Automation In Supply Chain Management

Automation in supply chain management has led to a higher level of competitiveness among companies in the logistics market. Aided by supply chain automation software, the modern supply chain is increasingly efficient — giving businesses a competitive advantage in their industries.

Exactly what is automation in supply chain? In essence, supply chain automation is the definition used to describe the technology innovations and processes, such as integrating supply chain software into a company’s current systems, to streamline the supply chain without the need for human involvement or manual effort.

This type of automation in supply chain management has given businesses numerous advantages. Instead of manually collecting data to determine where their shipments are located in the supply chain, users of supply chain automation can capture data that provides them with details about the progress of the shipment. These details can include the time of departure from a warehouse, potential delays, and the estimated time of arrival to the customer.

Supply chain automation software, which enables teams to integrate numerous applications such as IoT devices, also enhances collaboration among the partners in a supply chain, giving them the ability to strategize alternative solutions in the event of a bottleneck and properly manage inventory levels based on consumer demand.

Overall, real-time visibility in supply chain, achieved through automation integrations, has given businesses an increased level of agility, allowing them to use data insights to enhance demand forecasting, business planning, inventory management, and supplier assessments.

According to the latest supply chain automation statistics, the global supply chain market size is valued at $15.85 billion, with projections of experiencing a CAGR of 11.2 percent from 2020 to 2027. That means it is projected to reach $37.4 billion by 2027.

While some companies are leveraging new supply chain automation technologies to increase their operation’s resilience in an increasingly challenging and complex market, others are still lagging. Nearly 70 percent of companies responding to a recent report said that they did not have total visibility on their supply chain.

However, an increasing number of companies — representing all sizes and all industries — are seeking automation in supply chain management to build more resiliency and agility against the type of disruptions that were rampant in recent years due to the COVID-19 pandemic.

The logistics disruptions caused by the pandemic ranged from shipping delays, product shortages, labor shortages, escalating freight costs, and surging customer demand for various products, causing many companies to struggle with their supply chain operations.

Automation In Supply Chain Examples

The expansion of supply chain modernization, including logistics automation, in recent years, has contributed to a significant boost in the supply chain automation market size. With the market expected to grow by a CAGR of 11.2 percent from 2020 to 2027, an increasing number of businesses will be expected to embrace technology to enhance and streamline their supply chain operations.

Some supply chain automation examples include the following areas:

Transportation. Supply chain integrations help freight forwarders, 3PLs, 4PLs, and carriers, not only gain insights on when a product has left a warehouse, and where it is located along the route, it can help them reduce transit times and minimize shipping expenses. Through technologies like route-optimization automation, freight forwarders and others in the transportation industry can choose the best routes and assign the best carriers for shipments based on various factors.

Back-office operations. Through supply chain automation, companies can streamline administrative tasks and business processes. Instead of relying on more time-consuming and error-prone manual entry of data, businesses can use automation to pull data from purchase orders and other documents into financing and accounting functions of software platforms.

Warehouse. Many companies use supply chain automation for their fulfillment and warehousing operations for order processing and tracking information that can be shared with partners throughout the supply chain and with customers. As a result, companies not only can optimize and streamline their warehousing operations, they can enhance customer service with updates on their shipments and ETA.

Robotics and Automation In Supply Chain Management

Robotics and automation in supply chain management processes, including robotics in operations management and robotics in supply chain management, are presenting new opportunities for business growth.

An autonomous supply chain describes a supply chain that can process a request, pulling a component from its location and delivering it to another point without human intervention. Autonomous robots examples vary significantly, based on size, functionality, level of artificial intelligence, and mobility.

Robots and the autonomous supply chain have helped companies realize the following benefits:

• Faster speed of operations; increased productivity
• Higher levels of accuracy in routine warehouse and manufacturing operations
• Enhanced efficiencies throughout the supply chain
• Reduced costs
• Reduced error rates
• Accuracy in inventory checks
• Optimized picking, sorting, and storing times
• Reduced risks
• Improved data collection about customer expectations

Benefits of Automation in Supply Chain

Companies leveraging the benefits of automation in supply chain are positioning themselves to be more competitive in their industries. Since supply chain technology can transform any systems or operations handled on a computer, the possibilities for automation are extensive — from billing to warehouse inventory systems and shipping. These integrations should be completed according to best practice techniques and industry standards.

As logistics technology becomes increasingly sophisticated through artificial intelligence, supply chain integrations, robotic process automation, and other innovations, supply chain benefits are steadily expanding.

The following are some of the benefits of automation in supply chain that companies are realizing as they make the transition.

Streamline production. Through supply chain automation, companies can optimize their resources and production. In addition to streamlining production processes, companies also can ensure 24/7 production.

Improve collaboration with partners. Automation in supply chain management also provides businesses with the benefit of integrating their systems with key suppliers to improve visibility at various levels of the supply chain. By enhancing visibility through integrated systems, partners can make better decisions that benefit all involved parties.

Minimize operating costs. Through the insights provided through supply chain automation, companies can realize cost savings in areas related to miscalculations about the need for inventory. As a result, companies can save on costs involving warehousing, labor, rent, and energy.

Scale production. With gains and cost-savings in other areas, companies can increase production at a more competitive price that can increase their market share.

Minimize errors. Through supply chain automation, a company can minimize the risk of errors associated with manual entry.

Gain insights in real-time. Businesses can leverage accurate data in real-time to guide decision-making related to potential bottlenecks that could cause disruptions as well as identify customer trends that can guide production and inventory levels. One example pertains to real-time visibility insights into the status of shipments.

Improve compliance. Automation can help a company ensure that it is maintaining industry standards and is in compliance with regulations related to its industries.

Automation In Supply Chain Mckinsey

Automation in supply chain McKinsey studies recognize the potential for artificial intelligence, such as machine learning in supply chain, to significantly improve performance for various businesses including those specializing in consumer-packaged goods (CPG).

However, many companies only have limited reach with their automation in logistics and supply chain management, according to an AI in supply chain McKinsey article.

Instead, they are only identifying individual processes for automation instead of taking a comprehensive approach to autonomous supply chain planning. As a result, companies may be missing out on opportunities to integrate processes and data, allowing systems to communicate with each other.

Here are a few examples of companies using AI in supply chain.

Echo, a Chicago-based transportation management company, uses artificial intelligence to support its supply chain solutions with optimized transportation and logistics. The benefit includes faster and more secure shipment of goods at more cost-effective rates. Through supply chain innovation, services include shipment execution and tracking, rate negotiation, reporting, compliance, and executive dashboard presentations.

J.D.com, a China-based company that is similar to Amazon, plans to have the company 100 percent automated in the future. Currently, it has implemented full automation of its warehouse and has added drone deliveries to its systems. The company combines artificial intelligence, big data, and robotics to secure its position as one of the leading businesses in the world.

New York-based Infor uses supply chain applications that leverage optimization engines, advanced algorithms, and machine learning so that clients can access deep insights based on data analytics and make more informed business decisions. The company offers numerous solutions, including supply chain planning, supply chain finance, warehouse management, supply chain visibility, and procure-to-pay automation.

Supply Chain Automation Trends

According to recent supply chain technology trends highlighted by Gartner, 34 percent of the business leaders surveyed said that adapting to new technology will be one of the most critical strategic changes companies in their field will face by 2027.

With the supply chain automation market size projected to surpass $37 billion by 2027, businesses will be embracing an extensive array of innovative, intelligent supply chain automation tools delivered by an increasing number of supply chain automation companies.

Gartner notes the future of supply chain automation will include the following trends:

Next-generation robots. With innovations focusing on robot automation that can enhance enterprise-level operations, companies in various industries can expect more flexible and adaptive solutions for an extensive number of tasks. Robots of the future also are predicted to be more interactive with other automation, significantly increasing efficiencies.

Digital supply chain twin or DSCT. Considered the digital representation of the physical supply chain, the DSCT provides the foundation for end-to-end decision-making to ensure all aspects of the supply chain are aligned vertically and horizontally throughout the supply chain. The benefit is more accurate and faster decision-making capabilities related to external situations.

Expansive analytics. Companies will be able to gain deeper analytic insights to inform decisions with the increasing availability of data and analytics tools that deliver more comprehensive reports and interactive data visualizations based on them.

Security mesh. Through this framework of governance, collaboration, and applied technology applications within supply chains, companies will be able to ensure the safety and security of their supply chain systems, applications, and tools. An effective security mesh can address cyber threats and other security risks.