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HomeProcurement/Supply Chain ManagementThe transition from Supply Chain 4.0 to Supply Chain 5.0

The transition from Supply Chain 4.0 to Supply Chain 5.0

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Disruptive technical innovations have historically been the main drivers of industrial revolutions, altering manufacturing paradigms and methods for meeting consumer demand. With the development of mechanization, steam power, and water power came the first industrial revolution. The second industrial revolution, which focused on mass production and assembly lines that used electricity, came after this. The third industrial revolution brought electronics, information technology systems, and automation, which paved the way for the fourth industrial revolution, which is related to cyber-physical systems.

The fourth industrial revolution, often known as Industry 4.0, aims to attain a higher level of automation and intelligence through increasing the application of new technologies. The terms “industry 4.0” and “fourth industrial revolution” are interchangeable, and they refer to a new stage in the management and structure of the industrial value chain. Digital twin technologies are related to the fourth industrial revolution. The infrastructure, procedures, and applications are seen in the real world can be replicated virtually using these digital technologies. To create cost-effectively decentralized decisions, they can then be thoroughly evaluated.

Digitalization, manufacturing technologies, and information and communication technology (ICT). By leveraging the effectiveness and efficiency of production processes, Industry 4.0 emphasizes the paradigm change brought about by new technologies while placing less attention on human, societal, and environmental elements.

Supply Chain 4.0

Supply Chain 4.0 was built on the adoption of Industry 4.0 technologies in supply chain management, including IoT, cloud, business intelligence, and big data analytics. Modern supply chain operations now place a greater emphasis on integrated S&OP and enhanced analytical planning as a result. Supply chain 4.0 is an upgraded version of the supply chain that combines several Industry 4.0 technologies, including big data, cloud computing, robots, and the Internet of Things (IoT). To dramatically enhance supply chain management, it blends cutting-edge AI algorithms, business intelligence tools, data sciences, and other next-gen technology. Additionally, the internet of things provides communication between various SCM and logistics activities, allowing businesses to track shipments and automate workflows.

Supply Chain 4.0 leverages new-age technology solutions and capabilities including the Internet of Things, Robotics, Big Data Analytics, and Blockchain. Systems and data integrations are the main challenges but are vital for achieving the following:

(i) Optimized supply chain performance

(ii) Frictionless, real-time collaboration

(iii) Greater efficiency

(iv) Greater responsiveness, flexibility, and agility

(v) Improved transparency

(vi) Higher quality

(vii) Faster fulfillment

(ix) Superior customer experience

Many manufacturing businesses are already making use of the distinctive qualities that supply chain 4.0 has introduced. In the upcoming years, connected technologies are projected to receive investments from roughly 80% of enterprises, according to Gartner. Supply chain 4.0 has arrived as a result of the need to manage and respond to the disturbances during COVID-19. The move to supply chain 5.0 is currently being driven by the shift toward sustainability.

Supply Chain 5.0

Supply chain 5.0 is the response of the supply chain to the Industry 5.0 paradigm. It is also based on a shift that prioritizes knowledge, workers, and lessening the impact on the environment. Technology has made it possible to apply this shift in thinking while maintaining profitability and competitiveness.

The need to incorporate European social and environmental goals in technological progress gave rise to the concept. This concept was reflected in the report “Industry 5.0 Towards a sustainable, human-centered and resilient European industry”, for the industry to move in 3 directions:

(a) Human factor

(b) Sustainability

(c) Resilience

Workers are seen as an investment and the concern for their welfare and training will be crucial for the logistics hub, and they are far from outdated notions. Technology will also be modified to meet worker needs, giving the business the advantage of luring and keeping talent.

Some futurists are promoting the concept of the Fifth Industrial Revolution, which centers on the idea of maximizing the benefits from both people and robots – The Industry 5.0. Practitioners and academics are discussing this new forthcoming Industrial Revolution based on three following elements:

Collaborative work between Humans and Robots (Cobot)

In contrast, in Industry 5.0, people and machines will collaborate on projects. Robots will focus more on performing tasks that are difficult, boring, or dangerous for people to complete. To maintain the integrity of people working with robots, security measures will be essential for the success of this relationship. The goal of this collaborative effort is to combine artificial intelligence with the internet of things and big data analytics technologies so that it may be integrated into daily life and fully utilize the human potential. This will make it possible to create a productive atmosphere where humans and machines work together.

Hyper Customization and hyper-personalization

The perfect synergy between humans and machines foresees a greater degree of freedom in the customization of items that clients seek. The intense use of disruptive technologies combined with workers’ creative and intelligent work will increase the capability for producing customized goods. To generate hyper-customization within their production systems, supply chains will be able to do so. It is crucial to note that in the network view, the leadership of supply chains must be able to effectively implement supply chain 5.0 to their upstream and downstream members.

Super Smart Society (Society 5.0)

In 2016, only five years after the German government first introduced the notion of Industry 4.0, the Japanese government began to popularize this terminology. Industry 4.0 technology will be heavily utilized, and human contact will transcend beyond what is possible from a manufacturing and commercial standpoint, according to Society 5.0. In terms of the supply chain, it is not always connected to the sector. Although there may be some connections and effects on supply chains, the focus is more on improving humankind’s ability to work together to build a more intelligent society.

While the implementation of Industry 5.0 technology to empower digital supply chain participants is still in its infancy, it holds the promise of assisting individuals along the supply chain in realizing their potential.

This could mean:

(i) Adding greater personalization to a supply chain, boosting not only customer satisfaction but also productivity and profitability;

(ii) Reducing supply chain waste and risks based on more up-to-date data.

(iii) Enabling logistics and supply chain management to focus more of their efforts on strategic experimentation and less on putting out fires or other routine execution-related issues.

(iv) Enhancing supply chain integration to facilitate more strategic alliances.

(v) Increasing the effectiveness of an organization’s human resources by assisting in the transfer and retention of knowledge about the specifics of a supply chain.


As Supply Chain 4.0 (the new way supply chains might be seen and managed in the context of Industry 4.0) has evolved, Supply Chain 5.0 is emerging as a crucial idea to be taken into consideration as well. Supply chain 5.0 must balance human ingenuity and technological efficiency to meet the expectations of customers who are more hyper-personalized and hyper-customized. It places individuals back at the center of production, allowing them to concentrate on more imaginative work and cerebral problem-solving. The productive system needs to be altered to accommodate sustainability and digitization at the same time given the daily disturbances. Where supply chain 5.0 enters the picture in this situation. The supply chain 5.0 revolution is necessary since sustainability and digitization are both important.

Read more: Web 3.0 and its role in the Supply Chain Management

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Shantanu Trivedi
Shantanu Trivedi
Shantanu Trivedi is working as a faculty at the University of Petroleum and Energy Studies, Dehradun. He holds an MBA and a Ph.D. degree in Supply chain management. He has more than a decade of experience in teaching and research. He has published 2 books, 5 book chapters and more than 12 research papers and articles in international journals of repute. His research interest includes Supply chain management, agribusiness, online and distance education, Business sustainability and infrastructure management. He is the reviewer of many international publishing houses. He has presented his work and won awards at many research conferences and symposiums. He has worked on many research with state governments and the government of India. In his spare time, Shantanu loves to travel and explore nature.
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