Top 5 Advantages of Supply Chain Management Automation
Why is automation important in meeting today's supply chain challenges? Let’s examine key business benefits of automation in supply chain management.
Supply chain management automation lets you transfer common tasks in supply chain management from humans to machines. Automation reaches across both physical and digital dimensions—everything from assembly line robots working on manufacturing shop floors to software bots automating back-office processes such as billing, scheduling, routing, and communications. Effective supply chain management requires strong coordination between these independent parts to take goods from raw materials to finished products, and the advantages of automation for these processes are numerous.
Why is automation important for supply chain management?
Automation can make a huge impact in any area that has complexity and urgency: Supply chain management has both. The supply chain management process has a lot of moving parts, inside and outside the organization, and visibility is often limited. As supply chain disruptions such as geopolitical conflicts continue, supply chain managers face increasing pressure to deliver faster to meet customer demand.
Supply chain automation can help companies across all these dimensions—reducing overhead costs and labor expenditures, streamlining product development, and speeding up delivery times. Ultimately, it can strengthen a company’s competitive advantage.
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What should I automate to optimize supply chain management?
Automation doesn’t replace human workers—it augments their abilities in myriad ways. RPA tools, for example, can help with tasks that are repeatable, high volume, and manual. IDP tools can pull information from forms and documents. Automation platforms can route exceptions or questions to a human to address. This frees up employees to work on more pressing or complex problems rather than getting bogged down in the minutiae of repetitive, rote tasks.
Let’s take last-mile delivery as an example. As customers order products, your customer service systems can search for inventory within warehouses, print labels, and then provide delivery estimates. Automated email or text updates to customers keep them posted on delivery times, delays, or new delivery dates. This keeps customer satisfaction high and reduces the number of transactional interactions service representatives have, helping them focus on crucial human-to-human interactions when required.
That’s just one simple example. Supply chain operations offer significant opportunities for automation. In addition to customer service, consider these areas where enterprises can gain the benefits of automation for their supply chain processes::
- Purchasing and procurement process automation to refresh supplies of raw materials.
- Warehousing systems that automatically print labels for orders, check if inventory is in stock, and send alerts when inventory buffers run low.
- Billing tasks such as invoicing, collections, and follow-up.
- Transportation tasks such as scheduling, dispatch, and inventory scanning and delivery receipts for long-haul trucks or shipping tasks.
- Last-mile delivery tasks like check-ins, GPS updates, and delivery scans and statuses.
In all these ways, automation helps companies with operational execution. But strategic and tactical planning tasks also benefit. For example, sales data from ecommerce platforms or point-of-sale systems at front-facing organizations provides real-time demand signals to planners or purchasers. Armed with this information, they can strategically plan within their ERP systems for more orders to meet demand spikes. This kind of real-time information helps teams to adjust far sooner in the process and meet demand before their competitors do.
What are the top benefits of supply chain automation?
Supply chain automation helps companies do more than just gain speed, although speed alone is a precious advantage in the digital transformation era. A strategic approach to supply chain automation can make the difference between success and losing out to a rival. Let’s examine the top 5 benefits of supply chain automation:
1. Reduced costs.
Automation increases efficiency and productivity, reducing costs over time. For starters, by automating some tasks, you can get more out of your existing workforce. This lets you produce more faster without having to increase labor expenditures beyond what you already have in place.
Second, you cut down on human error. Fewer mistakes means fewer scrapped products, greater product quality, and less waste in the system. For transportation companies, it translates into better on-time-in-full (OTIF) deliveries to customers. For all employees—from shop floor to transportation and logistics to back-office operations—it means less time spent on costly rework, which ultimately leads to more time for important value-added tasks.
2. Increased speed.
Beyond reduced costs, automation speeds up nearly every phase of the supply chain process. Machines and production line robots can manufacture goods at high speed. Truckers and shippers meet delivery deadlines. Back-office employees cut down on red tape across the board. This leaves a leaner process and gets goods into customers’ hands faster.
When workers don’t get bogged down in minutiae, they’re free to tackle more strategic tasks. For example, when someone’s not stuck putting out fires all day, they might spend time analyzing supplier performance to find more reliable partners (or identifying areas for more automation).
3. Higher morale.
Everyone has a work task they hate doing.(Reports, anyone?) Frankly, even if they love the task, doing the same thing over and over leads to burnout and stress. Automation can take rote tasks off a person’s plate so they’re free to pursue creative, strategic, or challenging tasks. In this way, automation helps produce engaged workforces, team cohesion, and stronger employee retention.
4. Smarter decisions.
Some people make poor decisions when under pressure—and even worse decisions when they lack visibility and clarity. Automation helps on both fronts.
First, offloading some decision-making to machines via business logic allows consistent responses in a given scenario. It also reduces time spent on the kind of low-level tasks that can exhaust people. Second, automation can play a critical role in data collection. With the right automation tools, you can route data to the right people at the right time. For example, if a last-mile delivery driver is running late on their deliveries, automation can alert dispatchers to find another nearby driver to finish the route.
5. Greater agility.
If a product arrives late, you’re on the hook. Agility represents a key factor in your company’s success. If an issue crops up, automation tools can help handle the issue and adapt faster. For instance, if your warehouse runs low on a product, you can set up the system to approve premium freight to expedite orders before customers are affected.
These five benefits add up to one large benefit—competitive advantage. For example, being able to produce and ship products faster without a drop in quality can increase customer satisfaction and contract renewal rates. It also gives companies the ability to take on more customers without dramatically increasing staff to cover the new influx. Companies who don’t invest in automation can get left behind as other suppliers present better production speeds or lower costs to their end customers.
What is a real-world example of supply chain automation?
Let’s look at a real-world example in the area of order fulfillment. Consider a supermarket chain that has been operating for more than a century. You don’t stay in business for that long without managing an effective and efficient supply chain. But there’s always room for improvement.
This supermarket company wanted to enhance the fulfillment leg of its supply chain. Before automation, their truck drivers had to use a patchwork of spreadsheets and software tools to track their work. Plus, drivers had to pick up a large, print manifest before they could get goods to stores. All of this wasted time and opened the door to human error. Finding, routing, and assigning drivers was a frustrating, manual process.
To solve this issue, the company rolled out a mobile application that automated significant chunks of the process. Using logic in the background, automation tools let drivers receive their assignments, check in at different locations, and get the information they need for delivery, all from a single app. The app also meant drivers could save the time they were originally spending picking up print manifests. This reduced manual work dramatically. In the end, the company reduced turnaround times by at least 10 minutes per trip (which adds up across thousands of drivers with multiple deliveries per day). It also reduced accounting reconciliations by 50% by increasing delivery accuracy. In this example, the company realized savings of $1 million in the first year. And that doesn’t include factors like happier customers and reduced stress on the workforce.
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