Automation is coming to every industry, and nowhere is this more true than in the supply chain. Indeed, coming advances in automation technology could potentially reshape the entire supply chain—and supply chain management software—as we know it.
Forward-thinking supply chain players are already preparing themselves for the new landscape. CIOs should be leading this charge to drive the best possible outcomes for their organizations, but it’s important to understand the nature of robotics, AI, and automation in the supply chain first.
What is supply chain automation?
Supply chain automation is a broad term that refers to technology that reduces or eliminates human involvement in supply chain activities. Automation encompasses many different technologies and methods, including machine learning, robotics, artificial intelligence, and more. This means that there are many different ways to automate different aspects of the supply chain.
Supply chain automation can potentially help solve many of the problems that manufacturing is facing today, including worker shortages, material shortages, incorrect demand forecasting, transportation delays, and other issues. As supply chain automation technology matures and the prices drop accordingly, it will soon become an integral part of the industry instead of an add-on for niche use cases.
What supply chain processes can be automated?
Almost any aspect of the supply chain can be automated, at least in theory. In practice, certain steps of the supply chain process are closer to being fully automated than others. Supply chain tracking, inventory management, warehouse management, transportation, and back-office tasks are among the most commonly automated processes today.
Supply chain tracking
Supply chains involve many moving pieces, from procuring raw materials to shipping the finished product. Tracking systems automatically monitor each shipment and ensure that each piece is sent and received on time.
If a pattern emerges with a particular destination, carrier, or route, the tracking system can alert the relevant teams. If it appears that inclement weather in a particular region will affect delivery times, for example, customer service teams can be proactive about notifying customers of delays. Or, if one carrier appears to have more frequent delivery issues, the leadership team can use the data to make an informed decision about that business relationship.
Proper inventory management is key for preventing both over- and under-stocking, both of which can cause major issues for a supply chain and eat into company profits.
Fortunately, demand planning analytics can forecast whether or not future demand for products will change. Then, inventory management systems generate automatic notifications when an SKU is running low to prevent frustrating out-of-stock situations.
Supply chain automation is already changing warehouse management in multiple ways. For example, SCM software can automatically receive and confirm orders, while box algorithms recommend the right size box to consolidate shipments and reduce waste.
Additionally, warehouse management tools can help eliminate or optimize repetitive tasks. Pick-to-light systems, for example, help human workers find products faster. Robot-guided vehicles—such as those Amazon warehouses use to fulfill orders—can retrieve packages without human assistance.
Transportation automation still has a long way to go due to the immense technical challenges, but it holds great promise for the future of supply chain automation. This type of automation involves self-driving vehicles, alternative delivery devices, and route optimization technology.
Once they become viable, self-driving trucks would address the long-haul truck driver shortage, while transitioning to delivery drones will reduce the need to use trucks and vans for last-mile delivery. In the interim, transportation automation is best focused on optimizing delivery routes and automotive maintenance schedules.
Thanks to the power of both artificial intelligence and optical character recognition (OCR), documents such as orders, receipts, and invoices are captured and processed automatically. This reduces repetitive, manual tasks, ensures greater accuracy, and improves the efficiency of billing processes as a whole.
Benefits of supply chain automation
Automating various aspects of the supply chain holds a lot of promise for businesses of all sizes.
First, automation allows human workers to spend more time and effort on value-added tasks. It also minimizes human error with tasks like data entry, where there’s a risk that information could be duplicated, incorrect, or missing.
Plus, the digital paper trail created by SCM software increases visibility into every aspect of the supply chain. This enables company leaders to make more strategic decisions that are informed by real-time data.
Supply chain automation makes it easier to maintain organizational agility as well. When something unexpected happens—such as a natural disaster, widespread raw materials shortage, or global pandemic—SCM software can help estimate the impact and create a response plan.
These combined factors result in faster production pipelines, increased profits, and improved customer satisfaction.
Limitations of supply chain automation
Despite the significant benefits, supply chain automation is still in the relatively early stages. As such, there are some limitations for companies hoping to go all-in on supply chain automation.
Many technologies, especially artificial intelligence, haven’t fully matured and reached their full potential yet. This means that only the most menial, rote tasks can currently be automated. It will take time before the software is able to handle more complex tasks that are currently done by humans, which is why so much SCM software is currently focused on the back office.
Cost is another significant challenge. This is especially true when it comes to robots, which are expensive to install and require ongoing maintenance to keep them functioning. Costs will come down as the technologies advance but for now, it remains a significant barrier to entry for a lot of supply chain entities.
This is why massive corporations such as Amazon are currently paving the way for supply chain automation, especially when it comes to robots and self-driving cars. It will be a while before smaller players with limited budgets are able to experience the benefits of supply chain automation.
The future of supply chain automation
While supply chain automation is in the relatively early stages of development right now, it’s eventually going to become table stakes for staying competitive in the manufacturing sector—and that will probably happen sooner rather than later.
Even if their company doesn’t currently have the budget to implement all types of automation right now, CIOs of supply chain companies need to understand what moves their competitors are making and how automation will impact their own supply chain in order to stay relevant for years to come. Choosing SCM software with machine learning or artificial intelligence capabilities is a great starting point.
Hardware-intensive automation tools such as warehouse robots and self-driving cars are more of an investment, but as their reliability goes up and costs go down, they will become accessible to smaller supply chain players. Understanding the benefits of robotics in the supply chain and preparing accordingly is key.
For the near future, CIOs should focus on updating legacy systems to get ready for these coming changes. They should also hire staff skilled in key areas such as AI, data science, and robotics so they already have the people that they need in place when the time comes to implement new supply chain automation initiatives.
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