Future Trends of Supply Chain Automation in India

The global market for supply chain management solutions is expected to reach $65.8 billion by 2032 at an estimated CAGR of 10.8%. Such rapid growth will come from the digital transformation of legacy supply chains and the upgrading of already digitised supply networks leveraging advanced technologies. It’s important for every business decision-maker to learn about future directions in India’s supply chain automation. 

What is supply chain automation? 

Supply chain automation is the practice of using technology to reduce human intervention, streamline, and optimise supply chain processes, starting from sourcing and procurement to finished product delivery to end customers. 

We can understand automation of a supply chain through how today’s large e-commerce companies handle their supply processes. In fact, e-commerce is the sector that has revolutionised end-to-end supply chain automation practices in the world. 

Some of the crucial components of any large e-commerce company (for example, Amazon, Rakuten, JD.com, Alibaba, and many more) are: 

• Robotic system-driven warehousing 
• Conveyer-belt automated driven sorting system 
• RFID and IoT-enabled real-time tracking of assets 
• Automated order processing and fulfilment 
• Order routing based on predictive analytics 
• Automated packaging 
• Deliveries using drones and autonomous vehicles 
• Real-time vehicles tracking 
• AI chatbot-based customer query handling and return automation 

Importance of supply chain automation

Supply chain automation is essential in any industry as it can benefit any business in several ways to ensure better customer experience and improve profitability. 

• Increase efficiency and operational speed: Supply chain process automation leverages sensor-based data capture, reduces manual intervention with autonomous machines and robotics, and significantly reduces the chances of errors. These help improve efficiency and operational speed tremendously. 
• Better situational awareness: Automating supply chain processes involves sensor-based capture, collection of raw resources and materials data and building real-time visibility over the processes and sub-processes. It offers any supply chain management team tremendous situational awareness. They can better predict and quickly react to potential disruptions, escalations and take preventive measures. 
• Easy to scale and rollback based on demand: Seasonal fluctuations, sudden changes in market dynamics and emerging trends often require adjusting supply networks. For example, industries, like FMCG, pharma, e-commerce, and logistics, are prone to massive swings in order volumes a few times during the year. Companies using legacy supply chain management practices often maintain excess capacity across processes to overcome such fluctuations. Automated supply chain tools enable the capability to scale and roll back quickly without requiring companies to reserve resources in anticipation of meeting sudden market fluctuations.  
• Cost savings: Another significant importance of supply chain automation is cost saving and optimisation. Better real-time visibility over the supply process, accurate predictability of potential risks, minimal or near-zero chances of manual errors, and strong process efficiency are the pillars of cost savings in a business using an automated supply chain. 

The current state of supply chain automation

Indian companies with operational exposure to global markets, like IT&ITES, automobile component manufacturers and OEMs, oil refineries, e-commerce, contract manufacturers and logistics services providers, have already digitised their supply chains. Many of them are in the process of complete automation of their supply network with inter-partners exchange of electronic data. Comparatively, businesses catering mostly to regional markets have been slow to digitise their SCM practices. 

However, they are evolving fast. With rising competition in domestic markets, Indian business owners and CEOs are becoming more concerned about reducing waste and increasing operational cost efficiencies. Such concerns are encouraging their shifts in favour of SCM digitisation and automation. 

Some of the common examples of digital supply chain use cases and supply chain automation among Indian companies are: 

• Digitised order processing 
• IoT-enabled tracking of assets, 
• Use of cloud-based tools in enterprise management processes 
• Data analytics in management decision-making 

Key drivers of future supply chain automation

Some of the key drivers of supply chain automation in India are:

• Rising operational costs - One of the biggest driver 
• Complexities of multiple sales channels 
• Customer expectation of faster delivery 
• Affordability of SCM technology 

Rising operational costs - This is one of the biggest drivers behind businesses adopting SCM automation. It is a fact that digitisation and automation reduce wastage, maximise efficiency and make actual improvements to the business bottom-line. 

Complexities of multiple sales channels - Indian markets are maturing. Competition is also rising. Traditionally price-conscious domestic customers are venturing for more options and opportunities. This is forcing companies to open new sales channels to maintain and improve their revenue stream. Managing supply chains with legacy practices is becoming too complex and error-prone. So, companies are preferring to adopt digital SCM and automation. 

Customer expectation of faster delivery - Indian customers’ expectation of faster deliveries is rising and domestic markets are getting flooded with newer varieties of products. Manual handling of supply processes is prone to errors and delivery delays. SCM automation improves a company’s capability to market products faster and also ensures quicker deliveries to end customers.  

Affordability of SCM technology - Affordable cloud computing and increasing availability of SCM applications in affordable Software-as-a-Service (SaaS) variants in India have allowed companies to adopt automation without requiring them to make huge upfront capital expenditures. This is also driving growth in the supply chain automation among Indian companies.  

Emerging trends in supply chain automation

Supply chain automation is an evolving field. Innovations like Generative AI, machine learning capabilities and machines with physical intelligence, are increasing automation capabilities and the depth of automation across processes. 

Some of the emerging trends in this field are: 

• Data and ML-based predictive analysis
• Use of blockchain and smart contracts 
• Digital twins of supply chain networks 
• Cybersecurity mesh 
• Sustainable supply chains 

Data and ML-based predictive analysis—This includes building data warehouses with auto-captured sales data, social media engagement data, and other sensor-captured data and applying analytical models to predict future trends in demand and sourcing flow. 

Use of blockchain and smart contracts - These tools are helping companies to reduce the number of intermediaries in the supply chain, and improve traceability and accountability of partners. 

Digital twin of supply chain networks—This is an evolving technology that allows building a digital replica of a fully automated supply chain. These twins can help us better understand the effects of a network disruption, how to contain the impact of such disruptions, and the full implications of any SCM decision.  

Cybersecurity mesh - Data-backed SCM systems are vulnerable to cyber threats. Companies adopting automated SCM are also implementing cybersecurity mesh to safeguard operations from potential data theft, cyber-attacks, and allied risks. 

Sustainable supply chains - Supply chain automation tools are increasingly being leveraged to reduce waste of raw materials, damages to finished goods and increase the energy efficiency of supply chains. 

Impact of automation on supply chain operations

The key impacts of supply chain automation can be visible in the following areas: 

• Reduced error in data collection 
• Increase in productivity 
• Quicker time-to-market 
• Better customer experience 
• Increase in cost efficiency and profitability 

Challenges and risks of supply chain automation 

The common challenges that Indian companies face in adopting supply chain automation are:

• High initial capital expenditure 
• Upskilling of workforce 
• Change management 
• Compatibility with legacy systems 
• Lower adoption by vendors and sourcing partners

What is the future of supply chain automation? 

The global business landscape is demanding more efficiency, resilience, and adoption of sustainable practices. Technological innovations are helping to onboard more and more consumers in a connected world. AI/ML tools are bringing in transformative changes. In such a world, supply chain automation is the only way out to adopt and perform successfully in sync with changing market dynamics.