Gaining a competitive advantage, improving customer service, driving growth, and optimizing costs are top objectives that business leaders aim to reach when investing in supply chain technology, according to a recent PwC survey.
With growing customer demand and risks, automation in the supply chain has become essential to streamline processes, reduce costs based on real-time analytics, and foster efficient inventory management by minimizing manual errors. The latter costs businesses around $600 billion annually.
In this article, you will learn what supply chain automation is, as well as its best practices, applications, challenges, and future trends.
Understanding Supply Chain Automation
Traditional supply chain processes imply a linear trajectory from suppliers to end consumers. Everything from procurement of raw materials to manufacturing, storage, distribution, and delivery is often performed manually and on-premises. Therefore, legacy processes fail to provide the required amount of visibility, accuracy, and flexibility, essential to meet the growing customer demands.
An automated supply chain allows businesses to automate warehouse management, inventory tracking, and document processing, which fosters the following benefits:
- Increased efficiency and productivity. By automating manual tasks like data entry and tracking you can speed up the processes, save your employees’ time for more meaningful tasks, and boost overall productivity.
- Cost reduction. A streamlined, data-driven supply chain allows you to adjust the operations to current customer demands, thus minimizing budget wastage. What is more, you can deploy less workforce by delegating some repetitive tasks to machines.
- Enhanced accuracy and reduced human error. With increased visibility, you can decrease the number of errors during order fulfillment. Besides this, automated repetitive tasks can be completed with higher accuracy when performed by machines, which also streamlines your operations and increases overall efficiency.
- Improved customer satisfaction. Fast and accurate delivery, real-time access to order data, and demand-driven warehousing are some benefits that allow you to meet and even exceed customer expectations. As a result, you can gain a competitive advantage, prevent your clients from opting for your competitors’ goods or services, and increase your sales.
These benefits are primarily driven by the following technologies, which are often used in supply chain automation:
- Artificial intelligence (AI) and Machine Learning (ML). As found in the PwC survey, these two technologies are expected to receive the most spending: 22% of executives plan to invest a minimum of $5 million. This enables them to more easily capture data to analyze it and help in more informed decision-making.
- Internet of Things (IoT). It’s the second most adopted tech, according to PwC, with 79% of executives implementing it into their supply chains to monitor stored goods, report on their location and condition, and share this data across the company.
- Robotics and Drones. They are fully or partially adopted by less than half of PwC respondents, yet the technologies allow you to automate warehouse management and delivery, speeding up the processes and optimizing the efforts.
- Blockchain. The technology is almost equally used for all supply chain stages, from planning to delivery, as it allows for transparency of materials and goods at every stage.
Applications of Supply Chain Automation
There are numerous applications of automation in supply chain management. The primary and most adopted use case is data interchange, which exceeds all the other spheres in terms of manual intervention, according to Raconteur findings. Next comes manufacturing, which implies the automation of production processes.
Here are the top four applications of automated supply chains:
1. Procurement and Sourcing
By automating procurement and sourcing, you can automatically select the best supplier that offers the right amount of goods at the best price and delivery time. What’s more, it allows you to track the current stock, correlate it with the forecasted demand, and timely order more raw materials or goods to ensure smooth operations.
To enhance planning, you can opt for an AI-based dynamic demand-forecasting system: it will provide estimates based on current and historical data for specific periods of the day, week, month, or year.
2. Inventory Management and Warehousing
By equipping your warehouse with IoT sensors, you can automatically source data on the amount of goods available, as well as their state. The latter is especially beneficial for goods that require specific temperature or humidity levels in order to not expire.
If you invest in Robotics Process Automation (RPA), you can provide your warehouse with a 24/7 manager that will complete repetitive tasks from data entry to inventory tracking, saving you time and money.
Read also: How IoT Can Transform Warehouse Operations
3. Transportation and Logistics
Drones and autonomous vehicles can speed up delivery, especially last-mile delivery, as they can drive 24/7.
If you still trust human delivery specialists, you can optimize their routes to speed up the delivery and establish real-time delivery tracking to offer your clients up-to-date information on their orders.
By equipping the trucks with IoT sensors, you can control the temperature and humidity levels to ensure groceries or flowers are transported in proper conditions.
4. Supply Chain Risk Management
By enabling AI-based forecasting, you can switch from a reactive model to a proactive one. In other words, based on the acquired data, AI/ML algorithms may predict coming risks like huge volumes of orders, allowing you to timely take actions to minimize risks.
Furthermore, you can set up rules for emergency situations, for your system to timely address potential risks. For example, decrease the ordered volume of raw materials if the demand is decreasing within a specific timeframe.
Read also: AI/ML Algorithms for Businesses to Watch in 2023
Challenges Businesses Face When Implementing an Automated Supply Chain
Although businesses have already adopted supply chain automation to some extent, the majority of them admit that the investments haven’t fully delivered the expected results. This can be triggered by several challenges companies face when implementing this tech.
Technological Challenges
According to Raconteur, software/integration issues are the top challenges for automation performance. Investing in cutting-edge tech doesn’t ensure its efficiency, unless it’s properly aligned with internal IT infrastructure.
What is more, businesses need to address data concerns, considering that data interchange is among the top automated tasks. It’s crucial to establish a secure connection between all software solutions and devices. Otherwise, business risks leaking sensitive data, which often leads to financial and reputational losses.
Workforce Challenges
According to a 2023 PwC survey, change management among employees is among the top three current challenges, with businesses finding it hard to get employees to work differently. Another pitfall is developing tech-savvy talents with digital skills to foster their digital transformation.
A year ago, executives planned to hire more employees, seeking to source the right talents — but this year, they are focusing on reskilling. This time-consuming initiative can eventually allow businesses to fully implement supply chain automation.
Regulatory and Legal Challenges
ESG issues are still a significant challenge in the industry, as reported by PwC. Businesses struggle to attract employees with digital skills and to assess ESG-related regulatory requirements, while some don’t have any digital ESG or digital supply chain strategy.
Reduced Costs, Increased Accuracy, and Enhanced Efficiency: Real-World Examples of Supply Chain Automation
Supply chain automation is applied across numerous industries, from manufacturing and logistics to retail. For example, a logistics service provider AM Transport automated data entry to eliminate repetitive tasks and expand workflow in other areas. The solution allows companies to automatically contact all stakeholders, including customers and the accounting department, as well as to submit bills of lading.
A Swiss chocolate factory improved efficiency by 50% and reduced costs via modernized inventory tracking through a mobile app with integrated QR codes. The app tracks the movements of goods, identifies inventory issues like excess or obsolete stock, and delivers accurate data. Download the Case Study.
Future Outlook: Trends and Opportunities in Supply Chain Automation
Automation in the supply chain has already facilitated the workflows in manufacturing, logistics, and retail industries. With advancements in AI, IoT, and Robotics and Drones, these industries are going to experience a higher degree of automation, which potentially may not require any manual intervention.
What is more, the industry is likely to experience the rise of the “Supply Chain as a Service” model, facilitating the processes from production to shipping, as well as a higher focus on risk management, stability, and sustainability. The last is likely to be on the agenda in the coming years, especially because business leaders still struggle to meet ESG objectives in the supply chain.
Conclusion
Supply chain automation is a game-changer that allows you to abandon legacy processes for the sake of tech-powered ones in order to meet the growing customer demand. With the right application of AI, ML, IoT, RPA, and blockchain, you can get rid of repetitive manual tasks, automate inventory tracking and warehouse management, and optimize logistics and procurement. What is more, the solution allows you to dynamically manage the supply chain to proactively tackle potential risks and always stay on the competitive edge. Today’s legacy processes may merely lead to poor customer service and lower sales, but in the future, they may become the deciding factor in your competitiveness. If you want to meet your industry standards and demands, Intetics is here to help you out with supply chain automation.
