May 26, 2023 The Competitive Advantage of Supply Chain Automation

Strategic technology implementation can drive efficiencies in the supply chain and strengthen companies’ bottom lines.

By Melissa Twiningdavis, senior managing director, Accenture

Leaders need to approach technology with the aim of driving value. While CSCOs are under pressure to deepen resilience and make operations a competitive strength, that doesn’t happen without the right combination of processes, technology and talent.

Of course, this is not a new idea. When the pandemic forced workforces to operate remotely, many companies sought ways to automate processes to sustain rigor while increasing efficiency. However, recent Accenture research shows that only 9% of organizations harness  AI capabilities to drive operational value across functions. And simply investing more in digital technologies does not guarantee resilience or improved business outcomes.

As organizations adopt more technology solutions, the business processes associated with tasks tend to become more complex. This is especially true considering the interconnected and interdependent nature of the supply chain.  Enhancing performance with AI starts with a clear strategy, mapping opportunities where automation can make the biggest impact and recognizing where progress can be made across talent, data, processes and use across the organization.

Some organizations have even applied digital twins to simulate process changes. This first step offers a bird’s-eye view with virtual representations of current procedures, allowing for greater insight into inefficiencies caused by process deviations, duplicate steps and other non-value-added activities. For example, Mars has been trialing digital twins for use in manufacturing operations to reduce instances of over-filling packages, a common problem in the food industry.

Digital twin capabilities can bring companies data-based insights that help them audit, analyze and improve supply chain processes before automating them. Essentially, if simply automating old processes can amplify the low-quality output of those already-flawed processes, when businesses gain a holistic view of operations and pinpoint process flaws first, they can actually focus on adopting the right technology in the right places to reach peak productivity.

Automating Processes for a Streamlined Supply Chain

Many supply chain processes are monotonous and prone to human error. After carefully evaluating existing processes to uncover inefficiencies, companies have much to gain from starting their process automation journeys in these three areas:

1. Warehousing: Global logistics companies and consumer brands have prioritized the adoption of robots and automation in their warehouse operations to help address immediate staffing needs and optimize order fulfillment processes. Additionally, brands like Mondelez International Inc. and Nordstrom Inc., found that such investments attracted more tech-savvy logistics professionals who were interested in helping build and implement beneficial technologies.
2. Inventory Management: Insightful and accurate inventory management is key to mitigating risk of over- and under-stocking supplies, which can drive unnecessary costs and exacerbate space constraints. Implementing automation in demand planning analytics, for example, can predict future changes in demand and drive forecast accuracy. As changes occur, inventory management software can automatically send notifications to flag when stock is running too high or low, improving a company’s real-time response to supply issues.
3. Billing: Tasks that require repetitive and often tedious work, are perfect opportunities to implement automation to eliminate the potential for human error. Artificial intelligence-powered automation tools can scan and sort bills, enter the correct data into the correct systems and generate valuable reports based on accurate data, improving overall efficiency by reducing mistakes and processing time.

Scale Fast to Drive Cost Savings

While automating a few processes alone can help create a more transparent, connected and resilient supply chain, a clear and strategic roadmap that prioritizes the needs of key stakeholders is required to scale automated operations. A company’s priority in this case should be to simplify and supplement employees’ work, allowing them to focus on more complex, thought-based problems in place of manual, error-prone work.

When deployed successfully, supply chain process automation ultimately drives bottom line impact. Accenture’s recent report found companies that thoughtfully and strategically reinvent their operations saw up to a 1.4X higher operating (EBIT) margin over peers, 42% more efficient in product and process innovation, 34% more sustainable and 30% better customer engagement.

In this rapidly changing landscape, it’s critical for companies to focus on enhancing automated operations to create a competitive advantage and maintain a resilient supply chain.

Melissa Twiningdavis is a senior managing director of Supply Chain Operations at Accenture.

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