When it comes to your business’s supply chain, it can be tempting to stick with what works. However, some manual supply chain processes are not only outdated but inefficient and even detrimental to your business.
Due to new technologies, merchants can now harness the power of automation in their supply chains. When correctly employed, supply chain automation can save precious money and time, improve your business’s productivity, and prepare it for the future.
In this article, we’ll cover what supply chain automation is, the pros and cons of incorporating automation into your supply chain, and explore which supply chain processes can be automated.
What is supply chain automation?
Supply chain automation refers to using technology solutions to perform or streamline supply chain processes without human attention, effort, or involvement.
By incorporating automation technology such as machine learning, artificial intelligence, and digital process automation into the supply chain, a business reduces the manual work required to perform certain business functions.
This in turn speeds up workflows and makes your supply chain more efficient.
Benefits of supply chain automation
Automating your supply chain processes can have several benefits. Here are some of the ways that your supply chain can benefit from automation.
Automating manual tasks
Supply chain automation enables your business to redirect human time and effort away from menial, time-consuming tasks, and devote that time and effort towards tasks that specifically require a human touch.
For example, tasks such as generating essential documents, processing orders, assigning picking slots, and paying out invoices can be extremely time-consuming.
Automating these tasks allows you to delegate to technology solutions that can complete the tasks much more efficiently and frees human workers to attend to matters that need human input.
This increases your supply chain efficiency, as you’re not wasting your worker’s time and potential on tasks that another entity could perform.
Minimizing human errors
Humans make mistakes — and when tasks are performed manually, something will likely go wrong.
By removing humans from the equation, automation lowers your risk of error and can prevent mistakes like:
- Accidentally duplicating and orders
- Incorrectly entering data from inventory or order details
- Entering inaccurate customer information (email, phone number, shipping address, etc.)
- Picking & packing the wrong item in an order
Increased supply chain visibility
Maintaining supply chain visibility requires a lot of labor, communication, connectivity, and commitment from both merchants, suppliers, and service providers.
Through digital automation, information is automatically recorded and updated in near real-time. This enables relevant parties to access important information when needed, track inventory, and communicate quickly throughout the supply chain.
Increased supply chain visibility subsequently helps you quickly identify and resolve bottlenecks to prevent further delays and disruptions, and increases overall efficiency.
Improved customer experience
With automation streamlining your supply chain, your customers will reap the benefits, too. A primarily automated supply chain gets accurate orders fulfilled and shipped to customers quickly, and helps you maintain high customer satisfaction and loyalty rates.
Limitations of supply chain automation
Although automation has several benefits, it still has some limitations that you should keep in mind. These limitations may be particularly apparent in the small business supply chain, where there are fewer resources and smaller budgets involved.
Currently limited to certain tasks
Not all supply chain functions can be automated. While relatively menial tasks such as order processing, inventory counts, and administrative tasks are great candidates for automation, most supply chain processes will still require human attention and involvement.
For example, although you can generate picking lists automatically and assign warehouse robots to assist you in the physical picking itself, these robots are still incapable of making critical decisions based on the current situation (for instance, what to do in case of shortages).
Cost
Advanced supply chain technology often requires significant financial investment, costing thousands of dollars in annual fees or one-time licenses.
This type of major financial investment may not be viable for smaller eCommerce operations and startup DTC businesses. Typically, to access supply chain automation systems, these brands outsource their warehousing and fulfillment operations to a tech-enabled 3PL or logistics platform.
Which supply chain processes can be automated?
While it isn’t currently possible to automate your entire supply chain, merchants can automate key processes and tasks to save time, resources, and money.
Back-office
Supply chain automation makes managing administrative tasks and regular business processes easier.
Certain tools enable you to automatically pull data from purchase orders into your software, and your financing and accounting tasks can also be automated by automatically processing invoices and maintaining your financial records.
Supply chain analytics also benefit from automation, as automation helps a business owner keep track of key performance metrics without spending hours gathering data and crunching the numbers themselves.
In this way, supply chain automation can produce more accurate insights for your business to help you improve your current operations and plan for the future.
Transportation
Automation can also be applied in some of your transportation processes.
Route-optimization automation determines the best routes and assigns the most suitable carrier for shipments, which can help reduce transit time and lower shipping costs.
Many automation tools give you better supply chain visibility with real-time transit tracking. This enables you to keep a close eye on where your vehicles are, which inventory items are in transit, and whether there are any potential delays.
You can then use this information to optimize the movement of your goods to reduce operational costs and transit times.
Warehouse
Fulfillment and warehousing are supply chain operations that most often incorporate automation.
Beginning with order processing, certain software automation can automatically receive and confirm orders and send tracking information to customers.
In some cases, these programs can also automatically forward every order to the fulfillment center location that is closest to the order’s destination.
Some warehouse automation tools even come with features to determine where to best store inventory to make the most of available space while increasing picking efficiency.
Inventory
While inventory management requires human expertise, there are aspects of it that can be automated.
Automatic reorder point notifications when you hit a threshold amount for a particular SKU help you time replenishment perfectly and prevent stockouts and backorders.
Some merchants choose to automate the restocking entirely and set up their system to automatically reorder stock when an SKU hits its threshold to save time and trouble.
Automatic inventory counts that are up-to-date, even to the minute, give you the best visibility into inventory levels so that you know exactly how much stock you have left at a given time.
Also read: Introduction To Sales Onboarding Tools
