfyetal.,2021).Supplychainsarecentraltomanyofthecorequestionsinsustainabledevelopment(Pyykkö etal.,2021).
ThedisciplineofsupplychainmanagementhascoevolvedwithIToverthelastthreedecades.EnterpriseResource Planning(ERP)systemsemergedasintegratedbusinesssoftwaresolutionsinthe1990s,providingthebackboneof corporateITsystemssincethen(Nazemietal.,2012)andthecoresystemsusedbyenterprisestoplan,manage,andcontrol theirsupplychains(Grabskietal.,2011).However,ERPimplementationanddeploymentresultedinmanyproblemsand challenges(Chenetal.,2009).
Thedigitalizationofthesupplychainpromisesnewdigitalarchitectures,newcapabilities,andmoreeffectiveISsand ITforsupplychainintegration,planning,managementandcontrol.
2.1Thedigitalizationofsupplychains
Thedigitalizationofsupplychainshasbeendiscussedwidelyintheacademicliteratureinrecentyears.Termssuchas SmartSupplyChain(Wuetal.,2016),DigitalSupplyChain(BuyukozkanandGocer,2018; Nasirietal.,2020),Supply Chain4.0(Fredericoetal.,2019),andtheSelf-thinkingSupplyChain(Calatayudetal.2019)havebeenputforwardto describethephenomenon.Thestronglyrelateddomainsofthedigitalizationofmanufacturing,particularlyI4.0(Hofmann andRüsch,2017; Ghobakhloo,2018; Culotetal.,2020)andSmartManufacturing(Kusiak,2018),havealsoaddedtothe debatesontheimpactofdigitaltechnologiesonbusinessoperations,industry,andsupplychains.
AsnotedbyWuin2016, “Thedeepintegrationofthedigitalworldwiththephysicalworldholdsthepotentialtobring aprofoundtransformationtoglobalsupplychains” (Wuetal.,2016,p.396).However,muchofthesubsequentacademic researchhasbeenprimarilyliteraturebased,proposingconceptsandframeworkstocapturetheeffectsofdigitalizationon supplychainsandtheirmanagement.Thewiderpractitionerliterature,consultancystudies,andpolicyreportshavealso stronglyemphasizedthephenomenonformorethanadecadeandoffermoreexamplesofpractice.Theseincludeearly reportsondigitaltrendsandinitiatives(e.g., Accenture,2014; IBM,2010; Kagermannetal.,2013)succeededby numerousreportsonopportunities,challenges,andimperativesofadoptingappropriatedigitaltechnologiesanddevelopingdigitalstrategiesforthesupplychain(e.g., ATK,2015; BCG,2016; WEF,2017).Thetrendcontinuesatpace (e.g., ASCM,2021; Bhargava & Mahto,2021; EY,2020; WEF,2021b).Wesummarizetheargumentstypicallymadeon thepotentialfordigitaltransformationofthesupplychain.
Thereisgeneralagreementacrosstheacademicandpractitionerliteraturesthatapplicationofdigitaltechnologieshas thepotentialtoimproveandautomatemanyaspectsofsupplychainmanagement,internallywithinorganizationsand externallyacrossthesupplychain.Digitaltechnologiesmayreplaceorobviatetheneedforsomeactivitiesandprocesses throughdisintermediation,enabletheredesignofsupplychainconfi gurations,andallownewbusinessopportunitiesin widerdigitalecosystems.Incombination,theireffectsareexpectedtobedisruptive,changingthesupplychainlandscape fundamentally.Changewilloccurfromgreaterconnectivitybetweenentitiesacrossthesupplychain,enablingbetterand moreeffectivecommunicationandgreatervisibilityandtransparencyofsupplychainoperationsinrealtime.Suchinformationwillreduceuncertaintyandfacilitateproductiveuseofavailablesupplychainresourcestoachievehighservice levelsincustomer-focusedsupplychains.
Effectiveuseofdataandinformationwillenablesynchronous,frictionless,andresponsivesupplychainoperations, allowingmoredemand-drivenoperationsthanintraditionalsupplychains.Controlwillbeachievedthroughthe applicationofalgorithmspoweredbyAdvancedAnalytics,BusinessIntelligence,andArtifi cialIntelligence(AI).This willgenerateclearandtimelyinformation,andimproveanalysisanddecision-making,withopportunitiesforsome autonomousdecision-making.Dataavailabilityisexpectedtobe “big” intermsofvolume,variety,andvelocity.Data sourceswillbeatdifferentlevelsofgranularity,e.g.,datageneratedinternallyfrommachinesinfactoriesmayindicate theneedformaintenance,externaldatamayprovideindicatorsofchangesinconsumersentimentsaffectingdemand,or
signalpotentialdisruptionsandvulnerabilitiesinasupplychain.Suchdata,combinedwitheffectivedecision-making, mayenableagreaterabilitytoorchestrateandutilizesupplychainresourcesatspeedtogeneratecompetitive advantage.Thereisalsogeneralappreciationthatdata-richsupplychainsystemsmaygeneratemorevulnerabilitiesto cyberrisks.
Somearguethatdigitalizationwillenableleaneroperationsandmaysupportsustainabilityatmanylevels(DeFelice & Petrillo,2021; Lietal.,2020; McGrathetal.,2021).Thereisgeneralacknowledgmentthattherearesignificantchallenges indigitaladoptionatacompanylevel.However,theacademicliteratureshowslimitedappreciationofthechallengesof adoptingandintegratingdigitaltechnologiesacrossgloballydispersedsupplynetworkscomposedofmultiplesupplychain actorswithdifferentinterestsandperspectives.Issuessuchasdataownership,security,digitalcomplexityacrossmultiple systems,andgovernanceofdataecosystemsatthesupplychainlevelarelesswellexploredintheresearchliteraturebut arehighlightedbypractitioners(WEF,2021b).
Althoughthereiswideagreementthatdigitalandcommunicationtechnologiesallowenterprisestobecomemore connected,thereislessagreementonwhichdigitaltechnologies,existingoremerging,offerthegreatestpromise,oron theprecisemechanismsbywhichdifferenttechnologies,aloneorincombination,willengenderchangeandenable improvedsupplychainperformance.Wediscussnexttherangeoftechnologiesthatarecontributingtoprovidingastrong digitalthreadconnectingtheentiresupplychain,boththosetechnologiesthatare firmlyestablishedandthosethatare emerging.
3.BuildingblocksfortheDigitalSupplyChain
Productdesignandmanufacturingprocesseshavedevelopedenormouslyoverthelasthalfcentury.Manufacturingsystems haveundergonechangesinstructure,organization,andoperation.Therehavebeenstepchangesinautomationacrossmost sectors,facilitatingproductivityimprovementsandhigherlevelsofproductvarietyanddifferentiation.Computershave beenattheheartofthesechanges,fromtheemergenceofearlyComputer-AidedDesignandManufacturingtechnologyto today’sProductLifecycleManagementsystems(MacCarthy & Pasley,2021).Similarly,technology,systems,andsoftwarehavecontributedtoimprovingthemanagementofsupplychainsandlogistics.
Wedistinguishherebetweendigitizationanddigitalization,usingtheformertermtoreflectthedigitalencodingof somethingphysical(e.g.,aproductmodelcaptureddigitallyinadesignsystem).Weusethelattertorefl ectanapplication thatusesadigitalencodinginanorganizationalorbusinesscontexttoperformabusinessprocessdigitally(e.g.,an invoicingprocessinitiatedautomaticallyondispatchofanordertoacustomer).Manyofthetechnologies,systems,and subsystemsenablingtheDigitalSupplyChainaregiventhelabel “smart,” whichwediscussbelow.
3.1SmartFactories,SmartWarehouses,andSmartLogistics
Thetermsmartisappliedwidelytodescribedevices,consumerappliances,andproducts(PorterandHeppelmann,2014, 2015),aswellasmachinesandtechnologiesacrossadiverserangeofcontexts.Itisalsoappliedtodescribebuildings, homes,factories,businessprocesses,andmanyotherdomainssuchasmedicine.The “smartcity” hasgarneredastrong researchinterest(Panetal.,2021).However,thereisalackofprecisioninthedefinitionanduseoftheterm ‘smart’ , althoughsomeofitspropertieswerepredictedthreedecadesago(Weiser,1991).
“Smartness ” ofanobject,system,process,orenvironmenttypicallyimpliesatleastthreeattributes.First,asmartobject hasembedded(orhasaccessto)technologiesandsoftwarethatallowittosenseaspectsofitsenvironmentinsomewayto assessitscurrentstate.Second,itcanmakeautonomousdecisionsonappropriatecoursesofactiondependingonthe currentstate,orcanprovideindicators,directions,instructions,oroptionsforusers(ordecisionmakers)tochooseacourse ofaction,particularlyinwarningaboutortakingactiononthepredictionoroccurrenceofundesirableorcriticalstates. Decisionsorinstructionsmaybeoptimalinsomesense,givingtheobjectintelligentcharacteristics.Third,smartobjects areconnectedtotheInternetand/orotherdigitalnetworks,possiblymediatedthroughCloudtechnologies.Thisenables externalcommunicationandfacilitatesremotemonitoring,supervision,analysis,diagnosis,andcontrol.Productsthat possesstheseattributesaresometimescalledsmart,connectedproducts(Porter & Heppelmann,2014).Thesmart descriptorisappliedmorebroadlytoenvironments,systems,processes,andorganizationalstructuresthatpossesssomeof theseattributes.However,notallobjects,systems,orenvironmentslabeledassmartwillpossessallofthefeatures noted autonomousbehaviorforinstancemaybelimited.
TheacronymSTARA(SmartTechnology,Arti ficialIntelligence,Robotics,andAlgorithms)isusedinsomemanagementdisciplinestocapturetherangeofdigitallyenabledtechnologies,devices,software,systems,andplatformsthat areaffectingemployment(Brougham & Haar,2018).Wediscuss firstthesmartphysicalsystemsthatfeatureinthe digitallyconnectedsupplychain,specificallySmartFactories,SmartWarehouses,andSmartLogistics.
