15 August 2023

What does supply chain 4.0 look like?

Under the banner of “industry 4.0”, supply chain 4.0 represents a move away from a traditional, linear supply chain management model. It is a more integrated model where information flows in multiple directions. With that move comes potential benefits in productivity, sustainability and digital transformation.


It should also help the supply chain to better engage on sustainability issues. Where information only flows from one link in the chain to the next, any link that refuses to engage is a potential block to openness and transparency several steps away on the chain. The crux of supply chain 4.0 is using digital tools to take away those supply chain management problems.

digital services

How does supply chain 4.0 compare to supply chain 3.0?

Where industry 3.0 (and supply chain 3.0 as part of it) represented the adoption of automation, computers and electronics, industry 4.0 is about cyber physical systems (robotics), the internet of things and networks. According to David Philp (Chief Value Officer, Cohesive Group), supply chain 3.0 has not reached full maturity, for while the technology is there, the skills to fully exploit it are not.

Going from supply chain 3.0 to 4.0 will therefore take time – and a lot of data. The case for change, however, cannot be overstated. The combined issues of waste, carbon emissions and economic performance affect buildings across their whole life cycle.

Traditional construction has had negative consequences for people and the planet. Its model is not set up to support sustainable and regenerative outcomes. As a result, change is needed to support efforts to tackle the climate crisis through a global, faster, more flexible and data-driven supply chain.

Through reimagining the supply chain and sharing data across the value chain, more cohesive workflows will make supply chain 4.0 more productive , more accurate and less wasteful. Like embodied carbon and the circular economy , supply chain 4.0 is a journey.

Using data to drive supply chain management

It is one thing to say that digital transformation and digital tools will drive supply chain transformation, but what does that look like? Dr Jas Kalra (Supply Chain Lead, Lower Thames Crossing) shared correspondence he received from a project director addressing exactly that.

“Wouldn’t it be great if, on any project, there was one central portal that everyone on the project had access to? A portal that the whole project lived on. If you and I became new members of the project, we would straightaway get logins to the project system. Everything you need to know on that project is on there. Anything you input to the project must be input through the system otherwise it doesn’t count. No matter what organisation I go to, what project I am onto, the system remains the same. All communication takes places inside the system – no emails! Because emails, by definition, are outside the system. How do you govern and control and share that information? Everything we have now are all parts of the answer, but there is no ‘one answer’.”

Any such system, were it to become a reality, would have many potential benefits – and not only for supply chain management. For example, it could also support the golden thread of information, acting as the ‘single source of truth’ designed to increase accountability and improve building safety.

Already, some of the elements exist that could enable the creation of the ‘one answer’ that the project director is looking for. Tools and APIs have already been created, and there is a lot of knowledge, skill and motivation within the construction industry.

But there are also barriers to overcome, especially around not being able to coordinate different data inputs. Trust issues  and commercial sensitivity will need to be overcome. And while some organisations do have the skill, knowledge and resource to invest, others do not – and their motivation to do so is low when their daily activity is centred on the survival of their business.

Delivering supply chain change

By creating products and components capable of spanning multiple building life cycles, material extraction and use, and emissions associated with manufacturing and disposal, can be drastically reduced or even eliminated entirely.

Gilles Alvarenga encouraged a different perspective on how we view buildings: rather than looking at the building as an asset, what if we viewed it as a collection of components that have future value?

What often limits this approach is the idea that a building designed for one use can’t easily be adapted into a different use. Rafe Bertram offered a unique take on this by observing: “Buildings are kind of similar to each other. They have to fit people into them.”

In other words, adaptable, circular buildings where components can be reused don’t have to be radically different from what we are constructing now.

It comes back to the early design stage thinking: how easy would it be to adapt, say, a school into a residential building or an office building? Considering timescales is important too – is a building expected to be used for twenty years or one hundred and twenty years?

In terms of the industry’s knowledge and understanding, the circular economy is a little way behind – but it is coming and will increasingly be part of construction project requirements. Meridian Water is working to embed circular economy principles by using the Excess Materials Exchange platform. The platform certifies material to ensure it has the highest possible value, then connects projects in the borough who can use that material. 

Delivering net zero

Culture change and trust are key. Both take time to build, which risks creating a feeling of starting all over again.

It must be client-led, and a good starting point is engagement with Tier 1 contractors and product manufacturers. Getting their buy-in will develop the trust in contracts, competence and goodwill. Once culture is aligned between these key parties, there is hope for a successful transition.

This level of change is certainly disruptive to existing business models. At the same time, failing to change will create disruption of its own. Better, then, to start the process of change now, rather than reacting to a need for change later.

Case studies are key to showing how the transition can be made and the benefits it is capable of delivering. Neil Pennell (Head of Design Innovation & Property Solutions, Landsec) presented an overview of The Forge, a project that put theory into practice. 

As the world’s first major commercial development to use a platform approach to design for manufacture and assembly (P-DfMA), The Forge learned from the efficiency of manufacturing and applied it to construction. An independent comparison between traditional construction and the P-DfMA design identified a near-20% reduction in embodied carbon.

Processes became more streamlined and accountable, making it easier to work towards the ultimate goal of delivering a development that is the first to meet the UKGBC’s net zero definition. Ultimately, rethinking traditional construction and supply chain management on The Forge helped to create a more collaborative supply chain. 

Showcasing industry’s progress and vision at Construction Summit 2023

While government policy and regulation can prompt change where it might not otherwise have been forthcoming, it can also take a long time to be made. Businesses are often ready to lead when the government won’t legislate far enough.

That is what led to Tata Steel UK and Constructing Excellence coming together to create the Construction Summit, with 2023’s edition being the first. It represented an opportunity for thought leaders and decision-makers to come together to see where supply chains are making progress. Audiences could learn from best-practice examples, and be inspired by one another to continue their own positive journeys.

The Summit featured presentations across three different strands. Each strand was viewed through the lens of productivity, sustainability and future paths, to give a complete snapshot of where the construction industry is today, and what it is working towards in the short, medium and long term.

For audiences who couldn’t attend the Construction Summit, each strand has been written up into an individual white paper capturing all of the topics discussed on the day. Download the white papers using the links below.

•    Supply chain
•    Climate change and net zero
•    People and skills 

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