Supply Chain Automation: The Complete Guide

Learn how supply chain automation can help you fight common disruptions. Explore examples of supply chain automation in action, business benefits, and emerging trends and tools.

What is supply chain automation?

Few events have brought the issue of supply chain to life like the COVID-19 pandemic. The pandemic exacerbated supply chain challenges in industries ranging from life sciences to manufacturing, and consumers had to wait longer to receive everything from computers to cars. But the pandemic is far from the only factor causing supply chain disruption in recent years. As geopolitical conflicts, labor shortages, and other disruptors continue to pop up, companies must find effective ways to respond to rapid change. Supply chain automation tools give companies new ways to cope with uncertainty and keep business processes and products moving.

"Supply chain automation tools give companies new ways to cope with uncertainty and keep business processes and products moving."

Supply chain automation refers to the use of technology to handle supply chain tasks without direct human intervention. Automation comes in many forms and uses several types of technologies. For example, manufacturing plants may use physical machines and Internet of Things (IoT) devices to automate physical tasks on the shop floor. Technologies like robotic process automation (RPA) and intelligent document processing (IDP) can automate software-driven processes on the shop floor and in the back office.

Supply chain automation proves critical for businesses to operate at scale. For example, by automating manufacturing production tasks, organizations can produce more products faster with consistent quality. Retailers facing the front end of the supply chain often have to deal with increased pressures on last-mile deliveries due to the “Amazon effect,” which has led consumers to expect fast delivery. Automation helps speed up the delivery process so these other retailers can compete.

Automation can also help improve supply chain agility. When a company sets up automated alerts to monitor demand signals from customers, it gains a chance to help teams adapt faster. For example, the procurement team can start ordering products and materials sooner to prevent shortages. Companies can also develop more resilient supply chains by automating notifications when suppliers may run behind schedule or lack manufacturing capacity. In these situations, the purchasing company can find alternate, temporary suppliers or choose to purchase premium freight.

Supply chain automation does not replace human workers but augments them. For instance, in the absence of widespread autonomous vehicles, the world still needs truck drivers, airline pilots, and ship crews to continue routing deliveries. Automation tools can make teams working across the supply chain more effective.

In the digital transformation age, speed and agility have become true competitive differentiators. Supply chain automation tools and strategies can help you respond efficiently to the next disruption. Ready to craft your new supply chain strategy? Keep reading to discover emerging supply chain trends, examples of what can be automated, and business benefits.

[ Learn more about supply chain risks and how to boost supply chain resilience. Get the eBook: Bringing Clarity to Supply Chain Chaos. ]

What are the top disruptors of supply chains today?

Global supply chains have faced multiple “black swan” events during the past few years. These events underscored the importance of frequent scenario planning so companies can be adaptable in the face of risks. To effectively scenario plan for your business, you should consider the most common supply chain disruptors today:

  • Geopolitical changes and conflicts top the list right now. From the war in Ukraine disrupting major shipping lanes to Chinese manufacturing’s output dwindling, companies have to reconsider their global supply chain choices. Global energy shortages, which can result from political conflicts, will likely also impact manufacturing capabilities, forcing some factories to operate at reduced capacity.
  • The COVID-19 pandemic upturned international supply chains, and companies have been trying to catch up ever since. Zero-COVID policies caused shutdowns in countries that manufacture and supply goods throughout international markets. Even now, supply shortages continue as teams try to recover. Additionally, as some nations sought to revitalize their economies by focusing on ESG (environmental, social, and governance) efforts, including green infrastructure, demand increased for certain raw materials. In turn, ESG now needs to be a part of supply chain scenario planning.
  • Labor shortages continue to affect supply chains, causing a lack of shipping crews, long-haul truckers, and last-mile delivery workers, among other challenges. And this employee shortage affects more than just transportation and logistics. Many types of organizations, from manufacturers to government agencies, may face critical brain-drain issues as employees near retirement age. And with employees aging out of the workforce, supply chains both international and domestic feel pressure.

But scenario planning can only get you so far. After all, the events that bring the most pain are often the ones you don’t see coming. A good example of this is when the Ever Given ship blocked the Suez Canal for six days in March 2021—this event cost the global economy roughly $60 billion in trade. Industry leaders are working to avoid single points of failure so their supply chains can remain resilient, even in the face of unexpected change. And how are they doing this? With automation.

What are examples of supply chain automation?

What do supply chain automation tools look like in action? Automation can play a role in nearly every part of a supply chain—from office tasks to customer service. Let’s explore examples of how supply chain automation applies to different business challenges:

Manufacturing shop floor use cases.

Manufacturing companies have long adopted automation tools such as industrial IoT devices to improve production. For those in the manufacturing link of a supply chain, automated technology has revolutionized shop floor operations:

  • Shop floor equipment with fixed automations or robots on an assembly line can speed up production.
  • Automated reports for management provide greater visibility and help teams course correct when issues arise.
  • Maintenance staff can use artificial intelligence (AI) to understand performance signals from smart devices and improve predictive maintenance.

[ Learn how to gain added value from shop floor equipment and automation investments. Get the eBook: Delivering on the Promise of Connected Manufacturing. ]

Office administration use cases.

In an organization’s managerial ranks, automation tools can speed up productivity across all sections of the supply chain—from manufacturers to logistics companies to retailers. Consider these examples:

  • Supply chain planners can receive real-time demand signals from point-of-sale and eCommerce systems to better inform their forecasts.
  • Finance teams can reduce data entry around accounts payable and receivables and send automated communications for collections.
  • Customer service representatives can automate follow-up emails and case assignments to deal with various customer issues.

Transportation and logistics.

Transportation companies play a critical role in the supply chain. They deliver goods across different links—including material suppliers, manufacturers, retailers, and customers. Automation can help transportation companies:

  • Assign delivery drivers to specific routes to assist with last-mile delivery.
  • Scan goods and automatically send manifests to warehouses before delivery.
  • Send delay alerts by tracking the GPS location of vehicles.

Customer service.

Strong customer service—whether B2B or B2C—has proven to be a critical factor in maintaining and improving customer loyalty. Consider the following ways that supply chain automation tools can play a role in customer service:

  • Routing calls to appropriate departments and teams using case management and business rules technology.
  • Sending automated emails with delivery status updates.
  • Assisting on web portals where customers can check on orders.

Benefits of supply chain automation.

What are the top benefits that supply chain automation tools typically bring to an organization?

For starters, automation helps improve production and delivery speeds. Automating repetitive tasks frees up employees to tackle higher-level tasks that require human intervention.

Second, automation improves transparency. For example, automated the sending and receiving of notifications allows warehouse teams to track whether deliveries have been made on time. Automating alerts for when inventory levels dip to dangerously low levels allows procurement teams to order more materials long before a shortage puts a wrench in production.

Third, automation lowers costs without forcing you to sacrifice quality. It can reduce returns, inventory losses, and scrap. It can also help you get more out of your existing workforce by offloading many of the more basic, routine work to bots, freeing up human resources to focus on more strategic tasks.

Finally, automation improves customer satisfaction by assisting with last-mile delivery. If someone’s running late on a delivery, your systems can use business logic to reroute delivery vehicles and find out who’s closest to the delivery area. For long-haul transportation, automation can help you better keep track of which trucks are available for long-term deliveries, schedule drivers, and send them directions to warehouses and pickup points.

3 trends to watch in supply chain automation.

Supply chain efficacy depends heavily on multiple complex factors. Disruptions were common but manageable prior to 2020. But with the supply chain crisis precipitated by the pandemic and its fallout, it’s important to gain insight into emerging trends and prepare for them. In 2023, organizations face three growing trends:

"Expect the focus on environmental, social, and governance (ESG) to accelerate."

First, supply chains will face continued disruptions on both the political and weather fronts. With the impact of geopolitical issues and the increasing pace of climate change causing even more storms and supply shortages, it’s critical to build these two types of disruptions into scenario planning. Running frequent scenario planning sessions can help you build resilience into supply chain efforts by knowing contingency plans for different situations. You could set up automated contingency plans to run when issues occur. For example, if an area of the country has an ice storm and trucks cannot easily deliver goods to their destination, your systems can automate the process of requesting supplies and transportation from another area in the country. Or if a warehouse catches fire and inventory is damaged, it will be significantly easier to replace lost inventory if you’ve already automated sourcing and procurement processes.

Second, expect human resource shortages to affect operations. For instance, many manufacturers face aging workforces that soon may leave for retirement, and organizations have trouble backfilling these roles. As older workers train new employees before they retire, automation can augment their efforts, passing some previously manual work to machines. Automation will become a must-have for companies to survive a dwindling supply of talent.

Finally, expect the focus on environmental, social, and governance (ESG) to accelerate. Companies across the supply chain will need to automate collection of their carbon emissions and other environmental data so they can easily report this information to regulators and suppliers. As businesses face requirements to report on their scope-3 carbon emissions to investors and regulators, those who cannot easily report their ESG data may lose out on important deals. Organizations can get ahead of this trend by automating carbon data capture now.

Supply chain automation tools: 3 factors to consider.

Today’s automation software market offers any number of point solutions, such as robotic process automation (RPA) tools. But while RPA software bots can automate simple, repetitive tasks, RPA on its own will only get you so far. Unlike AI tools, RPA does not learn from data over time. And RPA hits a wall at the point in a business process where you need a cognitive decision. (For more detail on this, read our related article, RPA vs. AI vs. Low-Code.)

On the other hand, an automation platform that includes several kinds of tools—not only automation technologies, like RPA and intelligent document processing (IDP), but also low-code development and process mining—lets you automate entire business processes. Look for a platform that:

  • Makes it easy to work with data: A platform built on a data fabric architecture and toolset lets teams work with data in a virtualized layer that sits on top of existing systems, such as CRM and ERP applications. Your IT and line-of-business teams get a unified, real-time view of the organization’s disparate data silos and can work with the data as though it were local. The data fabric approach eliminates the need for time-intensive, costly data migrations and helps people make better decisions, faster. That’s vital in the realm of supply chains.
  • Helps you discover and optimize real-world processes: Process mining tools let you see how your organization’s processes actually work, find bottlenecks, and note potential opportunities for automation. As you optimize processes, you can track before and after results to ensure that you’re streamlining efficiently.
  • Cuts down on development time: Low-code development and design tools let teams create full applications from business process diagrams. That’s a speed and agility advantage for IT teams. A platform that lets you easily build process automation into your apps with low-code helps IT leaders increase development speed and change course quickly as business needs change.

[ Discover more areas where automation can support supply chains. Get the eBook: The Future of Supply Chain Orchestration. ]