Consider the journey of a couch from its raw materials to the customer’s living room. Leather, wood, and foam are sourced, manufactured into a couch, which is stored in a warehouse. The product is then shipped to distribution centers and finally delivered to the customer.
This process requires precise coordination among suppliers, manufacturers, logistics providers, and retailers. With so many steps and parties involved, inefficiencies arise, like data entry errors, lack of real-time visibility into inventory levels, and unoptimized transportation routes. Thankfully, supply chain automation can help reduce these faults.
Here are the benefits of supply chain automation and strategies you can apply across your various supply chain functions to improve operations and efficiency.
What is supply chain automation?
Supply chain automation refers to the technology used to execute repetitive tasks in the supply chain without human intervention. This can include software, robotics, and artificial intelligence to manage and coordinate the flow of goods from suppliers to customers. The goal is to boost speed, reduce errors, and lower operational costs while improving overall productivity.
A supply chain is the network of all the individuals, organizations, resources, activities, and technology involved in the creation and sale of a product, from raw materials procurement to customer delivery. While supply chains improve efficiency, they’re not without their problems.
Supply chain challenges
- Workforce shortages
- Global epidemics
- Geopolitical tensions
- Rising operational costs
- Regulation changes
A supply chain disruption is any event interrupting the normal flow of goods and materials within the chain. These can occur at any stage, from production to delivery. Here are some key challenges:
Workforce shortages
Workforce shortages can disrupt supply chain operations, leading to delays in production and distribution. Insufficient staffing can directly impact your business’s capacity to meet delivery timelines.
Companies see an increase in workforce shortages when there are more jobs and fewer people willing to take those jobs. This leads to increased competition for workers, wage inflation, and creating supply chain bottlenecks.
Global epidemics
Epidemics can significantly disrupt global supply chains, impacting everything from raw material procurement to consumer delivery. Widespread lockdowns and sick workers can lead to abrupt halts and inefficiencies across the entire supply chain. In the case of the COVID-19 pandemic, the enduring effects included semiconductor chip shortages that rippled through industries from automotive to electronics.
Geopolitical tensions
Geopolitical tensions can significantly disrupt global supply chains, leading to market volatility and increased transportation costs.
For instance, the ongoing trade tensions between the US and China, exacerbated by tariffs and restrictions, complicate supply chain management for companies relying on cross-Pacific trade. The war in Ukraine has also disrupted global energy and grain markets, forcing businesses to navigate shortages and seek alternative suppliers and routes. Finding alternatives requires significant time and resources, further taxing companies and potentially delaying their operations.
Rising operational costs
Elevated raw material prices, higher wages, and increased freight rates are inflating operational costs, complicating supply chain management processes. As a result, companies face pressure to adapt their logistics strategies and sourcing decisions to offset rising expenses.
This trend affects industries reliant on international shipping and labor-intensive manufacturing processes. These businesses are more susceptible to cost fluctuations in transportation and labor, which directly impact their production and distribution expenses.
Regulation changes
Regulation changes, like environmental laws and trade policies, continually reshape supply chain management processes. For example, when the EU enforced stricter emissions standards, companies were required to revise their logistics to meet the regulations. These shifts often increase compliance costs and require significant adjustments across global supply chains to uphold legal requirements and market presence.
Benefits of supply chain automation
- Automate manual tasks
- Enhance supply chain transparency
- Increase operational flexibility
- Reduce operational expenses
- Improve customer satisfaction
Automating supply chain processes offers numerous benefits:
Automate manual tasks
Supply chain automation tools use automation technology to streamline manual tasks like data entry, inventory tracking, and order fulfillment. This can help minimize human errors and speed up these processes, allowing your workforce to focus on higher-level activities, boosting overall productivity.
Enhance supply chain transparency
Supply chain automation enables real-time tracking and visibility into every aspect of the supply chain. For instance, by integrating Internet of Things (IoT) sensors and RFID tags, you can monitor the location and condition of goods in transit.
This additional visibility lets you monitor order status, shipment tracking, and supplier performance, providing insights into where delays or inefficiencies occur and why. This detailed insight leads to better decision-making, as it helps ensure resources are allocated efficiently and customer demands are met quickly.
Increase operational flexibility
Supply chain automation allows for quick changes in production and distribution to respond to varying market conditions.
For example, if demand unexpectedly rises, automated systems can instantly adjust order volumes and update distribution strategies to meet the new demand. This quick response helps prevent both stockouts and excess, ensuring the supply chain operates smoothly despite fluctuations.
Reduce operational expenses
Supply chain automation can help minimize human errors, thereby preventing costly corrections and delays. For instance, automation technologies ensure accurate stock records through automated order entry, preventing excess inventory purchases, and reducing waste by identifying items nearing expiration through automated tracking.
Additionally, automation strategies like optimized route planning and load scheduling cut fuel costs and improve vehicle use. For example, automated route planning selects the most efficient paths for deliveries, reducing travel time and fuel consumption. Automated load scheduling ensures trucks are fully used, maximizing cargo space and minimizing the number of trips.
Improve customer satisfaction
Supply chain automation improves order accuracy, speeds up fulfillment, and improves inventory management, all of which elevate customer satisfaction. By tracking what customers buy, you can anticipate demand and make sure products are ready to ship as soon as they’re ordered. This speeds up delivery and makes the shopping experience better.
These improvements ensure customers receive their orders promptly and accurately, making customers happy and reducing complaints and returns.
Supply chain processes to automate
- Warehouse automation
- Back-office automation
- Transportation automation
- Inventory automation
- Customer service automation
There are plenty of benefits to automating supply chain operations. If you’re not sure where to start, here are some critical areas to consider:
Warehouse automation
Warehouse automation transforms your operations through a warehouse management system (WMS) that can optimize inventory tracking, order fulfillment, and labor management. By integrating this system with an automated storage and retrieval system (AS/RS), your warehouse can streamline material handling, reduce manual labor, and better use vertical space.
You can also deploy autonomous mobile robots (AMRs) to automate goods-to-person picking, improving efficiency, accuracy, and worker productivity in your warehouse operations.
Back-office automation
To streamline your back-office and administrative supply chain tasks, implement robotic process automation (RPA) solutions. Implementing RPA involves setting up software-based robots to handle tasks within digital systems, streamlining operations without the need for physical machinery. These tools can automate repetitive and rule-based processes, like data entry, invoice processing, and order management, freeing up your staff to focus on more strategic initiatives.
You might consider integrating your RPA with artificial intelligence (AI) and machine learning (ML) technologies to automate complex supply chain tasks, like demand forecasting, inventory optimization, and supplier risk assessment. Adopt cloud-based collaboration and workflow management tools to improve communication and coordination among your supply chain teams, which can speed up administrative tasks across your organization.
Transportation automation
To improve supply chain agility and optimize your transportation business processes, leverage transportation management systems (TMS) that offer real-time visibility, route optimization, and automated carrier selection. These systems can reduce transportation costs, make data-based decisions, and quickly adapt to changing market conditions.
Integrate your TMS with real-time tracking solutions to monitor shipment progress, automate alerts for delays or disruptions, and proactively communicate with carriers and customers, ensuring a responsive and efficient transportation network.
Inventory automation
To automate inventory management and efficiently handle supply chain tasks, start by implementing inventory management software that integrates with your enterprise resource planning (ERP) tool and WMS. This integration offers real-time visibility into stock levels, tracks inventory movement, and optimizes reorder points based on demand forecasting and supplier lead times.
Additionally, incorporate IoT sensors and RFID technology to further automate inventory tracking. These technologies monitor storage conditions and enable real-time asset tracking, reducing manual work and improving inventory accuracy.
Consider adopting advanced analytics solutions to analyze inventory data. These tools can predict potential stockouts or overstock incidents by automatically adjusting inventory levels based on market trends and customer demand patterns.
Customer service automation
To streamline customer service processes and reduce time-consuming tasks, implement an AI chatbot solution. This handles routine inquiries, freeing up your customer service team to focus on more personalized support.
Integrate your chatbot with your customer relationship management (CRM) tool and order management systems to provide real-time order status updates, shipment tracking information, and proactive notifications to customers. This improves transparency and reduces the volume of inbound customer queries.
These advanced tools can analyze customer interactions to identify common pain points or frequently asked questions.
Supply chain automation FAQ
What are the disadvantages of supply chain automation?
The disadvantages of supply chain automation include high initial implementation costs, reliance on technology that may be vulnerable to hacks, and potential job losses due to reduced need for manual labor.
What does RPA mean in the supply chain?
RPA, or robotic process automation, in the supply chain refers to using software robots to automate routine and repetitive tasks and reduce errors.
Why automate a supply chain?
Automating a supply chain increases efficiency, reduces costs, improves accuracy, and enables businesses to scale operations while responding more quickly to market changes.
