The Cost of Manual Supply Chains and the Migration to Automation
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Supply chains are continuing to grow in complexity, as businesses struggle to manage global networks of suppliers, increasingly high customer expectations, and unforeseen disruptions.
Recent events have highlighted how important it is for businesses to streamline their operations and improve transparency in each step of the supply chain. Earlier this year, 94% of Fortune 1000 companies reported experiencing supply chain disruptions due to the pandemic, including demand fluctuations, product shortages, logistics bottlenecks, uncertainty in obtaining raw materials, and shipping and receiving delays. Yet a large percentage of companies are still using cumbersome manual supply chain processes instead of adopting automated technologies.
In a recent survey of supply chain professionals, only 5% of respondents considered their company’s order fulfillment operations “highly automated;” 46% used a mix of automated and manual processes, and 45% used mostly or completely manual processes.
Only 21% of global supply chain leaders said they had a highly resilient network today — "meaning that they have good visibility and the agility to shift sourcing, manufacturing and distribution activities around quickly" — according to a Gartner survey from February/March 2020.
Manual processes create gaps and vulnerabilities within supply chains, while automated systems offer opportunities to accelerate innovation, boost revenue, enhance customer experience and quickly resolve problems.
Let’s look at a few of the biggest advantages your company can gain by implementing automation in your supply chain.
1. Improved visibility
In a manual supply chain, processes and teams are siloed, so no one has a clear view of the entire product journey. Your employees may use a hodgepodge of spreadsheets and applications to enter purchase orders, track inventory and logistics, or verify production or shipping details. This fragmentation results in ongoing inefficiencies, requiring team members to make multiple phone calls or sift through long email threads to find the information they need.
As your company scales and you have more suppliers and SKUs to manage, automation becomes more crucial to your operations. If you don’t know there is a problem with a shipment until a week later, it can have a domino effect and ultimately cost your company time and money.
Instead of maintaining separate applications and manually entering data into each, you need one system that automatically collates relevant data, offers real-time updates, and gives your team full visibility into your supply chain. This single view eliminates communication gaps and enables you to identify and resolve problems before they get out of control.
A Deloitte report emphasized that, in response to Covid-19, companies must prioritize improving end-to-end supply chain visibility through digitization: “New approaches and solutions are leveraging artificial intelligence and machine learning-powered entity resolution platforms, incorporating structured and unstructured data, and using proprietary and subscription-based databases to illuminate supply networks more quickly and to a level of detail that was previously thought to be impossible. Once the issues are visible, the solutions will come from achieving increased flexibility, collaboration, and control.”
2. Increased time savings and accuracy
Manual supply chain processes are just that: manual, labor-intensive, and time-consuming. Your employees end up spending hours every week doing repetitive tasks that could be automated for greater efficiency and accuracy.
In 2019, half of all U.S. manufacturing and distribution sales — $8.4 trillion in business-to-business sales — were processed manually, with customer service representatives typing in purchase orders by hand. This method is both tedious and susceptible to mistakes, and automation could save companies thousands of hours a year.
Automated supply chain workflows reduce the communication delays and errors common in manual tasks. The typical manual supply chain involves coordinating multiple variables and multiple people, often with no visible chain of custody, so it’s easy for details to slip through the cracks. If several employees are in charge of submitting a purchase order, emailing it to the supplier, waiting for a reply, and making revisions — while juggling a queue of other P.O.s and responsibilities — mistakes can easily occur along the way. According to platform usage data from my company, Anvyl, the average P.O. requires information exchange 10 times before completion, has 4 supporting files and involves 11 different individuals.
Incorporating automation into this process would minimize errors and free up employee time for more strategic or creative responsibilities. A more automated workflow would allow you to digitize and share purchase orders, auto-assign production tracking tasks to approve P.O.s, upload quality and shipping documents, pay invoices, and track delivery notifications — only requiring human intervention at distinct milestones or when problems arise.
As your company’s supply chain becomes more complex, your need for automation will also grow. Evaluate which manual processes you can begin to automate to close gaps, improve visibility, prevent errors and save time and money across your supply chain.