Open Eng. 2016; 6:511–517 Review Article Open Access Marinko Maslarić*, Svetlana Nikoličić, and Dejan Mirčetić Logistics Response to the Industry 4.0: the Physical Internet DOI 10.1515/eng-2016-0073 Received Jun 25, 2016; accepted Aug 01, 2016 1 Introduction Abstract: Today’s mankind and all human activities are Maybe the key word of this century is digitalization. Dig- constantly changing and evolving in response to changes italization is present in all spheres of human activities. in technology, social and economic environments and cli- When it comes to business activities then digitalization mate. Those changes drive a “new” way of manufacturing is a personification of the concept Industry 4.0. That is, industry. That novelty could be described as the organiza- words such as mechanization, electrification and informa- tion of production processes based on technology and de- tization are key words for the first three industrial revolu- vices autonomously communicating with each other along tions respectively, so is digitalization, which includes the the value chain. Decision-makers have to address this nov- use of integrated Cyber-Physical Systems, the key word for elty (usually named as Industry 4.0) and try to develop the fourth industrial revolution or the Industry 4.0. The appropriate information systems, physical facilities, and term Industry 4.0 refers to a further developmental stage different kind of technologies capable of meeting thefu- in the organization and management of the entire value ture needs of economy. As a consequence, there is a need chain process involved in manufacturing industry [1–3]. for new paradigms of the way freight is move, store, real- The Industry 4.0 assumes the formation of global networks ize, and supply through the world (logistics system). One which shall include product and storage facilities in the of the proposed solutions is the Physical Internet, con- form of Cyber-Physical Systems which shall communicate cept of open global logistics system which completely re- independently, generate and control themselves. Thus im- defines current supply chain configuration, business mod- provements in design, production, distribution and ex- els, and value-creation patterns. However, further detailed ploitation shall be achieved. Every change in the produc- research on this topic is much needed. This paper aims to tion concept shall have an impact in the form of trans- provide a balanced review of the variety of views consid- formation of all goods, information and financial flows ered among professionals in the field of Physical Internet which represent the area of logistics. Logistics function with the final aim to identify the biggest challenges (tech- was present in all developing phases of industry and only nological, societal, business paradigm) of proposed new its purpose has changed (from firstly pure operative and logistics paradigm as a practical solution in supporting In- supportive role to the role of strategic tools) as well as dustry 4.0. modes of realization of its activities. Therefore, as indus- trial concept was under development so logistics concept Keywords: logistics efficiency; digitalization; logistics was also developing with the main characteristic of con- transformation; internet of things stant increase of complexity as the result of increase in requirements of producers for greater efficiency and cus- tomers for higher level of service. The current state of over- all logistics efficiency is not ideal, and a new concept for lo- gistics organization that challenges current and future in- dustrial practice is needed. The solution could be in a new *Corresponding Author: Marinko Maslarić: University of Novi operational, organizational and management paradigm – Sad, Faculty of Technical Sciences, Trg Dositeja Obradovica 6, 21000 Novi Sad, Serbia; Email: [email protected] the Physical Internet. This concept was first introduced by Svetlana Nikoličić: University of Novi Sad, Faculty of Technical Professor Benoit Montreuil of Laval University of Quebec, Sciences, Trg Dositeja Obradovica 6, 21000 Novi Sad, Serbia; Email: Canada, and central idea is as follows [4, 5]: why not or- [email protected] ganize logistics activities in an open and shared network Dejan Mirčetić: University of Novi Sad, Faculty of Technical Sci- rather than in dedicated and specialized networks in a new ences, Trg Dositeja Obradovica 6, 21000 Novi Sad, Serbia; Email: era of interconnected logistics? This paper aims to pro- [email protected] © 2016 M. Maslarić et al., published by De Gruyter Open. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License. 512 Ë M. Maslarić et al. vide a balanced review of the variety of views considered big data and cloud computing. It can be said that the In- among professionals in the field of Physical Internet with dustry 4.0 fits in both IoT and IoS, that is, that it repre- the final aim to identify the biggest challenges (technolog- sents their application both in production and service in- ical, societal, business paradigm) of proposed new logis- dustry as well as that it connects with other smart tech- tics paradigm as a practical solution in supporting Indus- nologies. Other terms which are often cited in the literature try 4.0. concerned with Industry 4.0 are [6]: • Industrial Internet, which refers that industrial and the internet revolution come together. The main dif- 2 Industry 4.0 ference between Industrial Internet and Industry 4.0 is that Industrial Internet goes beyond manufactur- 2.1 Definition of the term Industry 4.0 ing to cover the wider adoption of the web into other forms of activity. The term “Industry 4.0” was initially coined by the Ger- • Cyber-Physical Systems (CPS), which represent on- man government, and it describes the organization of pro- line networks of social machines that are organized duction processes based on technology and devices au- in a similar way to social networks (they link IT with tonomously communicating with each other along the mechanical and electronic components that then value chain [6]. The concept was derived from increase communicate with each other via network). RFID in production computerization where physical structures represents early form of this technology, as is stated are integrated into information networks and as such it in- in [1]. cludes both horizontal and vertical integration of a large • Smart Factory, term that exemplify some of the tech- number of systems at all levels which lead to “end-to- nical innovations such as integration of ICT in the end” solution (the solution with as less as possible inter- production process and how these could play out in mediary layers). Vertical integration includes connection practice. and networking of production systems with business pro- Hence, it could be concluded, like in [1], that all of those cesses of all connected participants, and horizontal inte- concepts together make an environment for Industry 4.0 gration assumes connection of information systems in dif- (Figure 1). ferent phases of production whether within one company or among different companies in a supply chain. These developments make the distinction between industry and 2.2 The characteristics of the Industry 4.0 services less relevant as digital technologies are connected with industrial products and services forming hybrid prod- As it is stated in [6] the main features of Industry 4.0 are: ucts which are neither goods nor services exclusively [6]. interoperability (CPS allow humans and smart factories The Industry 4.0 is not the only term that appears in the to connect and communicate with each other through IoT context of increased digitalization, first of all production one, then come the rest of business processes. In [1] it is stated that in the United States and the English-speaking world more generally, some authors also use the terms such as the ‘Internet of Things’, the ‘Internet of Every- thing’, the ‘Internet of Service’, or the ‘Industrial Internet’. They further state that all of these terms and concepts have in common the recognition that traditional manufactur- ing and production methods are in the throes of a digi- tal transformation. According to [6] the Internet of Things (IoT) refers to information technology (IT) systems con- nected to all sub-systems, processes, internal and exter- nal objects, supplier and customer networks that commu- nicate and cooperate with each other and with humans. The same authors assume the Internet of Services (IoS) as internal and cross-organizational services are offered and utilized by participants in the value chain and driven by Figure 1: The Industry 4.0 environment, adapted from [1]. Logistics Response to the Industry 4.0: the Physical Internet Ë 513 and IoS); virtualization (capability to connect physical sys- orities for the EU with a view to foster growth, competive- tems with virtual models and simulations); decentraliza- ness, investments and jobs. On that way, use of digital tion (decision making and management are performed in- technologies is therefore a priority task and a cross-cutting dependently and parallel in separate subsystems); real- policy covering all sectors of the economy [8]. time capability (adjustment with requirements in the real In logistics sector, vast amount of data and IT is avail- time is the key requirement for any kind of communica- able that could improve the use of existing resources. It tion, decision making and management of systems in the has been already shown in papers [9–12] that some of the real world); service orientation; modularity (systems of the benefits that could be achieved through the IT applica- Industry 4.0 should be maximally modular and capable tion in logistics are improved analyzing, communicating, for quick changes on the basis of automatic detection of designing, understanding, and optimizing. Digitalization a real situation). In the concept of the Industry 4.0 there of logistics processes leads to “logistics transformation” are significant changes in relation to traditional technolo- or to creation of “smart logistics” solutions.