Emilia Dunaj
Emilia Dunaj
B2B Content Creator
January 2024, 13 min. read

Many things can disrupt your supply chain. From constant delays and staffing issues to the rapid digitalization of the marketplace, the only certainty is change. 

Businesses are constantly working to eliminate weak links in their supply chains. Industry leaders seek new ways that ensure their supply chains don’t break down, even when unexpected changes happen. 

The key solution here is supply chain automation. 

This guide explores how automation transforms supply chains. You’ll learn about common supply chain challenges, areas ripe for automation, and the benefits it brings to businesses. We’ll also dive into the latest technologies, upcoming trends, and how to get started with automation.

Let’s get started.

What is supply chain automation?

Supply chain automation is the use of technology to make your tasks and processes faster and more efficient. It covers everything from buying supplies to delivering products to customers. 

In automated supply chain workflows, technology takes over manual tasks, minimizing the human interference required. Automation uses industry-specific hardware and software to reduce mistakes and get better results from your supply chain processes.

supply chain automation explanation

In the supply chain, automation is becoming an industry standard, helping businesses work smarter and faster. It’s especially beneficial for companies with large networks, multiple dependencies, or operations across various locations, where coordination and efficiency are key to success.

Common supply chain challenges

In recent years, we have faced various supply chain challenges, not just from rare, large-scale disruptions like the COVID-19 pandemic or natural disasters. Everyday issues, such as fluctuating market demands, supplier inconsistencies, and transportation delays, also significantly impact operations. 

These challenges show how important it is for companies to plan for different situations. It helps them stay flexible and ready for risks.

supply chain challenges

To plan well, it’s important to know about the most common things that can disrupt supply chains today:

Lack of real-time visibility 🔍

A major hurdle is an inability to monitor supply chain activities as they happen. Without accurate visibility, businesses struggle to make quick, informed decisions, leading to potential delays and inefficiencies.

Example: In the pharmaceutical industry, where timely delivery of medications is critical, the lack of real-time visibility can have dire consequences. For instance, a pharmaceutical company failing to track its shipments accurately might lead to delays in delivering essential drugs, severely impacting patient care.

Manual processes and data entry ⌛

Relying on manual tasks in supply chains can lead to significant time consumption and errors. From order processing to inventory management, these manual activities slow down operations and increase the risk of mistakes.

Example: When a construction materials supplier depends on manual order processing, it often leads to mistakes in fulfilling orders. Small errors can result in delivering incorrect materials to construction sites, which in turn can cause project delays and inflate costs.

Data management 📊

As supply chains generate massive amounts of data, effectively managing and making sense of this information becomes a challenge. Poor data management can lead to missed insights and opportunities for optimization.

Example: In the electronics sector, where product life cycles are short and demand varies rapidly, poor data management can cause significant losses. An electronics manufacturer might continue producing outdated models due to obsolete sales data, leading to surplus stock that becomes difficult to sell.

Inventory management 📦

Proper inventory control is critical yet challenging. Poor tracking and forecasting can create bottlenecks like overstocking or stockouts. These issues are often costly and lead to customer dissatisfaction.

Example: For an automotive parts distributor, inventory management is crucial. A simple forecasting error in the automotive parts industry might lead to a shortage of a critical component. This shortage can halt production lines at major automotive manufacturers, causing significant operational and financial impacts.

Logistics challenges 🚚

The complexity of logistics, including transportation and delivery coordination, creates significant challenges in supply chain management. Inefficiencies in this area can lead to increased costs and delayed deliveries.

Example: Logistics inefficiencies in the food and beverage industry can lead to significant costs. If a food distributor plans routes inefficiently, it could lead to delays in deliveries. These delays may result in spoiled products and substantial financial losses, not to mention damage to customer relationships.

Benefits of automation in supply chain

Successful businesses are the ones with smooth workflows. Automating supply chain processes turns potential chaos into coordinated efficiency. It addresses all the above example challenges and many more. 

Here’s how implementing modern technology can benefit your business operations in detail:

  • Improved efficiency and speed. Using smart technology, automation streamlines supply chain processes to optimize order processing and delivery. You get faster turnaround times and increased productivity.

  • Transparency and visibility. Automation provides live insights into every step of your supply chain. It makes every process visible and enables better-informed decisions.

  • Cost reduction. By automating repetitive tasks, businesses can reduce labor costs. Automation minimizes errors, cutting down on waste and associated expenses.

  • Enhanced accuracy. Automated systems are laser-precise. They are less prone to errors than manual processes, leading to more accurate order fulfillment and inventory management.

  • Better data management and insights. Automation tools can effectively collect and analyze large sets of data, providing valuable insights for decision-making and strategic planning.

  • Improved product quality. Automation systems employ sensors and quality control algorithms that continuously check products against set standards. It ensures consistent production quality, reducing the risk of defects.

  • Ensuring regulations are always met. Using programmed compliance checks to avoid violations, automated systems help in consistently complying with industry standards and regulations.

  • Agility to respond to the unexpected. Digital systems connect information and data across your organization, improving your ability to quickly adapt to changes.

  • Improved customer satisfaction. Faster and more accurate services lead to better customer experiences. Automation can also personalize customer interactions, enhancing satisfaction and loyalty.

Automation is an unstoppable advancement. According to McKinsey, even 30% of the time that workers spend on the job could be transformed by automation technologies in the coming decade. Companies failing to automate will simply stay behind.

Key areas of tech-enabled supply chain

Introducing digital process automation into your company’s supply chain can make a huge difference in many areas. Here’s how various departments within your organization can benefit from introducing modern supply chain tools and techniques:

1. Sourcing and procurement automation

Automating sourcing and procurement consolidates vendor proposals, making it easier to evaluate and compare them using a standardized scoring system. Automated workflows for contract management and purchase order generation streamline these processes. 

Invoice matching and payment processing become more efficient, eliminating human errors. Additionally, spending data analysis helps in budget adherence and uncovers cost-saving opportunities.

2. Warehouse automation

Within warehouse operations, automation significantly enhances the efficiency of production and supply management on the shop floor. 

Automated systems adeptly handle complex scheduling, ensure quality control, and optimize the use of materials. AI-powered software plays a crucial role in predicting potential quality issues by analyzing historical data and pinpointing defects during the production process. 

These advancements lead to reduced production times and costs, all while maintaining high standards of quality. For example, an automated system in a warehouse might precisely manage the timing of part assemblies, cutting down on waste and boosting overall efficiency.

3. Back-office automation

For office tasks like order processing and invoicing, automation brings speed and accuracy. It accelerates business processes but also allows staff to focus on strategic activities. 

An automated invoicing system, for example, results in faster and error-free billing processes. This means suppliers get their invoices quicker, improving overall business relationships and operational workflow.

Back-office automated systems can also manage vendor documentation and certifications, track performance against KPIs, and ensure vendor compliance with policies, thereby enhancing overall efficiency.

With automation tools, you’ll have a more streamlined back-office operation, with fewer errors and improved overall efficiency.

4. Distribution automation

In distribution, automation also brings precision and speed. 

Automated order processing improves accuracy and gathers vital sales data. 

Order picking becomes more efficient with reduced errors, and stock levels are monitored in actual time to trigger timely reorders. 

This ensures that inventory is always optimally managed, preventing delays and ensuring customer demands are met swiftly.

5. Transport and logistics automation

In logistics, automation optimizes delivery routes, schedules shipments, and tracks vehicles in real-time. Using advanced algorithms and tracking systems, you can cut delivery times and fuel costs. 

Additionally, AI-powered automation software enables predictive maintenance for transportation vehicles, reducing the risk of unexpected breakdowns and ensuring consistent delivery schedules. 

It also enhances load optimization, ensuring that each delivery is carried out with maximum efficiency, leading to reduced environmental impact and cost savings. 

6. Customer service automation

Automated customer service tools can handle inquiries, track orders, and provide updates, offering a more responsive and satisfying customer experience.

Customer care benefits from automated support systems like chatbots, which provide quick responses and personalized interactions. Chatbots are great for dealing with routine inquiries, allowing your sales agents to handle complex customer service issues.

Learn more: 5 Essential Supply Chain Management Automation Tools

Supply chain automation tools in various industries

Modern supply chains can leverage multiple software tools to navigate through disruptions. From comprehensive supply chain management software and advanced voice picking systems to precise GPS tracking and efficient pick-to-light technologies, the options are varied and impactful. 

How do different industries use these automation tools? Let’s look at how automation is making an impact on several important sectors:

Manufacturing supply chain automation

Over 40% of manufacturers are struggling to beat their competitors because of a lack of technology and skilled workforce. One of the best benefits of automation in manufacturing is that it fits this gap effectively. Smart manufacturing technology provides vital data insights, attracts talent, and minimizes risks to supply chains. 

With the right software, manufacturers can streamline production scheduling, inventory management, and quality control. 

For instance, a car manufacturer using robotics for precision assembly can significantly enhance production speed and accuracy. By incorporating AI systems, the company can predict and prevent equipment failures, reducing unexpected downtime. Additionally, using digital scheduling software, the manufacturer can efficiently manage production timelines, adapting quickly to changes in demand. 

New technologies allow manufacturers to streamline processes and respond more agilely to market trends or unexpected events, ensuring they stay competitive.

Healthcare supply chain automation

In healthcare, automation ensures the timely delivery of critical medical supplies and medications. It introduces a new level of planning and precision crucial for patient care.

Picture a hospital where RFID tags track equipment and medication levels in real time, ensuring they are always stocked. Automated dispensing systems accurately manage medication distribution, reducing errors. Compliance platforms keep the hospital up-to-date with healthcare regulations, ensuring patient safety and care efficiency.

Automation helps to manage supplies better and react quickly to urgent medical needs. This means important supplies are always ready, plus they’re used in the best way to help patients.

Chemicals supply chain automation

In the chemicals industry, especially for cold supply chains, IoT applications are vital for temperature monitoring. These sensors play a key role in ensuring the integrity of sensitive products. 

For a pharmaceutical company transporting temperature-sensitive drugs, effectively optimizing logistics is crucial for ensuring timely delivery to clients. If the company uses IoT sensors to continuously monitor and report the storage conditions, it can ensure products remain at the required temperatures. 

Moreover, automated logistics platforms plan and optimize routes for efficient delivery. The company can also use predictive analytics tools to help forecast demand and avoid overproduction or shortages.

Emerging technologies in supply chain automation

Today’s supply chain technology is nothing like how it was five years ago. Exciting new tech is changing its processes. 

emerging tech in supply chain

Here are the technologies that are changing the supply chain industry today:

Artificial Intelligence

AI transforms supply chain operations, offering smarter ways to manage everything from inventory to shipping. Machine Learning (ML), a key part of AI, excels at analyzing patterns in data. It predicts product demand and identifies the most efficient routes for transportation. But most importantly, AI in supply chains enhances decision-making processes.

Robotic Process Automation

While AI simulates human decision-making processes, robotic process automation in the supply chain focuses on automating routine, rule-based tasks. Together, RPA and AI form a powerful duo for modernizing and streamlining business operations.

Internet of Things

IoT technology allows for real-time tracking of goods and assets across the supply chain. This connectivity leads to better control of inventory and equipment, helping things run smoothly.

Digital twin

Digital twin technology creates a virtual model of a physical item or process. It can test and plan changes without disrupting the real system. Businesses can predict issues and optimize their operations proactively.

Cloud computing

Cloud-based platforms make data sharing across the network chain easy and safe. They support scalable solutions and enable more collaborative and agile supply chains.

Intelligent Document Processing

IDP turns data from documents into useful information quickly and accurately, speeding up paperwork in the supply chain.

Blockchain

Blockchain provides a secure way to record every step in the supply chain. It makes things more open and honest, reduces the chances of fraud, and makes sure everything is done right.

Smart voice-operated systems

This tool helps in hands-free operations. It sends automatic voice commands to direct warehouse staff to specific locations and items based on real-time orders. 

These technologies open up new possibilities for innovation and efficiency in supply chain management automation. 

How to approach automation in supply chain?

Automating your supply chain involves strategic planning and building a detailed roadmap for digital transformation. 

Learn more: Roadmap to Successful Supply Chain Digital Transformation

Start by examining your current processes closely. Identify which areas could benefit the most from automation. Set specific goals: are you looking to reduce costs, speed up deliveries, or improve the accuracy of your inventory management? 

The selection of technology is a critical step. It’s important to choose solutions that meet your specific requirements and seamlessly integrate with your existing systems. 

While off-the-shelf products are readily available and convenient, they may not entirely suit your unique requirements. Nonetheless, customization can address this issue. Opting for custom software development ensures a solution tailored to your specific needs. 

Choosing the right technology partner makes a huge difference. Look for one who will understand your business context and guide you through the customization and integration process, ensuring a successful digital transition in your supply chain. A skilled digital consulting expert will advise you on the best supply chain automation solutions for your unique business needs. 

Key takeaways

To keep up with the changing conditions and market trends, it helps to be agile. Outdated applications, poorly planned systems, and technical glitches can slow you down when unexpected changes happen. 

The solution is to automate your supply chain. With automated systems, you gain the ability to adapt quickly, gain a holistic view of your business operations, and stay in control. Your business becomes stronger and prepared for whatever comes next. 

Ready to transform your supply chain strategy? Right Information helps companies achieve maximum ROI when standard software is just not enough. Contact our technology experts to discuss custom supply chain automation solutions that best suit your business needs.