OM in the News: 5G Promises Radical Overhaul for Supply Chains

The rollout of 5G, reports The Wall Street Journal (April 12, 2020) has the potential to transform the supply chain— helping companies more precisely measure consumer demand, cut waste and react in real time as situations change. 

Supply and demand. Part of the problem with modern supply chains is that, often, businesses and their suppliers have only a vague idea of where goods are at any one point in time, what condition they are in and whether they are even needed at their destination. There are limits in current 4G networks to how many sensors, cameras and other internet-connected devices can be supported at any one time. The enhanced bandwidth and stability that 5G offers will enable far more devices to be live on a single connection. This new level of analytical capability will help solve one of the toughest challenges for supply-chain management: figuring out how much of something people want at any particular moment.

Food waste. Although 820 million people around the world are undernourished, up to 30% of all food is lost or wasted. Oversupply in grocery stores is a major source of overall waste. 5G can help, for example, by enabling real-time data transmissions to monitor failures in refrigerated containers. 5G will also allow for greater route optimization, taking into account traffic and other information. Businesses will incur fewer oversupplies of goods, reducing their impact on the environment by producing less waste and requiring fewer deliveries.

Infrastructure overhaul. A more immediate benefit for supply-chain specialists will be the ability for wireless 5G to sidestep aging infrastructure that would otherwise be prohibitively expensive to replace. For example, the ability for all of the thousands of pharmacies across the U.S. to exchange data in real time isn’t currently possible using the existing infrastructure. 5G will have a tremendous effect on getting prescriptions to patients in a timely fashion and improving customer experiences.

Classroom discussion questions:

1. What is the difference between 4G and 5G?
2. Summarize the SCM advantages of 5G.