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Technological development from time to time causes changes in the way humans produce things. Currently, the world has entered the industrial revolution 4.0 which creates disruption and requires companies to rethink how they design supply chains to produce the desired output. The basic concept of industry 4.0 was first presented at the Hannover exhibition in 2011. The topic of industry 4.0 has become very interesting in global industry and academia, and it has been part of the World Economic Forum's agenda since 2016 (Hoffman and Rüsch, 2017; Lu, 2017).
Furthermore, the topic is being explored and integrated into the development agendas of various countries such as the United States, France, Japan, Singapore, England and China (Liao et al., 2017). This high attention is due to the potential that Industry 4.0 has in changing the form of competition in the industry as well as the process of making and delivering value by companies (Porter and Heppelmann, 2014). Industry 4.0 includes a series of sophisticated and disruptive technologies such as the Internet of Things (IoT) and Cloud Computing (Bunse, 2013), which have implications for various business areas including the development of new products and services, operations, work environment, people and organizational management, business models etc. It will lead to significant changes to the supply chain (Pereira and Romero, 2017; Bienhaus and Haddud, 2018). Swanson (2017) states that the application of technology to the supply chain, in this case called supply chain 4.0, can create a competitive advantage in product supply and availability, cost reduction and increase in market share. This is supported by Rexbausen and Seyfert (2016) who report that there is an opportunity for a 30% reduction in overall costs, as well as a 75% reduction in stock availability in warehouses and lost sales.
The development of technology has made several companies adapt to the implementation of digitalization transformation which requires investment in the form of providing capital or acquisitions, and collaboration with technology companies or some other forms of technology companies in an effort to implement digitalization transformation in their operations.
In placing their investment, companies need precise targeting on which dimensions require digitalization transformation most in order to maximize investment returns. Bughin et al. (2017) study examine the effect of digitization into 5 dimensions that has occurred in the industry, namely products and services, marketing and distribution channels, business processes, supply chains, and new entrants at the ecosystem level. The study examines the effect of digitization in each of these 5 dimensions on company performance as seen from company revenue and growth in Earnings Before Interest and Tax (EBIT). It shows that there is a large impact on revenue and EBIT growth when digitization is carried out on the supply chain dimension. Digitalization in the supply chain dimension accounts for two thirds of the total projected to achieve annual revenue growth and more than 75% to annual EBIT growth. This is supported by the results of research by Schrauf & Berttram (2016), Bailey et al. (2017), and The Economist (2019) which found that one third of the more than 2,000 respondents who have digitized their company's supply chain have resulted in increased revenue and growth, and operational efficiency, and opportunities for new business models that can be applied in the company.