What is Supply Chain Automation: Examples, Trends, Benefits

Supply chain automation helps businesses enhance their operations by providing seamless workflows and real-time reporting. In this article, we will explore what supply chain automation is, look at its importance for businesses and learn about the types and examples of supply chain automation.

What is Supply Chain Automation?

Supply chain automation is the process of using technology to handle supply chain operations without any direct human intervention. It incorporates automation technologies such as artificial intelligence, machine learning, robotic process automation, and digital process automation into the supply chain. These technologies help businesses reduce the manual work required for functions such as inventory management, order processing, logistics tracking, predictive analytics for demand forecasting, supplier management, and warehouse operations.

Importance of Supply Chain Automation

Supply chain automation is of great importance because of the following reasons: 

• Using supply chain automation enhances efficiency by speeding up production and delivery while maintaining quality standards.
• It improves the responsiveness and reliability of supply chains, allowing quick adjustments to changes in demand and potential supplier delays.
• Also, supply chain automation boosts overall labour productivity within companies by automating repetitive tasks.
• It ensures companies can react promptly to unexpected events, which is necessary in today's business landscape.

Key Components of an Automated Supply Chain

Now that you know the importance of supply chain automation, let’s look at its key components: 

Automation of Material Flow 

This is the first component of the supply chain automation. It includes computers, automated guided vehicles, and robots for material handling. Also, computer-based software allows businesses to chart the flow of materials on a unified dashboard and optimise the efficiency of the supply chain. 

Information Flow Automation

The availability of the internet helps businesses shareinformation. This second component of supply chain automation helps businesses to share production-capacity requirements, information about demand-forecasting, schedule for the manufacturing with the relevant parties. This helps businesses to use the data available for maximising the performance of the entire supply chain. 

Automation of Control and Supervision 

This component of supply chain automation automates the control of production activities with minimal need for any human intervention. The software helps in standardising the supply chain process and initiating automated reactions to predefined actions. 

Automation of Relationships

The fourth component deals with maintaining relationships with suppliers, OEMs, retailers, distributors, contract manufacturers and even customers. It keeps all these stakeholders in the loop and helps with combined forecasting by providing dates related to product development, joint scheduling, point-of-sale information and financial transactions. 

Benefits of Supply Chain Automation

There are major benefits that companies can reap by choosing to automate their supply chain processes:

• Supply chain automation reduces labour costs, inventory costs, warehousing costs, and overhead costs associated with inventory storage, including rent, labour, and energy costs.
• It allows manufacturers to increase the volume of products produced by combining the skills of trained workers with the precision of automated equipment, thereby boosting productivity.
• Automation reduces errors associated with manual processes, providing accurate, real-time information on inventory levels, which aids in cost control.
• It assists organizations in complying with industry standards by standardizing pricing, products, and vendor processes.

Limitations of Supply Chain Automation

While supply chain automation offers significant advantages, it also has some limitations to consider:

• Requires significant initial investment in technology, training, and integration.
• Integrating automation with existing processes can be complex and time-consuming.
• Dependency on technology may lead to vulnerabilities in case of system failures or cybersecurity threats.
• Demands specialized skills for operation and maintenance, posing challenges in workforce readiness and training.

Types of Supply Chain Automation

Here are the main types of supply chain automation: 

Warehouse Automation 

Warehouse automation improves the efficiency of inventory storage and order fulfilment processes. In these types of supply chain automation, receiving and shipping operations are automated with the help of warehousing software. Warehouse automation also extends to the machines and physical tools used to run the warehouse. Warehouse robots assist in finding, moving, packaging, and shipping the products. 

Inventory Automation

This type of supply chain automation is about enhancing the accuracy, speed and visibility of the data associated with inventory. It takes care of everything, such as the number of products coming in and leaving the warehouse, the location of all the SKUs, and availability, etc. Inventory software automates the whole stock control process and helps maximise production, cash flow and inventory tracking. Specific complementary tools are also used, like label printers and barcode scanners.

Back-office Automation

Back-office automation focuses on improving efficiency through real-time visibility of business insights. It solves the data entry bottleneck, and assists in cutting down the time it takes to minimise human errors. Supply chain software is used to pull the data automatically from orders without requiring any manual input and directing that data into other important systems. This enables businesses to establish a single source of truth within their organisation for tracking the status of orders across the supply chain. 

This type of supply chain automation also focuses on improving the finance processes, and customer services with the help of advanced back-office automation tools such as OCR, which converts different types of documents into editable and searchable data, further streamlining data entry and ensuring accuracy. 

Transport and Logistics Automation

For tracking deliveries smoothly, and ensuring better communication between the logistics teams, this type of supply chain automation proves useful. To match the expectations of the customers and keep up with online purchases, delivery automation systems and logistics software are used. Examples include route optimisation, automatic delay alerts, data-backed driver assignments and GPS tracking. 

Examples of Supply Chain Automation

Examples of supply chain automation include:

• Analysing data to decide which products to stock based on popularity and costs.
• Using robots in warehouses to handle and ship goods efficiently.
• Installing pick-to-light systems and automated signs in factories to speed up operations.
• Optimising delivery routes and assigning drivers automatically with GPS and real-time alerts.
• Implementing voice picking systems that use automatic commands to guide pickers based on real-time customer orders.
• Automating storage and retrieval of goods in warehouses with AS/RS systems.

Future of Supply Chain Automation/Supply Chain Automation Trends

As the supply chain landscape evolves, three key trends are shaping automation strategies:

Focus on ESG

Companies must accelerate their ESG priorities and reporting, meet new regulations and customer expectations, such as reducing carbon emissions and enhancing transparency. Automating these reports and data collection can help supply chains stay ahead of this trend.

Artificial Intelligence

AI is seen as the most transformative technology, aiding in demand forecasting, route optimisation, inventory management, quality control, and customer management. Coupled with IoT technologies, AI enables proactive opportunities and disruption management, making supply chains more adaptable and efficient.

Workforce Changes

With an ageing workforce, supply chains face challenges in retaining experienced employees and filling vacant roles. Automation addresses this shortage by transferring knowledge to digital systems, enhancing employee capabilities, and taking over routine tasks, allowing human workers to focus on complex, strategic assignments.

In conclusion, supply chain automation is not just a trend but a transformative necessity in today's business environment. By leveraging technologies like AI, IoT, and automated systems, companies can achieve greater efficiency, agility, and accuracy throughout their supply chain operations.