**2. Literature review**

#### **2.1 Earlier industrial revolutions and supply chains**

History shows technological innovation has always been at the center of business productivity and social emancipation. It brought individuals and firms to massproduce by moving from manual and small-scale trade activities to mechanization and large-scale engineering productions. Material and services that evolved from the revolutionary innovations impacted every aspect of economic activities [2]. Makers of goods and service providers from agriculture to factories practiced primitive forms of trades to address the challenges and conditions of their respective eras. Previous industrial transformation exacerbated economic activities and created processes and concepts suitable to describe and resolve enduring challenges.

Business concepts relating to earlier supply chain activities, procedures, and actions did not develop until later. The academia, industry, and governments described the activities associated with the phenomenon after they had already happened [3]. However, identifying and describing developing innovative technologies and related processes offered the supply industry concepts and procedures to structure and shape future business activities.

**Figure 1** illustrates the typical model of the supply chain showing the association between firms from raw material to end-use. While the linear nature of the supply chain models was suitable to satisfy earlier business practices, it is no longer practical to address problems facing value chains in the 21st Century.

For instance, as figure one illustrates, end-users lack the capability or option to collaborate with material (A), Transformation (B), and so forth if they were a desire to do so. The absence of these options in the linear supply chain model reduces the potential of firms to collaborate within a broader supply chain at the national or global scale.

*Industry 4.0: The Tenets of the Next Generation of Supply Chain Management DOI: http://dx.doi.org/10.5772/intechopen.102979*

**Figure 1.** *Supply chain architype.*

#### **2.2 Paradigm shift**

To understand the urgency to shift supply paradigms, one must grasp the current business environment. The global population doubled since the 1980s when only a handful of companies utilized computers for business. Many companies used computer technologies for small tasks, ranging from storing essential inventory data to chart display. At the time, most firms only performed business activities without computers due to the affordability of the technology. Nevertheless, the business industry and its concepts still evolved along with the adoption of computer technology. For instance, the radio frequency identification (RFID) technology helped the retailer industry and governments describe policies and procedures associated with tracking and tracing consumer products. Hence, though RFID technology did not exist earlier, most producers and retailers could still manage data and track and trace goods through traditional bookkeeping.

Meanwhile, as consumer demand evolved, so did the supply industry by adopting technologies such as RFID in various applications, including product recalls [4]. Referring to the linear supply chain (**Figure 1**), RFID sensors in most retail products often connect trade and distribution, removing end-users from collaboration despite the ability of the technology to do so. However, the linear supply chain paradigm does not envisage a collaborative transaction between the consumer and the manufacturer.

As civilizations progress, the global supply industry and governments must adopt emerging technologies and concepts to address current challenges. Industry 4.0 not only gives governments and the global supply industry the necessary tools and ideas to manage challenges, but it equally provides consumers the prospect to be a part of the solution. The current supply chain models have not successfully predicted and evaded supply chain-related predicaments. The failure is arguably in how the concept of the supply chain itself.

Today, while most supply chain firms employ computer technologies, many still lack the essential technology to collaborate successfully with partners. While many firms remain indifferent in linking their pieces of machinery with others, the speed of technology advancement equally makes it difficult to address security shortfalls as they occur. Nonetheless, a partner's lack of understanding and awareness of existing technological innovation will lead firms not to take advantage of the innovative technologies despite the rationality. In one instance, a farmer revealed during an interview to have never heard of blockchain or cloud computing [5], which many have come to consider as the cornerstone of business security and operations. Since a lack of coordination and collaboration could result in the absence of visibility and synchronized strategy between partners, firms not adopting the industry 4.0 technologies would become the gateways to substandard products and services [6]. The inability of a farmer or supply partner to

**Figure 2.** *Three-dimensional collaboration.*

successfully and securely collaborate with others at various ends of the supply spectrum could only negatively impact the resiliency of the chain.

Linear supply chain models do not provide the necessary collaboration needed to connect valued chains at various levels of the industry. The current consumer and business data necessitate supply firms connect not only with businesses but also with consumers; hence, the necessity for multidimensional collaboration. As **Figure 2** shows, Industry 4.0 allows firms to exercise cooperation in terms of vertical, diagonal, and horizontal dimensions. When supply firms implement the 4IR technological tools, they enhance their ability to exchange business data internally, externally, and between partners beyond primary products (PBPP).

#### **2.3 Dimensional collaboration**

*The Horizontal Dimension* denotes the breadth of internal transactions within the main production effort. These transactions represent activities that enhance the internal collaboration between firms with direct equities on the primary production effort. Firms could have a mutual horizontal dimension when one adds value directly to the product line. For instance, tire, and windshield manufacturers add value to producing a motor vehicle a car. The three companies from the tire, windshield and carmaker have internal transactions that impact making a motor vehicle. A new motor vehicle would necessitate, among others, tires and a windshield for it to be complete. In this instance, the business transactions from the windshield and tire manufacturers make up the internal transaction of motor vehicles (main production effort).

*The Vertical Dimension* denotes the scope of transactions external to the main production effort. The transactions represent activities that enhance the external collaboration between firms having indirect equities on the primary production effort. Firms have a mutual vertical when one adds value indirectly to the main production effort. Using the motor vehicle example from the Horizontal Dimension, car dealers

#### *Industry 4.0: The Tenets of the Next Generation of Supply Chain Management DOI: http://dx.doi.org/10.5772/intechopen.102979*

and transportation services do not directly add to the main production effort. In this instance, neither transportation services that take the finished car from the plant to the dealership nor the car dealership adds directly to the main production effort. While car dealerships and transportation services could negatively impact production, they do not generate the main production effort. However, they add value to the overall supply web production of the motor vehicle.

*The Diagonal Dimension* symbolizes the breadth of transactions that could occur internally and externally to the main production effort. These transactions represent activities that enhance both internal and external collaboration between firms having direct and indirect equities on the primary production effort. Firms have a mutual diagonal dimension when they complement value directly and indirectly to the primary production effort. In the above example of a motor vehicle's main production effort case, the tire, windshield, and carmakers would add value to one another when engaged in active (direct) or passive (indirect) joint activities that enhance firms' resiliency and purpose. Meanwhile, the Diagonal Dimension also includes other value partners supporting internal and external business transactions. The value partners range from financial, government, security, and others supporting institutions that directly or indirectly impact the firms' overall business operation value.

The global supply industry no longer relies on the next mile or the input from the value chain to remain resilient and anticipate the next medical shortage or cargo ships bottleneck crisis. As COVID-19 pandemic and the Los Angeles cargo crises proved, the global supply industry needs better tools and concepts to anticipate an evolving global turmoil. As opposed to employing linear supply chain models, supply firms desiring competitive advantage at the international stage should implement supply web models that integrate horizontal, vertical, and diagonal dimensional business models.
