Impact of Implementing Industry 4.

0
in Colombia’s Supply Chains

Jose Ignacio Rodriguez Molano, Stephanie Johanna García Moncada,

and Karol Daniela León Parra(&)

Universidad Distrital Francisco José de Caldas, Bogotá, Colombia

jirodriguez@udistrital.edu.co,
{sjgarciam,kdleonp}@correo.udistrital.edu.co

Abstract. This article offers an introduction to the Industry 4.0 and the supply
chain. It also identifies the different applications in the technologies of infor-
mation (TIC) sector, the Internet of Things (IoT) and some emerging tech-
nologies related to Industry 4.0 in the supply chain. Starting with a state of the
art focused on companies in general, the research methodology is detailed as
well as the scope of what has been achieved and its current evolution. An
important aspect of the Industry 4.0 are the consequences or impact that its
application has had in the supply chain and pave way for its placement in
Colombia. Data shows that it has been barely applied in the country and the
different reasons that explain such context will be discussed. Finally, the
implementation strategy for small and medium-sized companies is presented, to
diagnose the needs of this and propose solutions based on industry 4.0 that
would solve them.

Keywords: Supply chain
Industry 4.0
IoT
Process optimization

1 Introduction

Nowadays, communication in our environment is possible through internet-based

networks which allow the interaction of sensors and network connectors. These
communication and interaction outlets have allowed the development of new appli-
cations which offer innovative services or evolved versions of the existing services,
which is the starting point of an extensive chain of value that encompasses research and
development up to technology-based services [1].
Industry 4.0 is dabbling into the supply chain and of the main reasons is that the
industrial sector overall has the priority to accelerate its processes, operations and other
links. The aftermath of the fourth industrial evolution has allowed companies to
automate and boost the speed of the process in general [2]. Companies must be open to
changes and must restructure themselves swiftly and precisely in order to satisfy the
needs of their clients.

© Springer International Publishing AG, part of Springer Nature 2018

Y. Tan et al. (Eds.): DMBD 2018, LNCS 10943, pp. 704–713, 2018.
https://doi.org/10.1007/978-3-319-93803-5_66
 Impact of Implementing Industry 4.0 in Colombia’s Supply Chains 705

2 Methodology

For the elaboration of this article, different bibliographic databases were consulted such
as IEEE Explore, Science Direct, Cengage, Engineering Village and Scopus; The
keywords used in all databases were Supply Chain, Internet of Things, Industry 4.0,
Optimization and Automation. Additionally, relevant articles were consulted, current
news, publications in academic magazines such as the magazine of the Mining Faculty
in the Universidad Nacional de Colombia, SpringerLink, European Research of
Company Management and Economy.
Furthermore, different search engines were used such as Google Scholar, Mende-
ley, Google Books, among others. Within the sources of interest, the most relevant
topics were established by searching the main characteristics of the topic.

3 Introduction to Industry 4.0

In this field, there has been some research and one of the researchers named Bauer
states that competitiveness has its base in flexibility since this is reflected on shorter
deadlines, diversity in the demand and customization of the product which gives birth
to the term Industry 4.0. To reach this state, industrial processes were involved in the
so-called industrial revolutions. The first one occurred between the 18th and 19th
centuries which introduced mechanical aspects into the production process by using
steam and hydraulic energy.
The second industrial revolution took place at the end of the 19th century as electric
energy and production began to strengthen the industry giving way to scheduling and
task organization leading to efficiency. The third revolution came in the 1970s with the
appearance of electronics and information technologies. These technological advances
allowed the automation of production processes. Finally, the fourth revolution is cur-
rently underway which has consolidated the production through technological, infor-
matics and communication processes with reduction in the expenses and greater
efficiency.
In 2015, Blanchet stated that the fourth revolution has allowed some sectors to
change more rapidly than others. Given the previously mentioned communicative
processes, it is important to highlight that higher efficiency is related to production
elements linked to the internet. This is how the concept of Industry 4.0 emerges. “The
fourth industrial revolution is not defined by a set of emerging technologies per se, but
instead by a transition to new systems that are built over the infrastructure of the
(previous) digital revolution” quoted from Schwab, executive director of the World
Economic Forum (WEF) and one of the main enthusiasts of the revolution.
It can be evidenced that Industry 4.0 was derived from two important aspects. In
2014, Lasi considers that there are aspects which are extremely related to the society
and the economy. This can be explained by the fact that shortening production and
transportation times is a competitive advantage which is essential to companies.
Flexibility is another important factor since it enables the customization of the client’s
needs in terms of the product. By offering this service, the interest of the client on the
706 J. I. R. Molano et al.

company is increased but to work on this aspect it is crucial that the machinery of the
production process can effectively adapt to changes and modifications [3].

4 Introduction to the Supply Chain

The supply chain is a set of interrelated processes that can be grouped in to two large
areas: evolution and planning [4]. It is a set of functional activities that are repeated
many times over the productive flow channel in order to convert raw materials into
finished products. Value is thereby added to the product for end user [5]. The man-
agement of the supply chain uses advanced technology, information management,
operational research and organizational planning with the purpose of correctly pro-
gramming and controlling factors to better produce and deliver the products and ser-
vices to satisfy the customer [6].

5 Scope

Currently, the term Industry 4.0 is gaining momentum in all the practices and tools that
it encompasses. Technology is the driving force of the supply chain and many tech-
nological mechanisms are available [7]. Technological tools allow the companies to
automate functions in order to eliminate redundancies and costs, generate information
that support management plans as well as the tasks of execution, evaluation and
connection of people’s skills and experience.
The Internet of Things (IoT) offers the possibility to learn and interact with
machines through different tools and devices such as sensors, actuators, screens,
software and other systems connected to the internet [8]. The implementation of IoT
systems can perfectly integrate the cybernetic world with the physical world and has
led to crucial changes that have powered human interaction with the digital world [9].
It is no secret that current business, production and other types of models tend to
disappear since it is not always clear what must be reinvented or what needs to be
modified or updated in the working model that has been used for a long time. Models
that manage to survive will have infinite benefits in the future in terms of costs, speed,
performance and other vital factors throughout the supply chain.
The supply chain has included the fourth industrial revolution which allows useful
tools to evolve, develop and be potentiated such as the visibility of the inventory in real
time, the input of purchases, the state of the exits from the inventory, the operational
movements, the sudden flaws which will lead to a faster response to both the client’s
needs and the operation. The standardization and improvement of some processes can
be achieved as well as the creation or organization of new links [10].
This strategy seeks to align the operation and generate more control that is accurate
and opportune with the purpose of predicting flaws and long-term improvements [11].
The intellectual capacity and technology have improved the supply chain through dif-
ferent tools that let companies capture the voice of the client. Communication throughout
all the stages of the supply chain enables the reaction to the needs with a flexible pro-
duction, automated storage and process optimization and automation [12, 13].
 Impact of Implementing Industry 4.0 in Colombia’s Supply Chains 707

Some of the most used tools and media (TICs, GPRS technology, RFID, low-power
networks to sense in palettes) are labeled as smart and can be considered alternative
modern processes that emerge from the need to handle a large amount of products and
information flows [11]. The inclusion of new technologies such as robotics, the Internet
of Things, nanotechnology, artificial intelligence and 3D printing are generating an
important shift worldwide [14].
The automation and optimization of many processes through new technologies will
progressively reduce the functions performed by mankind with machines that are faster
and more productive. This is more attractive in terms of investment and offers eco-
nomic benefits. Currently, this means that we are building the future. The convergence
of a large number of new materials, developments, robust software, faster connection
networks, efficient processes and Internet-based services is changing the industry [1].
The industry 4.0 also called the fourth industrial revolution is known for implementing
robots and integrating them to cyber-physical systems with the purpose of achieving a
radical transformation. These advances and changes over different methodologies have
led to the creation of smart factories [15].
The fourth industrial revolution poses a new challenge for organizations that need
to adapt and continue to be supported on a digital transformation. If this challenge is
not adequately faced, the company could be left out of the market as it was seen in
previous technological revolutions [16].

6 Consequences and Impact

Companies should profit from market analysis to improve their supply chains and
attend the user demand since customization of products requires a strong connection
between the sales department and production capacity. The planning systems that
include technology from Industry 4.0 should break down the demand to improve the
visualization of the supply chain throughout the different links with the purpose of
detecting the possible incidences caused. The impact is hard to dimension since these
technologies are having an impact on a global scale in the social, economic, political
and work aspects. The real consequences will arise as time passes on [10]. The fourth
industrial revolution has had real consequences nowadays due to the implementation of
new technologies and systems that have allowed the development of new industrial and
commercial applications which entails direct and indirect consequences that fall on the
employee.
A relevant aspect is the human factor and which is the most important asset in a
company and no change would be possible without it. Although there is a strong focus
on technology, highly-qualified professionals are still necessary to plan, control and
develop all the processes. It is important that the companies allocate a part of the
investment into the integral formation of the employee so that the teams working inside
a company are prepared to face the needs of a market that changes every day [1].
According to the International Labor Organization (ILO), the unemployment rate
measures the percentage of the population in working age that does not have a job, but
is “available and looking for” employment [17] (Fig. 1).
708 J. I. R. Molano et al.

Fig. 1. The unemployment according to the International Labor Organization (ILO). Taken from:
https://datos.bancomundial.org/indicador/SL.UEM.TOTL.ZS?end=2017&start=1991&view=
map

The organization estimates that the number of people unemployed worldwide will
surpass 201 million with an additional increase foreseen of 2.7 million in 2018 [18].
This situation is notably related to the companies seeking to reduce operation and
process times as well as other variables that replace manpower. Hence, this imple-
mentation can be detrimental since robots could do the same tasks that people currently
do; the robot can even replace one or more persons because he does the job while being
faster and cheaper.
The WEF discussed this matter last year when a report was presented in Davos that
argued that the digitalization of the industry will suppose the disappearance of 7.1
million jobs and the creation of another 2.1 million for 2020 [19]. To combat this effect,
it is necessary that employees are better trained in target areas of the industry 4.0 which
means that some skills need to be added and potentiated. There are learning factories
that contribute to guide the path to new production trends as the industry 4.0 [20].

7 Implementation in Colombia

In Colombia, the last few years have seen an increase in the interest for the connectivity
of the country with the rest of the world. In 2009, the Communications Ministry of the
Republic of Colombia became the Ministry of Information Technologies and Com-
munications (ITC) according to Law 1341 or TIC Law which is the entity in charge of
designing, adopting and promoting policies, plans, programs and projects in the sector
of Information Technology and Communications. Its functions include to increase and
 Impact of Implementing Industry 4.0 in Colombia’s Supply Chains 709

facilitate access to all inhabitants of the national territory to the ITC and their benefits
[21]. Next, the scheme represents the relation between the general relation of the digital
ecosystems with different focuses that are evidenced in the country. The users,
infrastructure, services and applications are considered (Fig. 2).

Fig. 2. Ecosistema digital. Adapted from: http://www.mintic.gov.co/portal/vivedigital/612/w3-

propertyvalue-19438.html

One of the plans of the Ministry of ITC is the “Live digital” (“Vive digital” in
Spanish) strategy which, seeks that the country takes a great technological leap through
the massification of the internet and the development of national digital ecosystem. In
spite of this plan and other policies that have been implemented in the country, the
efforts haven’t been sufficient. The increase in the ITCs in the country has been slow
and globalization forces Colombian companies to compete with the rest of the world,
so the process must be accelerated. To achieve this, the public, private and academic
sectors must emphasize their efforts in moving on to Industry 4.0 in Colombia [21].
In the country, the strategy has just begun to interact with the industry. In some
cities such as Bogotá and Medellin, the technological and industrial breakthrough is
more noticeable. In 2013, Medellin participated in the “City of the year” contest and
won recognition to being the most innovative city in the world which establishes a
precedent in Colombia [22].
The transportation, communication and services sectors are the most advanced in
the implementation of the Industry 4.0 technology which has generated new strategies
to give answer to the clients. In the country, some companies can be recognized for
implementing industry 4.0 such as Uber, Emermedica and financial entities. Most of
the companies have implemented web platforms which allow users to carry out more
processes through the network. A large amount of applications has been developed
710 J. I. R. Molano et al.

which allow the interaction between people and information that is found online such
as Waze and Google Maps.
It is important to highlight that the country has not profited from new technologies.
Innovation is clearly scary and there is always a resistance to change. This is a common
problem in the country and companies do not want to revolutionize or branch out into
new digital tools [19]. In Colombia there are already a number of companies that have
focused their efforts on the implementation of Industry 4.0, sectors such as mining, oil,
water treatment plants and manufacturing, have discovered the benefits of the correct
implementation of the Industry 4.0, this is the case of Kaeser Compressors which is in
the ranking of the 20 most innovative companies in the world in Industry 4.0 according
to the Internet of Things Institute.
Industry 4.0 is growing in the country but due to limited technological conditions,
the companies that wish to implement it must face great challenges. However, there are
companies that have implemented different technologies throughout the supply chain
and have better positioned themselves in the market. They can serve as a guide to new
companies although logistic advances are expected in the following years that allow the
implementation of the strategy in Colombia.
Finally, the logistic improvement efforts need different focuses. Not only must there
be concern on the country’s logistic infrastructure but there must also be an emphasis
on the communication processes and interactions with the client as well as the decision
making based in their requirements and demands so that commercial relations are not
lost.

8 Proposed Implementation

In Colombia, industry 4.0 has had very little application due to most companies being
small or medium-sized. There are diverse factors that support this behavior in the
country. One of them is the lack of information, knowledge and tools that directly affect
technological and industrial development.
It is detrimental that industry 4.0 has not been implemented in Colombia because its
application and implementation could contribute to solving many inconveniences and
problems of the national companies. Hence, the following methodology is proposed to
diagnose the needs of the small and medium-sized companies and propose solutions
based on industry 4.0 that would solve them.
1. Determine the issues to solve in the company as well as the critical processes that
need improvement, work flow, etc.
2. Determine the main objective to reach with industry 4.0. Some examples are:
– Regulate and optimize the flow of materials
– Improve the security of the processes
– Improve the level of availability of the materials
3. Determine the technologies to implement according to the activities of the company
and the desired goals. To achieve this, the studies carried out on the matter can be
considered. The following table suggests some technologies for each productive
 Impact of Implementing Industry 4.0 in Colombia’s Supply Chains 711

sector. The selection of the technologies should be based in terms of the costs of
acquisition, installation and maintenance to adjust the implementation budget.
4. Determine the informatics system that will register the data and process the infor-
mation obtained with the implementation of industry 4.0.
– The information should be stored in the cloud
– Determine the staff in charge of the interpretation of the information
5. Determine the sectors and departments of the company that would be affected by
the changes that will be implemented since the collaborators of these areas must be
educated on industry 4.0 and the technologies that will be implemented as well as
its benefits (Table 1).
Table 1. Suggested industry 4.0 technologies for each activity sector
Activity Technologies
Sensors RFID Beacons Augmented 3D GPS Other
reality printer
Agriculture, cattle raising, X X X X X
forestry and fishing
Extractive industry X X
Manufacturing industry X X X X X X
Supply of electric energy, gas, X
steam and air conditioning
Water supply, residue X
management, sanitation and
decontamination activities
Construction X X X
Retail and wholesale X X X X X X
commerce, engine-based cars
repair
Transport and storage X X X X X
Hostelry X X X
Finance and insurance X X
Professional, scientific and X X X
technical activities
Management and assistance X X X
Public administration and X
defense, social and mandatory
security
Education X X X X
Social services and sanitary X X X X
activities
Art, recreation and X X X X
entertainment
Other services X X X X
Home activities X X X
Adapted from: MARTÍ, D. L. P. (2016), Análisis de Casos de Estudio sobre Industria 4.0 y
Clasificación según Sectores de Actividad y Departamentos Empresariales.
712 J. I. R. Molano et al.

9 Conclusions

The fourth industrial revolution is not an easy challenge but it can become the
opportunity for organizations to immerse themselves in the digital era. Industry 4.0
should focus on the distribution, storage and implementation of technologies that
facilitate the flow of information throughout the supply chain to satisfy the customer
needs.
It is important to consider the climatic and geographical conditions of the country
offer a relevant scenario for the correct development of the labors of the supply chain.
All of this suffers from modifications as institutions and government entities solve the
failures in the infrastructure derived from the inefficient use of resources to improve
access routes, ports, etc.
Industry 4.0 in Colombia is a field that has not been widely developed so its study
and application must be motivated by the companies and the academia. One of the
fields of study is the logistics and the immersion in the supply chain and other pro-
ductive processes.
As a final aspect, it is noteworthy that the implementation of Industry 4.0 allows
companies to have faster responses, more standardized distribution channels and clients
more satisfied with the products and services that they offer. This will potentiate the
country’s productive sector in a considerable manner.

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