Curse or Blessing? Exploring risk factors of digital technologies in industrial operations

Abstract

Both practitioners and scholars emphasise the benefits of Industry 4.0 (I4.0) technology implementation, such as increased transparency and the availability of real-time data in operations processes. Current literature on I4.0 technologies tends to overemphasise the positive impact and transformational capabilities of digital technologies while there is little focus on evaluating potential risks associated with their adoption in industrial operations. An understanding of how supply chain risks are perceived in digitalisation projects within industrial operations and an understanding of decision-makers' responses to different types of risks has important managerial implications. Current literature, however, lacks systematic empirical evidence on the implementation of I4.0 applications and related risk factors. This study aims to address this research gap by exploring the relationship between I4.0 technologies and supply chain risks based on empirical evidence from 300 case studies of industrial practice in Germany and fifty-three interviews with relevant managers from selected use cases and with general experts in this field. Our findings show that digital technologies are frequently adopted to address certain existing supply chain risks but that their implementation introduces new sources of risks (e.g. cyber risks). Based on qualitative data analysis and drawing on Normal Accident Theory, we propose a framework to explicate the drivers and contingency factors of new sources of supply chain risks in the context of Industry 4.0 technologies. Practical recommendations are provided for supply chain managers to guide the process of managing supply chain risks based on the technological life cycle.

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