i4.0 and Inventory Management

i4.0 or Industrial revolution 4.0 is what industry leaders seem to be talking about lately. If you haven’t heard of it yet, don’t worry! This blog post talks about what i4.0 is and how it will impact the practices of inventory management. So, let’s get started!


As the World Economic Forum explains, Industrial revolution 4.0 is the fusion of various disruptive technologies that will change the way we work. Artificial intelligence, 3-D printing, IoT (Internet of Things), quantum computing and many more are a part of it. With its own pros and cons, the major areas that i4.0 will affect are people, government and business.

i4.0 and Inventory Management

In the business sphere, the manufacturing sector and their supply chains are already leading the adoption of i4.0. In fact, the use of various technologies will transform the current supply chain model to become a Demand Driven Supply Chain (DDSC). That is where the impact of i4.0 on inventory management stems from. A DDSC implies that your supply chain works based on the given level of demand or in other words, a highly efficient JIT production system.


Once i4.0 revamps your supply chain to become demand driven, benefits on your inventory management will be multi-fold:

  • Your inventory level efficiency improves as you don’t over-stock or under-stock.
  • Inventory turnover increases as you produce to fulfill the given demand.
  • Lead times shorten as i4.0 empowers your supply chain to manage different orders faster.
  • Your COGS will reduce since you don’t incur costs of holding inventory beyond its use.

Key Areas to Focus

As i4.0 grows, your inventory management practices will evolve as well. There are certain areas you must focus on in order to adapt to the revolution:

  1. VisibilityVisibility across your supply chain and inventory levels is key to manage your inventory better. Transparency should go beyond knowing the level of inventory at a given time. It should also include the quality, source, and lifetime of your stock.
  2. Analytics – Collecting real time data from your demand and supply channels will give you the actual information you need. Integrate with your POS system to get insights of customer demands. Also, knowing how much time it takes you to produce, ship, and deliver will be vital.
  3. Forecasting: Data and Analytics will lay the groundwork for your forecasting capabilities. Your supply will revolve around demand, which increases your efficiency. Use your Inventory Management System to control all aspects in a central location.
  4. Collaboration: Make sure all your departments and suppliers are on the same page when it comes to creating a DDSC. Your infrastructure and communications will need to be robust in order to adapt to unseen circumstances. A good strategy is giving key stakeholders access to your operations based on their role.

In conclusion, the 4th revolution will change the way you manage inventory. The timeline might be long, but change is inevitable. Planning to adapt now will give you a head start in the race. If you’re interested in learning more about Inventory Management, feel free to reach out to us at Clear Spider today!

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