Understanding Supply Chain 4.0 and its potential impact on global value chains

The reorganization of supply chains using advanced technologies, such as the Internet of Things (IoT), big data analytics, and autonomous robotics, is transforming the model of supply chain management from a linear one, in which instructions flow from supplier to producer to distributor to consumer, and back, to a more integrated model in which information flows in an omnidirectional manner to the supply chain. While e-commerce is uniquely suited to many of these techniques, they also hold the promise of improving efficiency in brickand-mortar stores. These technologies are generating enormous benefits through reducing costs, making production more responsive to consumer demand, boosting employment (employment in supply chain sectors where such technologies are most likely to be applied has grown much more rapidly than in other supply chain sectors and in the economy as a whole) and saving consumers’ time. The impact of these technologies on the length of supply chains is uncertain: they may reduce the length of supply chains by encouraging the reshoring of manufacturing production to high-income economies, thus reducing opportunities for developing countries to participate in GVCs, or they may strengthen GVCs by reducing coordination and matching costs. • Digital technologies are transforming supply chain management from a linear model in which instructions flow from supplier to producer to distributor to consumer, and back, to a more integrated model in which information flows in multiple directions (sometimes referred to as Supply Chain 4.0). • Digital technologies offer huge benefits in terms of inclusive patterns of growth, innovation and entrepreneurial opportunities • The impact of new digital technologies on GVCs is uncertain: they may reduce the length of supply chains by encouraging the reshoring of manufacturing production, thus reducing opportunities for developing countries to participate in GVCs, or they may strengthen GVCs by reducing coordination and matching costs. * We are grateful for helpful comments by Gary Hufbauer, Satoshi Inomata, Kalina Manova, William Shaw, Emmanuelle Ganne, and Lauren Deason. All errors and omissions remain the responsibility of the authors. 104 • Technological innovation, supply chain trade, and workers in a globalized world