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Published: 7 June 2024
Contributors: Teaganne Finn, Amanda Downie

What is supply chain automation?

Supply chain automation is when a business uses automation technology, like artificial intelligence (AI), machine learning, and digital process automation to do supply chain tasks with limited human intervention. The use of this technology can streamline the management of goods and services and help businesses scale up their organization.

The global supply chain faces challenges and disruptions often. For example, the COVID-19 pandemic was a major upset to supply chains around the globe and businesses are still feeling the impact. Labor shortages and geopolitical conflict have contributed to continuous supply chain disruption. Also, the growth in ecommerce platforms has expanded the volume of goods being produced and shipped.

However, with the introduction of new technologies, such as automation and AI tools, companies have new methods to cope plan, and forecast within the ever-changing landscape. AI plays a crucial role in automating repetitive tasks in real-time, driving employee productivity and customer satisfaction.

Progressing Supply Chain Resiliency
Why is supply chain automation important?

A supply chain consists of the entire process of production to the selling of goods. The process starts at procurement of raw material all the way through to the delivery and recover. Global supply chains, including the manufacturers and retailers that logistics providers source to run the supply chain system, will continue to face challenges. Thus, it is important to have flexible, reliable supply chain management practices and tools.

Supply chain automation is a supplement to human workers, not a replacement. AI tools work alongside the human workforce to cut down on supply chain bottlenecks and unnecessary inefficiencies, along with helping companies meet regulatory compliance. Automation can come in many forms through different types of technology, including physical machines, Internet of Things (IoT) devices, robotic process automation (RPA), and intelligent document processing (IDP).

As the global supply chain continues to change, it's important to refine workflows and take advantage of the newest automation solutions that can minimize or eliminate time-consuming manual tasks. Automation tools can provide inventory management through an automated system, which can be much more efficient than a legacy system. This allows employees more time to do higher-level tasks within supply chain operations.

Benefits of supply chain automation

The digital transformation age is upon us and businesses that can use speed and agility are much more likely to come out on top. Below are the biggest reasons why organizations might consider implementing AI into their supply chains.

  • Added flexibility 
  • Better planning
  • More transparent IT systems
  • Improved customer experience
More flexibility than the current system offers

Legacy supply chains are not optimized for the digital landscape that we’re seeing today. Oftentimes logistics employees are sourcing information from documents, spreadsheets, emails and other digital documents to perform essential processes. This can lead to human error and a disruption of the entire supply chain.

By managing these tasks through automated channels, such as apps or RFID (radio frequency identification) tags, companies get more flexibility to respond quickly to market needs and fluctuating demand.

Better planning mechanisms

A current, successful supply chain needs to be adaptable to the changing world around it and be able to elevate planning capabilities. The way to get there is through automation tools that provide real-time data insights, accurate demand plannin, and demand forecasting.

With those tools in place, supply chains can make smart, cost-saving decisions based on more accurate information than ever before.

Transparent approach to IT systems

Legacy IT systems have limited capabilities, making it hard for supply chain professionals to see all supply chain processes and operations in a holistic way. The sharing of information has traditionally proven difficult and inconsistent, which is where automation comes into play.

The automation tools offer a seamless connection of information and data entry into one place visible to all supply chain employees. This simplifies business processes and makes it so all those involved in the supply chain are on the same page.

Improved customer satisfaction

With AI capabilities the customer experience can improve greatly through faster and more accurate response time. An example being last-mile delivery, in which an automated system can take data in real-time and reroute as-needed. Or in long-haul transport an automation tool can help send drivers to warehouses for pickup and see driver schedules with real-time visibility.

Supply chain automation trends

The Covid-19 pandemic was not a disruption predicted by the global supply chain. However, as much as possible, it’s important to keep ahead of emerging trends, including:

1. A sustainability focus: There is likely to be a bigger focus on environmental, social and governance (ESG) priorities as companies seek to meet new reporting standards and regulations. Separately, customer expectations are also more focused on reducing carbon emissions and companies with more transparent information available to the public consumer.

The solution: Automation tools can help automate ESG reports and collect data quickly, cutting out the need for manual processes.

2. A change in the workforce: The workforce is aging, therefore, finding skilled, experienced employees has become more of a challenge. Roles are not being backfilled and retaining employees is a growing issue.

The solution: Automation is becoming one of the critical solutions to addressing the issue and by using digital systems, such as warehouse automation to fill in the gap. 

3. A drive toward AI: AI technology is exceedingly popular, especially in supply chain optimization and other business transformation efforts. With supply chain automation specifically, AI is helping organizations make proactive decisions and use data sets.

The solution: AI technology is assisting in demand forecasting, route optimization, inventory levels, decision-making and more.

Examples of supply chain automation

Automation tools can be applied to a supply chain during various steps of the process. Below are some use case examples to explore.

Inventory management

A traditional supply chain operation would manage inventory through several different systems, perhaps an employee registering goods by hand or a technical mechanism that is prone to errors. What automation technology offers is warehousing simplified through AI digital tools. The AI technology can integrate data and create patterns with purchase order information and historical demand patterns to maintain proper inventory levels.

Back-office automation

Supply chain software can improve back-office efficiencies by automating data entry, minimizing the risk of human error and operational costs. The automation tools can pull data from orders without manual input necessary and inputs that data directly into the systems where it belongs.

Warehouse automation

Automation technology serves no area of a supply chain more than in the warehouse and improving the overall efficiency of inventory storage. Many aspects of the order processing and order fulfillment process can be automated by using automation software. Separately, AI assistants can help enter invoices, purchase orders and receipts automatically into the organization’s Enterprise Resource Planning (ERP) or accounting software.

Logistics automation

Digital technology is helping businesses manage package delivery and ensure better communication between transport employees. As the ecommerce space continues to grow easier delivery tracking methods are necessary to meet customer expectations. Supply chain automation software can provide route optimization, GPS tracking and real-time delay alerts, ensuring the customer is happy and all is running smooth on the back-end.

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