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Davos 2019: The Fourth Industrial Revolution

Bain Partner Hernan Saenz discusses how operations and global supply chains are changing.

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Davos 2019: The Fourth Industrial Revolution
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Hernan Saenz, who leads Bain's Global Performance Improvement practice, describes the effect of the fourth industrial revolution on operations and the implications for companies in this new era.

Read the transcript below.

HERNAN SAENZ: One of the key topics we are discussing here at the World Economic Forum in Davos is the impact of the Fourth Industrial Revolution on operations and global supply chains. In short, those trends that define the Fourth Industrial Revolution—massive data, integrated, accessible, real-time by smart tools—will completely transform operations all the way from research and development to the last mile of fulfillment.

We expect operations to change in at least four ways. Number one, supply chains will be visible end to end. This means more opportunities for collaboration with suppliers and customers, as well as more flexibility in responding to changes. Number two, the supply chains will be intelligent. This means we can prototype products, services and processes before launching them. We can use predictive forecasting, planning and maintenance.

Number three, the automation will be smart. There will be machine learning in services and in manufacturing, making those processes better and smarter every time they get used. And finally, number four, we will see the introduction of the next-generation worker of the future: digitally literate, enhanced by virtual reality, augmented reality and wearables, in a world of enhanced productivity and a lot more safety.

There will be three major implications for companies. The first one is that the lines between strategy and operations will blur. Operations is no longer the last mile of fulfillment. It starts at the beginning, opening up the possibilities for strategy. Second, the era of continuous improvement for lowest costs is gone. It is now the era of flexibility, resilience and customization. And finally, it's no longer four walls, it's ecosystems, and the ability to partner will be the source of competitive advantage.

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