Why Supply Chain Automation is Critical for Business Success

Across the board, automation unlocks a whole host of business benefits. 

We’re talking: greater efficiency, cost-savings, quality improvements, fewer risks, and tighter security protections. 

And, that’s before you consider the near-infinite amount of niche-specific gains that wouldn’t be possible without automation (among other things like, strategy, big data, and a rock-solid digital ecosystem). 

Automation is clearly shaking every industry at its core — changing everything about how we communicate, collaborate, measure success, and, most crucially, think about what “work” and “productivity” mean moving forward.  

All that in mind, we’re here to talk about supply chain management. So, in this article, we’ll focus on how automation fits into the broader SCM strategy — and why all supply chain orgs need to get on board ASAP.

What is Supply Chain Automation? 

Supply chain automation describes the process of using technology to streamline and automate supply chain activities. Think — sourcing, fulfillment, inventory management, scheduling, routing, maintenance, and so on. 

Like so many other digital strategies, supply chain automation isn’t really about the technologies you use or what processes you decide to outsource to the bots. It’s about using the right tools to achieve a specific set of outcomes: data accuracy, scalability, process efficiency, business agility, etc.

Why Supply Chain Automation is “Table Stakes” 

Supply chain automation plays a crucial role in helping companies generate value by improving efficiency, reducing costs, enhancing productivity, and enabling better decision-making. 

In its recent ebook, Four Pillars of the Digital Supply Chain, Microsoft explains that traditional supply chain control centers are run by massive, global teams that rely on many different manual processes. 

So, inevitably organizations experience bottlenecks and delays on a routine basis. If someone detects an issue, it might take several days to acknowledge the problem, let alone solve it. 

MS experts go on to say that moving to a modern control tower that’s supported by a digital twin of your supply chain allows all stakeholders to leverage built-in tools that connect to existing systems – your ERP, CRM, and so on. 

But, over time, your digital ecosystem enables more sophisticated (and hands-off) automations that drive efficiency gains across the whole supply chain. 

To be clear, automation is one of four digital supply chain pillars that must come together to support the broader SCM strategy. You’ll also need to unify all supply chain data, invest in the right analytics tools, and learn how to effectively collaborate under complex, fast-moving conditions. 

That said, it’s that automation piece that can take a solid strategy to super-human heights. 

Here’s a look at how supply chain automation creates value and drives outcomes – across multiple dimensions:

Increased Efficiency. Automation is probably best known for improving efficiency by performing tasks such as inventory tracking, data entry, and order routing with little to no human intervention. 

For example, automating picking in your warehouses can increase fulfillment rates, reduce errors, and ensure that customers receive their orders faster. 

Automation can also be used to quickly onboard suppliers and deliver self-service options that make it easier to process POs and send invoices. 

Even something as simple as automating data capture and transfer processes eliminates the need for manual or duplicate data entry. That means, work gets done faster and there are fewer opportunities for human error.

Supply chain automation and the efficiency gains it brings to the table can also improve employee satisfaction.

It reduces the burden on employees who might spend their limited working hours on repetitive, low-value tasks. Instead, human workers get to spend that time on activities that add value and make better use of their strengths – be it creative problem solving, strategizing, or fostering deeper connections with customers and partners. 

According to a recent MS ebook, 89% of digital automation users report being more satisfied with their jobs, while 84% say they’re more satisfied with their company, just in general, because of automation. 

Supply chain orgs can improve asset productivity, improve learning, boost efficiency, and improve employee safety across multiple dimensions.

Cost Savings. Cost savings represents another well-known use case for automation. But – it’s not just about making cuts. Supply chain automation helps companies reduce costs in a lot of different ways – not only by eliminating waste centers, but also by optimizing and allocating resources. 

For example, automating inventory management processes can prevent both stockout and overstock situations. This, in turn, reduces storage and carrying costs, as well as extra expenses associated with getting rid of unused inventory.

Automated warehousing systems can be used to improve storage utilization and streamline picking, packing, and shipping processes, reducing spending on overhead, labor, and other operating costs. 

Automation also supports better demand forecasting, which leads to more profitable decisions overall. More specifically, it improves inventory management, procurement, and logistics operations, supports agile decision making, and allows orgs to match supply with actual demand. 

Enhanced Customer Experiences. Customers have more power than ever before. If they experience delays, quality issues, or can’t get the support they’re looking for, they’ll leave you for a competitor that can. 

We tend to think of supply chain automation from a back-end perspective. Often, the conversation centers too much on how much time and money companies can save, rather than what customers gain from efficiency gains and extra resources on the inside.

Automating manual tasks and streamlining workflows ensures that customers have consistent experiences with your brand. Orders are less likely to get lost in the shuffle. It’s easier to resolve issues, process returns, and keep customers in the loop re: order status. 

Companies can also take steps to ensure that they have enough inventory to keep up with demand and ensure that orders arrive on time and meet quality standards.

Greater Agility & Flexibility. Supply chain automation also plays a critical role in helping orgs accommodate new needs. 

Solutions like Dynamics 365 Supply Chain Automation give companies the flexibility they need to adapt to dynamic market conditions or black swan disasters like COVID in real-time. The platform comes standard with several features that leverage AI and automation to improve planning, forecasting, and inventory management. 

For example, analytics and BI tools include embedded automation capabilities that might help orgs cope with a sudden influx of orders, without having to hire additional staff or invest in a bunch of new software. 

Baked-in predictive modeling and data visualization tools also leverage automation to optimize inventory allocations, measure the impact of potential actions, and identify and fix process inefficiencies that may be holding you back. 

Machine learning models can be programmed to monitor specific variables and automatically scan for potential threats or signs that change is underway. 

In D365 SCM, ML models proactively identify new variables and automatically apply logic to update existing forecasts with new information. 

That way, decision-makers are always working with the full picture. They no longer need to spend hours gathering information, integrating new data points, and interpreting those findings. Instead, they can jump right in and take action. 

Enforces Quality, Security, & Compliance Standards. Because automation minimizes errors and improves data accuracy across the entire supply chain, it’s a risk mitigation powerhouse that can protect you on multiple fronts. For example, improved accuracy supports product traceability, quality assurance practices, and greater transparency with consumers. 

From a security standpoint, automation plays a critical role in preventing, detecting, and responding to perceived threats. 

Security automation can be used to orchestrate adaptive strategies. It might be used to automatically contain and remove malware found inside your system or help you take steps toward recovery in the wake of an attack. 

On the compliance side, automation can be used to ensure that you and your suppliers adhere to regulatory requirements and international laws, as well as meet ethical and environmental standards. 

Many modern solutions are also designed to automatically incorporate new requirements into existing policies, preventing you from falling out of compliance and potentially facing fines, sanctions, or other repercussions.

Supply Chain Automation Must Be Done with Care

Benefits aside, supply chain automation is a complex strategy that happens in phases. 

Automation also comes in many different forms and uses a wide range of technologies and tools to tackle various supply chain tasks without human intervention – IoT, RPA, document automation, etc.

That means, you’ll need to develop a roadmap before getting started. While your actual strategy should include a lot more detail, here are four basic steps you might use to start fleshing out your plans:

Identify Opportunities to Leverage Automation. The first step toward supply chain automation is figuring out which processes can (and should) be automated. 

You might start by auditing your supply chain operations or conducting a workflow analysis. At this stage, you’re looking for bottlenecks and inefficiencies. You’re asking and answering questions like:

• How long does this task take?
• Who performs this task? 

• Is this task duplicated in another business unit/department?

• How much are bottlenecks/inefficiencies/duplicate work costing the business?

• Which tasks/processes create barriers to critical objectives?

• Etc.  

This will help you identify manual, redundant, and obsolete processes that can be automated, improved, or outright eliminated. If you’re brand-new to automation, this initial step is about identifying and fixing “low-hanging fruit” – so, obvious things like digitizing and streamlining legacy processes and tackling problems that can be solved quickly. 

While these simple automations are far from “transformative,” they unlock some early quick wins and allow you to start collecting the data you need for future improvements. 

Map Opportunities to Specific Supply Chain Processes. Once you’ve conducted your initial workflow analysis, you’ll want to start mapping opportunities for automation to specific processes. Opportunities might include:

• Manual processes
• Security & compliance problems
• Inefficient production processes
• Customer experience issues

Make a Plan. The next step is coming up with a comprehensive strategy for ensuring that automation actually drives the desired process improvements defined in steps 1 and 2. 

Here, your goal becomes about automating the processes that stand to have the greatest impact on customers, costs, and resources. 

Measure, Improve, Repeat. Again, automation isn’t some one-and-done affair. Getting it right means committing to constant improvement. That means, you’ll need to make sure that your supply chain automation plan includes a robust evaluation strategy. 

You’ll want to identify goals and metrics for each area impacted by supply chain automation. Think – security, sales, customer service, production, and so on. 

You’ll also want to measure process improvements against multiple dimensions – operating expenses, employee productivity, customer outcomes, inventory costs, etc. 

Every implementation must be followed by a comprehensive post-mortem. You’re looking at whether or not your efforts delivered the desired outcome, then looking for specific opportunities to improve your automation strategy next time around. 

Final Thoughts

The big takeaway here is that supply chain automation is the accelerant that fuels all SCM strategies – from managing risk to streamlining warehouse operations, empowering decision-makers, and improving customer outcomes. 

But – the “accelerant” part is key. See, SC automation only works if you already have a solid supply chain strategy in place – and the insights and tools needed to support it. 

Velosio works with manufacturers and distributors of all sizes – helping clients modernize and transform supply chain operations with the right mix of tech, hands-on support, and proprietary solutions.

Contact us today to learn how Velosio can assist with your supply chain automation.