What is supply chain automation, and how can it improve the operations of your business? 10 Mar 2023
If your factory is the beating heart of your business, the veins and arteries are your supply chain. To provide a dependable service, everything must be connected for your operational effectiveness.
Supply chain management has become disconnected as a result of gaps between applications used by many firms’ patchwork old systems, which can cause inefficiencies, a lack of visibility, and overall unpredictability.
A low-code automation platform may connect systems for a 360-degree view of operations and automate processes throughout the whole supply chain.
Repeatable, methodical, and error-prone processes abound in supply chain networks, including manual documentation mistakes, selecting and stocking errors, shipping and receiving problems, and many more. Supply chain executives are working harder to address these flaws and enhance their supply chain operations in the post-pandemic environment.
The market for supply chain automation expanded by 10.3% annually from 2015 to 2019 and is expected to quadruple by 2026 as a result of supply chain executives discovering the advantages of automation. With plans for supply chain hyper-automation, Gartner anticipates supply chain autonomy in 10 years or more. In order to overcome the flaws in their supply chains and maintain their competitiveness, businesses must put more emphasis on automating their processes.
Supply Chain Automation: What Is It?
Despite having the potential to experience some of the biggest value improvements of any business, supply chain organizations showed some of the lowest rates of process digitalization among the companies examined in a recent McKinsey analysis. Automation may benefit businesses of all sizes by simplifying repetitive processes and allowing the human components of the supply chain to concentrate on more important issues and long-term planning.
- lower their operating costs.
- increase their accuracy and productivity.
- Reduce or greatly reduce worker injuries.
- arrive at more accurate and timely enterprise decisions.
Different businesses will devise various strategies to achieve these objectives, but the end result of automation is to optimize our use of resources, carry out essential tasks with significantly greater accuracy, and produce accumulated data that can gradually deliver more actionable insights and process improvements.
Businesses of all sizes, from UPS to the neighborhood family restaurant, are learning why automation can be so efficient at managing time and resources. Consider a warehouse employee in UPS’s situation unloading a truck and organizing packages for the following leg of their journey. When the worker scans a package’s bar code, a sequence of things happens, including automatic chain-of-custody record changes and automated emails to recipients waiting on the other end for an update on a potential delivery. For an even more simplified intake procedure, a different version of this picture swaps out hand-scanning for RFID tags and readers.
In the case of that family restaurant, automation may build employee schedules based on previous business data or even forecast demand for (and plan supply of) critical ingredients and supplies throughout the year.
Automation guarantees that consumers may make orders at any time of day using current product availability data, get queries addressed, or have the status of their shipments checked whenever they need it for just about any form of business.
Benefits of supply chain automation:
Since the complexity of conducting business in the modern market keeps increasing, more enterprises are adopting supply chain automation. Supply chain managers are always seeking methods to make their supply chains more accurate and efficient. So, where does automation come in and how might it be helpful? Your supply chain processes may benefit in a variety of ways from automation. These are a few ways that automation may help your supply chain.
Automation of the supply chain contributes to the reduction of labor costs, inventory, warehousing, and overhead expenses related to the storage of inventory, such as rent, labor, and energy costs.
Companies can increase production in automated areas by up to 20% by making the most of their present resources and enabling round-the-clock operations.
Automation increases the number of items that can be produced for firms. Productivity will rise as a result of the technology’s ability to combine skilled laborers’ abilities with the precision of automated machinery.
Automation may aid in planning cost control by reducing errors associated with human procedures and providing precise, up-to-date information on inventory levels.
Supply chain automation increases time savings by decreasing the time required to perform labor-intensive functions like accounting, saving manufacturers a significant amount of time and money.
Collaborating with powerful suppliers
One of the main benefits of automating a supply chain is the ability to link systems with those of large suppliers since it offers a stable foundation that permits increased visibility among partners.
Minimizing a human mistake
When activities are carried out manually, it is quite possible that something will go wrong since humans make mistakes. Automation reduces the chance of error by eliminating humans from the process, which may prevent errors like:
- Accidentally duplicating an order
- Incorrectly entering data from inventory or order details
- Entering inaccurate customer information (email, phone number, shipping address, etc.)
- picking and packing the wrong item in an order
Improved supply chain transparency
It takes a lot of work, communication, connectivity, and dedication from retailers, suppliers, and service providers to maintain supply chain visibility. Information is automatically captured and updated in almost real-time thanks to digital automation. This makes it possible for interested parties to manage inventories, acquire crucial information as needed, and communicate rapidly across the supply chain. The efficiency of your supply chain will thus rise as a result of the quick identification and elimination of bottlenecks, which will prevent additional delays and interruptions.
What aspects of the supply chain can be automated?
Despite the fact that it is presently not viable to automate your complete supply chain, businesses might do so by automating certain crucial procedures and jobs. These are a few supply chain procedures you might want to automate.
The transportation of physical products is often studied in connection with supply chain management. Nevertheless, a sizable amount of the procedure takes place in the background. Back-office activities lay the foundation for all supply chain operations. These include procurement, production flow, and operations in charge of the massive volumes of data that regulate the transfer of raw materials and completed commodities. The pace and effectiveness of jobs may be considerably improved by implementing automation in this process.
Businesses may achieve nearly 100% back-office automation using optical character recognition (OCR) and artificial intelligence (AI). Tasks that can be automated include (but are not limited to) data collection, document content recognition, etc. Supply chain productivity and efficiency may both be enhanced through robotic process automation (RPA). By 2023, 44% of participants in a global poll predict that RPA will significantly or moderately disrupt supply chains.
- Warehouse management
The automation of warehouses is now a significant trend in the supply chain sector. Certain software may automatically gather, process, and provide consumers with tracking information about their orders. These applications may have the ability to automatically send every order to the best warehouse, depending on the amount of space available and the efficiency of the picking.
Moreover, warehouse automation has advanced in sophistication. Box selection algorithms, mobile barcoding, and radio frequency identification are examples of possibilities for automated identification and data capture (AIDC) technology. The latter suggests the ideal box size save waste and lessens the chance of product damage.
There are several approaches to automating transportation, one of the most crucial supply chain tasks. Yet, the goal of any automation system is to enable quick, accurate, and high-quality delivery in a more efficient and cost-effective manner. These are but a few illustrations of such approaches. The best carriers and the quickest, most effective routes may be found with the use of route optimization. A multi-dimensional monitoring tool gives you current vehicle data and alerts you to potential delays. You may streamline your transportation procedures and save transportation expenses by utilizing these and other technologies in transportation software development.
While certain portions of inventory management may be automated, it still requires human knowledge in many areas. Automated reorder point alerts help you schedule replenishment correctly and avoid stockouts and backorders when you reach a threshold number for a certain SKU.
In order to save time and hassle, some retailers decide to automate the entire restocking process and set up their system to automatically order stock if an SKU reaches its threshold. The finest insight into inventory levels so that you know precisely how much product you have remaining at any one time comes from automatic inventory counts that are current, even to the minute.
Trends in supply chain automation
The revolutionary technologies in supply chain management include, but are not limited to, digital twins, artificial intelligence, and cutting-edge analytical tools.
- Artificial intelligence (AI)
The application of artificial intelligence is revolutionizing supply chain management. Although AI is often not able to resolve issues that have already arisen, it is very useful in foreseeing future issues. AI can optimize inventory management and automate supply and demand forecasting, enabling firms to take proactive action by increasing supply prior to shortages and decreasing inventory prior to demand declines. AI assists in predicting supplier-related hazards in addition to managing supply and demand. Raw material insecurity is a common problem for businesses; if they don’t have enough inventory, suppliers can end up serving their lowest-margin clients last or not at all. AI enables managers to identify which suppliers’ mail does not arrive and why enabling managers to come up with a solution.
In conclusion, AI is no longer a choice but a must for your supply chain transformation. Supply chains benefit from an unparalleled degree of agility thanks to AI technologies. This is particularly true of supply chain automation in the areas of logistics, transportation, healthcare, and other industries.
- Advanced Analytics
Supporting decision-making is the primary function of advanced analytics in supply chain management. Large volumes of data produced by supply networks are only meaningful when properly interpreted. Powerful analytical tools give businesses accurate, trustworthy data that is accompanied by graphs, charts, and other visuals. The preceding digitization, purging, and standardization of such data throughout the whole supply chain ensure its dependability. As a result, the issues of inconsistent and fragmented information are resolved. Even analysts without a background in programming can get useful insights and easily depict results with the correct auxiliary analytical tools at their disposal.
The developers may work with you to integrate advanced analytics into your current system or assist with the creation of a complicated SCM system from scratch. We can also assist your business with data cleansing and digitization so that your supply chain has a single source of truth.
- Digital twins
While it may sound fantastical, digital twinning is a very practical technology that enables consumers to avoid supply chain interruptions. By creating a digital duplicate of your supply chain using virtualization technology, you may test different scenarios and alternative model assumptions to see how they affect supply chain operations. For instance, you may accurately model your warehouse in 3D and experiment with new equipment or other layouts while doing so securely. Digital twinning can be used by logistics departments to enhance delivery times through route optimization. Because of these factors, digital twinning is one of the most intriguing new technological developments.
Although there are many advantages to supply chain automation, a human employee may still outperform our tiny robot buddies in a number of crucial tasks. While many businesses are adopting supply chain automation, some are holding out while they wait to see how things pan out.
Let’s look at how employees still outperform robots despite the limitations of automation:
- Simple tasks
Little robots are quite useful in a warehouse setting, but they cannot fully replace a human worker. When it comes to navigating their surroundings and collecting the proper items, warehouse robots used in current supply chain automation setups are incredibly precise and efficient, but they lack dexterity.
Most require carefully finished surfaces to function properly, and you will need to fetch someone if you need something from upstairs. Also, workers are better equipped to make judgments at the moment based on external inputs.
Our tiny mechanical companions’ incapacity to do any sort of management is one of their biggest flaws. Some workflows and other optimized operations can be handled by artificial intelligence, but they lack very human characteristics.
Although supply chain automation is a terrific way to increase efficiency, you’ll still want a human touch to remain competitive. An AI assistant does not have the power or foresight to interact with a sales professional but understands that a large transaction is coming down the line based on how the discussion went.
The HR industry is another area where automation has no place currently. Sick days or other issues in an employee’s life that demand empathy cannot be handled by a machine. A robot is still a long way from being able to help businesses sort through difficult interpersonal problems.
- Robotization Expense
The expense of entry is also one of the key reasons some organizations are delaying supply chain automation. A price tag can make someone hesitate. Such a risky investment may not seem worthwhile at this time if you are unsure about using robots in your business.
The expense of AI is another issue. According to a survey, 80% of IT and corporate business leaders are interested in learning more about the price of implementing current AI technology in an organization; 74% are curious about how much more implementing AI would cost than current expenditure levels; and 69% want to know more about how to calculate the return on investment (ROI) for a new AI solution.
There will be many businesses that delay robotization until we have more information on how much installing this sort of technology costs. You may anticipate a boost in the adoption rate of supply chain automation whenever a precise ROI for such an endeavor is provided.
Confined at the moment to specific duties
Not every aspect of the supply chain can be automated. The majority of supply chain procedures will still require human involvement and attention, even though relatively routine jobs like order processing, inventory counts, and administrative chores are excellent candidates for automation.
For instance, even if picking lists are generated automatically and warehouse robots can be assigned to help with the actual picking, these robots are still unable to make important judgments depending on the circumstances at hand (for instance, what to do in case of shortages). Also, they lack the dexterity required to choose particular things that are kept in more difficult areas.
Use Velan to automate your supply chain.
Partnering with a logistics platform like Velan is an excellent alternative if your company is having trouble automating the supply chain due to financial restrictions or a lack of resources.
In order to maximize time and money savings at each level of the supply chain, Velan in particular deliberately uses automation.
Velan’s software is directly integrated with your e-commerce platform, allowing us to handle orders as soon as they are placed on your website. There is no halting the use of supply chain management software going forward; supply chain automation is on the rise. You may anticipate a rapid expansion in the use of robotics as we learn more about how to make them more reasonably priced and how to customize them to our operations’ requirements.
Keep a lookout for these revolutionary technological advancements as they emerge, and be prepared to use them when they do.
What do you think about using supply chain automation in your business?