The scale and importance of global supply chains are almost impossible to overstate. For example, there are an estimated 44 million jobs in the US supply chain alone, and without the ability to efficiently move goods and materials, many industries simply would not be able to operate. A factory without any way to ship its finished goods to customers is little more than a highly inefficient warehouse.
Of course, running an operation as large and complex as the average supply chain requires substantial investment. PriceWaterhouseCooper reports that a supply chain commonly represents more than 10% of a company’s overall costs. This makes it an ideal target for potential cost-saving and efficiency-boosting measures.
Among the most promising methods for improving the supply chain is smart automation. Smart automation for the supply chain blends traditional automation technology with cutting-edge advances in artificial intelligence (AI) and robotics. Applying this intelligent technology to the supply chain helps to optimize processes, boost transparency, and reduce costs.
As with many industries, intelligent automation has numerous applications for the supply chain. Automated document processing can cut down on delays caused by mistakes, for example, while logistics tools ensure that every truck is filled to capacity. All these improvements can combine to deliver significant benefits.
In general, though, smart supply chain applications fall into three main areas: the shop floor, transportation and logistics, and the back office.
Smart automation is a key feature of most modern factories and warehouses. From production line robots to the combination of powerful AI tools with internet of things (IoT) devices, an entire factory can digitize and connect to the downstream supply chain. This enables automatic refinement of production or resource allocation based on demand and the availability of supplies and raw materials. At the same time, production information can be shared directly with logistics and shipping tools.
With the proper training, AI tools can predict upcoming demand levels and compare them against current stock levels. If the tool anticipates a shortfall, it can automatically order stock to compensate and ensure the business never runs short. Similarly, if demand is set to fall, it can reduce orders to match.
This intelligent forecasting can help reduce the amount of human oversight needed to run an inventory operation and prevent delays or lost sales caused by either shortfall or overstocking. This can lead to significant savings. According to estimates, out-of-stock issues cost retailers nearly $1 trillion in sales each year.
Companies are combining these elements with robotic pickers and automated guide vehicles (AGVs) to fill orders without human aid. Amazon of course is the shining example of this phenomenon. Automation is well and truly alive on the shop floor.
Transport and logistics form a vital part of the supply chain, with factories and warehouses serviced by numerous trucks and transport vehicles each day. With data from shipping partners and transportation contractors, companies are using new AI tools to ensure this complex process runs efficiently.
Intelligent automation helps plan loads and journeys more effectively. One way is applying data from warehouses and factories to ensure optimal truck fill rates. Automation can also help the shipment reach its destination as quickly as possible by planning ideal routes for drivers based on real-time traffic data and ensuring that driver work schedules are efficient and within working-time regulations.
As with warehousing, advances in autonomous vehicles have raised the possibility of entirely AI-based logistics in the years to come. For example, self-driving trucks deployed in the near future will boost cost-effectiveness even further.
There are lots of examples of advanced automation on the shop floor and in distribution. But that is not the case with everyday back-office processes.
According to a study from iBASEt, manufacturing companies still rely on manual spreadsheets to handle almost half of their common processes such as accounts payable processing, HR onboarding, and legal contracts management. Paper forms and documents are prevalent in more than a third of these areas.
However, this kind of document-based work is an area where smart automation excels. Technologies such as intelligent document processing (IDP) and machine learning allow organizations to process incoming documents faster and more accurately than any human worker. IDP is already making real impact in key areas such as driver onboarding and shipping paperwork, where document-centric automation ensures accuracy in freight bills and bills of lading.
IDP captures and digitizes any kind of document in any form. Once documents are in digital form, robotic process automation (RPA) bots extract the appropriate data and quickly route it to the appropriate process, person, or system — without human intervention.
Everyday paperwork can be a real point of friction, not to mention delays, in the supply chain. Automation cuts costs and reduces errors — all the while allowing human staff to put their focus on high-value, complex edge-cases and exceptions rather than repetitive, manual, and error-prone data entry.
The difference between an efficient supply chain and a poorly organized one is immense. According to the Invesp consultancy group, an optimized supply chain can reduce a business’s costs by as much as 15%. A major savings when you consider the high costs of a supply chain in the first place.
A smart supply chain can dramatically boost the visibility of data across the whole organization. When every system and process is interconnected, the huge amount of data these systems produce can be used to help both AI and human workers rapidly make the best possible decisions. This whole process can play a key role in helping to reduce volatility throughout the supply chain.
The scale of the supply chain can sometimes make it hard to implement major changes and innovative technologies. However, the benefits of smart automation can quickly outweigh these challenges and prepare an organization for the next disruption.
For organizations looking to glean small improvements in the large and complex world of supply chain, smart automation is an obvious choice.