Why Automation Will Breathe New Life into Your Supply Chain

11/17/2022

Your supply chain is the beating heart of your business and can bring a multitude of benefits.

Your supply chain is the beating heart of your organization. If processes don’t flow easily and efficiently through it, or if it stops working altogether, it could make or break your business growth. 

But as important as supply chain management is to the success of your business, it’s not the easiest of feats. According to the US Census Bureau’s Small Business Pulse Survey (SBPS), 38% of US small businesses experienced supply chain delays due to the COVID-19 pandemic. If that’s not worrying enough, consider this: 69% of companies don’t have full visibility of their supply chain. 

This could spell serious trouble for businesses across a variety of industries, including manufacturing, transportation & warehousing, retail and wholesale distribution. There are processes like picking and packing products, for example, that can eat up large amounts of your employees’ time that could be spent doing other more important tasks. 

This is where automation can be a lifesaver. Not only can it help you optimize operational processes and reduce costs, but it can also give you a competitive edge and increase your profits. Those all sound like pretty fantastic benefits, right? We’ll explore the role of automation in supply chain management, while offering some insights into why it’s the best way forward, especially amidst warnings of a recession in 2023.

Chapter 1

Track your inventory better

Tracking inventory

A crucial part of the supply chain is your inventory - that’s the goods or materials you intend to sell to customers. Depending on the size of your business, you could have inventory spread across multiple places. 

So, when orders come in, you need to know what inventory you have, how much is available and where it’s located. Otherwise, you’ll find it tough to fulfill your customers’ orders. And we all know what happens when customers are unhappy - they complain and they’ll ditch you for a competitor if the problem happens more than once. That’s why it’s so important to have full visibility of your inventory so you know when you need to order (or reorder) items, how much to order and where to store your inventory. 

Some key elements of inventory management include:

  • Inventory tracking: Know exactly where all your inventory is located.

  • Order management: Customize pricing, send quotes, track orders and manage returns.

  • Transfer management: Move products to where they’re most valuable.

  • Purchasing: Create and manage purchase orders.

  • Shipping capabilities: Automate shipping to reduce late deliveries or delivering incorrect packages.

  • Reporting and analytics: Understand patterns in processes so you can forecast future demand and sales. 

As you can see, inventory management is not a one-and-done task. It requires multiple steps and processes. One small misstep or error could throw your whole operations off and lead to lost revenue. Now, I know you don’t want that to happen. 

This is where technology can be your greatest ally. For example, there are new innovations with self-correcting AI that make it easy to reduce waste and help you monitor your inventory better. And let’s not forget about IoT (internet of things) - data from IoT sensors could provide valuable insight into inventory location and status. So, you don’t have to resort to manually checking log books or asking multiple employees in your team to confirm this information. 

Of course, the pandemic also created a unique problem for retailers - carrying too much inventory. In the early days of the pandemic, consumers were panic buying toiletries like toilet paper. So, you’d see empty shelves in nearly every grocery store for weeks at a time. To accommodate this surge in demand, many retailers had to stock up on toilet paper and other in-demand items. 

But then when things normalized, demand for toilet paper inevitably dropped - leaving retailers with too much stock. AI-enabled technology can prove invaluable in spotting and reducing the problem of excess stock. It can also help you set up ‘what if’ scenario planning so you can understand service and cost alternatives that will put the correct stock levels in place and release significant working capital.

Chapter 1

Simplify workflows and improve back-office tasks

Given how digital everything is these days, you’d think there can’t be that much paperwork in the supply chain process. That’s where you’re wrong. There’s a lot of documentation, such as delivery orders, dock receipts, bills of lading and sea waybills. Your supply chain team stores and processes these documents for all kinds of reasons. But this can be quite a time-consuming and manual undertaking, which can cost your business down the line. 

Robotic Process Automation (RPA) is one type of software that can perform tasks at the user interface (UI) level. If you think of the retail industry, RPA can be used for automatic pricing and inventory adjustments, as well as using bots to obtain data from customer complaints and opinions in real-time. That data can then be used and prove valuable to other departments, including marketing, sales, research & development and manufacturing.

Back office tasks

One good example of a company using RPA is Walmart. The retailer uses over 500 bots to automate tasks like answering employee questions or retrieving useful information from audit documents. It also uses RPA to track its inventory flow so that it can spot when items are slow-moving or dead stock.

The benefits of automating back-office tasks are numerous and include:

  • Reducing errors in business operations

  • Providing real-time analytics

  • Speeding up the order and return processing

  • Easy collection of data for auditing

  • Freeing up employees’ time to focus on improving the customer experience

  • Optimizing operational efficiency

  • Saving on costs

Chapter 1

Increase picking productivity in your warehouse

Many warehouses delay buying and using automation technology - mostly because it’s a huge upfront investment and can be time-consuming to integrate with other systems. That might explain why more than 80% of the warehouses today have no automation whatsoever. 

As a study from the US Census Bureau revealed, ecommerce grew 43% in 2020 and in the two years since, it’s continued to grow. With this growth comes increased demands and pressures on warehouses to store, track and distribute the goods effectively and efficiently. 

So, automation isn’t just a nice-to-have anymore; it’s an absolute must if warehouses want to be more efficient, responsive, resilient and reliable to accommodate customer demands. 

One type of automation technology that is proving to be useful for US warehouses is autonomous mobile robots (AMRs) that help grab, sort and pick items from the warehouse floor. This can be a great way to reduce the amount of time warehouse staff spend on these tasks and free up their time to focus on more important tasks. 

And it seems to be paying off. Take DHL, for example, which has already rolled out 1,000 Locus Robotics AMRs and will deploy up to 2,000 robots by 2022. Robot use in warehouses can increase picking productivity of an order by two to three times. Meanwhile, some companies claim that a single robot saves up to 18 miles of employee walking in the warehouse per day, while also lowering labor costs. It’s hard to ignore these stats. 

Warehouse picking
Chapter 1

Improve your ‘OTIF’ (on-time, in full) delivery performance

While we’ve talked about things like RPA and bots, automation can also be much more simple. For anyone who has ordered something online, the delivery process can often be filled with frustration and confusion. Automation can take a lot of that stress away by eliminating errors like misspelled addresses, wrong orders and package sizes/weights as well as reducing the time employees spend preparing shipments. This also has added benefits for your business, such as happier customers and cost savings. 

Now consider this: nearly two-thirds of all goods shipped in the US move by truck. While transportation has typically been a traditional industry, we’re seeing automation seeping its way into the industry slowly but surely. For example, UPS has been using automation technology to identify the fastest route for its delivery vans. That means deliveries will arrive on time more often - leading to increased customer satisfaction, repeat business and revenue growth. 

That’s not all UPS is doing in the area of automation. At the start of 2021, UPS built a Smart Hub facility capable of handling 104,000 packages per hour. Joel Stenson, Vice President of Corporate Plant Engineering at UPS, explained the impetus behind building the Smart Hub. “The growth of digital demand in shipping and e-commerce has given us a variation in package mix, package size, delivery demands and customer expectations that did not exist just a few years ago. It tells us that the market is changing and we are changing right along with it.”

Delivery performance
Chapter 1

Improve the onboarding process with credit automation

The reality is that B2B credit processing often slows down customer onboarding because multiple teams and exchanges are involved. And because many types of businesses are still doing this manually, it can take even longer - costing the business revenue and even affecting customer retention. 

Most businesses today are struggling with late payments from customers, rising inflation rates and bankruptcies. So, any way that a business can limit its bad debt loss is a win. This is where credit risk automation can be incredibly valuable in automating credit applications and giving potential customers a yes/no answer based on the pre-agreed limits that you provide. So, instead of having to manually accept or reject credit applications, you can simply automate the process, which will speed up the onboarding process and keep your customers happy too.

 

steve carpenter

About the Author

Bill James

With over 15 years of experience in finance, risk management and data analytics, Bill understands exactly what enterprise businesses should be thinking about as they build their corporate growth and risk strategies. Prior to joining Creditsafe in 2021, he spent six years at Dun & Bradstreet as Area Vice President of Finance Solutions and Third-Party Risk & Compliance.  

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