What Are the Business Benefits of Supply Chain Automation?

Countries all over the world are feeling the increased pressure of a global consumer base, trade deals gone awry and increased competition in their verticals. In the ongoing struggle to shed costs wherever they can be shed, supply chain automation has emerged as a popular way to do just that. Let’s take a look at what supply chain automation is, how companies can apply it, and why it offers a competitive and productive advantage.

What Is Supply Chain Automation?

Of the companies studied in a recent McKinsey report, supply chain entities demonstrated some of the lowest rates of process digitization despite the potential to realize some of the greatest value gains of any industry. By streamlining routine tasks and empowering the human elements of the supply chain to focus on bigger-picture items and longer-term planning, automation can help companies of all sizes:

• Lower their operating costs
• Increase their accuracy and productivity
• Reduce or greatly reduce worker injuries
• Arrive at more accurate and timely enterprise decisions

Different companies will come up with different ways to realize these goals, but the end result of automation is to optimize our use of resources, perform critical functions with far greater accuracy, and yield accumulated data that can deliver additional actionable insights and process improvements over time.

Enterprises as large as UPS and as small as the family restaurant on the corner are discovering why automation can be so effective for managing time and resources. In UPS’ case, consider a warehouse worker unloading a truck and sorting parcels for the next leg of their journey. When that employee scans a parcel’s bar code, they trigger a series of events, including automatic updates to chain-of-custody records and automated emails to recipients waiting on the other end for an update on an eventual delivery. Another version of this scene replaces hand-scanning with RFID tags and readers for an even more streamlined intake process.

As for that family restaurant, automation can generate employee schedules based on historical business data, or even help predict demand for (and schedule deliveries of) important ingredients and supplies throughout the year.

And for just about any type of business, automation ensures that customers can place orders at any time of day using up-to-date product availability numbers, or have their questions answered or the status of their shipments verified, any time they need it.

What Does Supply Chain Automation Look Like?

You know better than anyone how much work goes into making a supply chain function smoothly and how many different processes need to be coordinated at once. Automation is finding its way into more and more functions in the modern supply chain:

• Automated production equipment and distribution centers: Material handling equipment and automated assembly lines provide constant feedback on equipment health and product throughput. This data informs forecasting all the way down the supply chain. Automated production also includes the concept of predictive maintenance, which can help supply chain companies with complex mechanical infrastructure plan around machine breakdowns, schedule maintenance during off hours, and avoid the disappointment and lapsed profits that equipment problems can bring.
• Automated warehouses and logistics: Robots and cobots greatly enhance picking and stowing rates in warehouses, while intelligent enterprise planning software helps supply chain managers prioritize orders, send automatic quotes and invoices, combine less-than-full shipments, coordinate last-mile delivery and more. Automated warehouses can also improve safety, thanks to autonomous vehicles that can transport materials between processing areas while minimizing human cross-traffic. Durability is another advantage since most robotic implements can perform in conditions far colder than humans can tolerate.
• Predictive shipping and no-touch order processing: Maybe it takes an industry giant to throw a gauntlet this size, but Amazon’s same-day delivery model could be standard-issue before too long. Predictive analysis tools for shippers are accessible even to smaller and mid-sized companies these days and can fold in data from a variety of internal and external sources, including market data, weather patterns, customer behavior, website and social analytics, and much more.
• Automated mobile platforms: Chatbots can answer questions around the clock and give real-time updates on the status of orders or product availability. Cloud connectivity also makes it easy for customer changes to shipping methods, routing details, delivery instructions and more to be reflected throughout the system immediately, no matter when they come in.
• Automation for compliance, transparency and oversight: The technology behind blockchain is going to be a game-changer for supply chain companies. Blockchain provides a way for business partners to enter into “smart contracts” with one another, in which certain events are triggered automatically when one or both parties complete previously agreed-upon conditions. Blockchain also gives the complex web of manufacturers, distributors, freight companies and other stakeholders the chance to contribute to a shared and distributed ledger.

Given the public’s support for greater traceability in our supply chains — especially any time labor ethics, sustainable material sourcing, potential counterfeiting, or the safety of food, beverage, or pharmaceutical products are involved — the possibilities raised by blockchain may be of greatest interest to supply chain and logistics companies today.

Traditional invoicing will become just a bad memory once blockchain eliminates inaccurate recordkeeping methods, automates vital but error-prone back-office functions, creates an auditable chain of custody for compliance purposes, and makes settlement and brokerage services a thing of the past.

Budgeting for Industry 4.0

With Industry 4.0 — the “fourth industrial revolution” — upon us, it’s clear this is just the start for automation solutions in supply chain management. The best advice for companies looking to take advantage of automation is to start with a specific problem in search of a solution. Identify your most urgent pain points before you even think about budgeting, so you can prioritize which spending areas will deliver the greatest advantage. Consider:

• The cost and expense of achieving compliance
• The challenges of data management and keeping company IP secure
• The burden of repetitive, manual tasks on daily operations
• Too few ways to anticipate demand, work delays and equipment failure

As we’ve seen, there’s a wide variety of automation and digitization tools already available to supply chain companies of all sizes, and we can expect many more novel solutions long before this industrial revolution has run its course.