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Supply chain automation – A 7-step action plan

May 3, 2023


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The present state of supply chains is riddled with various challenges and disruptors that considerably affect businesses. Hence, one of the most significant challenges supply chains encountered in the last few years was the COVID-19 pandemic, which triggered a massive disruption in production processes, transportation and logistics. The pandemic led to factory closures, labor shortages, and an unprecedented increase in demand for specific products, leading to a scarcity of raw materials and finished goods.

Moreover, supply chains are also battling against disruptors like natural disasters, cyber perils, geopolitical hazards, and ever-evolving consumers’ behavior. Thus, these disruptors have been causing unnecessary hold-ups, surging costs, and goods’ shortage, hitting businesses’ overall profitability and sustainability. Consequently, organizations must address these concerns and build a flexible and resilient supply chain that will be adaptable to changing circumstances.

Nevertheless, this will need businesses still using traditional supply chain management methods (SCM) to adopt new technological solutions to nullify the gaps created by manual processes. This will ensure firms create robust supplier relationships and establish effective risk management strategies to mitigate the impact of these challenges and disruptors. Therefore, technology continues to play an essential role in the success of supply chain organizations.

As per a recent survey by Gartner, 61% of respondents consider technology adoption a critical driver of competitive advantage for businesses. Therefore, in the next three to five years, it can be expected to witness a surge in the adoption of digital supply chain technologies that enhance human decision-making capabilities.

Impact of SCM on demand planning & inventory – Conventional to automation

A conventional approach to supply chain management leads to inefficiencies and sub-optimal outcomes in demand planning and inventory optimization. This is because it does not account for external factors that impact demand and inventory levels, resulting in inaccurate forecasting and excess inventory. Also, manual supply chains are costly due to high labor, transportation, and inventory-holding expenses. However, automation and digitization can help reduce costs and improve efficiency.

Supply chains increasingly embrace technology-driven solutions such as automation to overcome these challenges. This involves using AI, ML, and Robotic Process Automation (RPA) to streamline supply chain processes and optimize operations. Subsequently, companies will be able to make more informed decisions about their supply chain management practices by providing real-time data on inventory levels, demand patterns, and production processes. Also, with supply chain automation, businesses can reduce manual labor expenditures, enhance supply chain visibility, and achieve greater accuracy in demand forecasting.

Therefore, the next best step for supply chain companies is to apply supply chain automation software to enhance their supply chain management practices or methods by offering real-time data and increasing the transparency of supply chains. Hence, by embracing these technologies, firms gain a competitive edge, and improve customer satisfaction.

Why is supply chain automation the need of the hour?

Due to several compelling reasons, supply chain automation has become an indispensable need in today’s business environment. Firstly, it can significantly decrease operating costs by minimizing manual labor and enhancing operational efficiency. Thus, this will lead to money, time, and resource savings ultimately contribute to profitability.

Secondly, automation provides real-time data and insights, improving demand forecasting and inventory management. This, in turn, will lead to appropriate decision-making, allowing businesses to allocate resources more effectively and respond quickly to changing customer demands. With real-time data, companies can adjust their inventory levels, optimize their transportation routes, and streamline their supply chain operations, ultimately enhancing customer satisfaction.

Thirdly, automation improves accuracy, reduce errors, and minimize delays, leading to better quality in the supply chain. By eliminating human errors and inefficiencies, businesses can improve the reliability of their supply chain, which is critical for meeting customer expectations and maintaining their trust.
Finally, with supply chains’ increasing complexity and global nature, automation has become necessary to maintain the speed and scale of operations. By adopting automation, businesses can automate routine tasks and prioritize strategic activities like amplifying some latest products and services, thus expanding into new markets and enhancing customer experience.

Therefore, supply chain automation is vital to optimize operations, enhance customer satisfaction, and stay competitive in today’s fast-paced business. Thus, by using automation technologies, organizations can boost accuracy, and improve agility.

Brief overview and types of supply chain automation

Supply chain automation refers to using technology and software to automate and optimize various processes involved in the supply chain, such as production, procurement, inventory management, logistics, and customer service. The goal is to improve operational efficiency and enhance customer satisfaction.

There are four main types of supply chain automation:

Material flow automation: This involves using automated material handlings systems, such as conveyors, robots, and automated storage and retrieval systems (AS/RS), to move goods and materials throughout the supply chain.

Information flow and decision automation: This type uses software and algorithms to collect, process, and explore data from diverse sources, such as sensors, RFID tags, and enterprise resource planning (ERP) systems. This data can then be applied to make informed decisions about production schedules, inventory levels, and transportation routes.

Control and supervision automation: This implicates expanding supervisory control and data acquisition (SCADA) classifications and other control systems to monitor and control various processes in the supply chain, such as production, transportation, and inventory management.

Relationship automation: This automation concentrates on improving communication and collaboration between different partners in the supply chain, such as manufacturers, suppliers, distributors, and customers. This can include electronic data interchange (EDI), customer relationship management (CRM) software, and other tools to streamline communication and improve relationships.

Benefits of supply chain automation

Some of the key benefits that companies can gain by implementing automation in their supply chain processes are:

Reduced operating costs

Automated Supply chain minimizes operating costs by lowering labor costs, minimizing inventory, optimizing warehouse space, and reducing overhead costs associated with inventory storage, including rent, labor, and energy expenses.

Increased productivity

Supply chain automation increases productivity by up to 20% in areas that have been automated by optimizing existing resources and enabling round-the-clock work.

Increased volume

Automation in the supply chain allows manufacturers to increase the volume of products produced by combining the skills of trained workers with the precision of automated equipment, resulting in increased productivity.

More accuracy

Automation helps improve supply chain operations’ accuracy by reducing the likelihood of errors associated with manual processes. Also, accurate and real-time information on inventory levels helps companies to plan and control costs.

Superior time savings

Supply chain automation saves time and money by streamlining business processes and cutting down the time associated with labor-intensive tasks like accounting.

Integrating with large suppliers

Integrating with larger suppliers is a significant benefit of automating the supply chain process. It allows for a stronger foundation and better visibility between partners.

Improving compliance

Supply chain automation helps organizations ensure compliance with industry regulations and standards by standardizing pricing, products, and vendors.

Use cases and examples of supply chain automation

Several examples of supply chain automation are currently being used across industries. Here are a few use cases:

Seven steps action plans for implementing supply chain automation

Implementing supply chain automation can be complex, but following a well-planned action plan can ensure success. Here are seven steps to consider:

Future of supply chain automation

The future of supply chain automation is expected to continue to evolve and expand with the implementation of novel solutions such as artificial intelligence and the Internet of Things. These advancements will enable firms to gain more visibility and authority over their supply chains, cut down costs, increase efficiency, and improve customer satisfaction.

Predictive analytics and machine learning will improve demand forecasting, inventory management, and production planning. Besides, robotics and automation will allow for more precise and efficient product picking, packing, and shipping.

Additionally, technologies such as AI will improve supply chain transparency, enabling better tracking of products and reducing the risk of counterfeiting and fraud. As companies continue to invest and implement these technologies, supply chain automation will become more pervasive, driving increased productivity and profitability across the industry.

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Final thoughts

Considering supply chain automation’s benefits, it is time for organizations to leverage the latest technologies to stay ahead of the business competition in today’s fast-paced and competitive business environment. Automation offers a range of benefits that supports companies streamline their operations and improve their bottom line. By automating repetitive tasks and providing real-time data and insights, firms can take better decisions and enhance their efficiency and accuracy, leading to increased profitability, customer service, and a competitive edge in the marketplace.

Furthermore, automation will be able to aid organizations in scaling their operations more quickly, letting them manage growth and expand into new markets. Likewise, by automating supply chain processes, firms can optimize inventory management, transportation, and other essential operations, leading to cost savings and augmented productivity. Thus, adopting supply chain automation can help companies achieve long-term success and remain competitive in an ever-evolving business landscape. Hence, incorporating supply chain automation can give companies a strategic advantage, facilitating sustainable growth and maintaining a competitive edge in today’s dynamic business environment.

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