As the supply chain evolves, so too does technology, leading to exciting developments. Yet as our experts
warn, the key is to understand how to implement technology in a way that fits into your business in order to achieve results (and your competitive edge).
Consumer expectations are shifting at an alarming rate. In a post-Amazon world, where omnichannel boundaries blur and delivery speed and convenience are key, supply chain strategy has never been more important. Online retailers aren’t selling products online, they are selling an experience, and this is where the importance of the supply chain becomes paramount. A flawed supply chain will lead to a disappointing consumer interaction with your brand. With advancements in artificial intelligence and automation becoming more accessible for businesses, supply chain automation is where online retailers can find their competitive edge.
Power Retail recently published a comprehensive Special Report on Supply Chain Automation, which you can download here. We offer some key takeaways from our experts below.
How do businesses practically optimise and automate the supply chain? David Bickerstaff, Director of Let Lucy, offers this practical advice:
“First things first: what is the business type? Retailer, distributor, manufacturer, or supplier? Let’s say you’re a distributor. You buy from a manufacturer or perhaps a master distributor, and on-sell to retailers. The next question: what is your strategic advantage and how do you compete? Removing product uniqueness from the equation, your business will either focus on cost and driving efficiency, or you’ll be focused on responsiveness – catering to demand, product options and service levels,” he explains.
“Assuming your strategic advantage is cost driven (think efficiency), in today’s environment you will be ultimately looking to automate all across the internal value chain. From procurement àinventory control àsales àdistribution, your aim will be to drive cost out of all your processes. Begin with the process you estimate to have the highest potential value and lowest cost/effort to change. Once this process is identified, it is critical to baseline the current cost of the process (best if you can look at it from a unit cost) and work with your financial and supply chain teams to identify the constraints. Then calculate: if these constraints were removed, what would the new unit cost be?”
“Alternatively, if your strategic advantage is responsiveness, you’ll look to automate those elements of your value chain which won’t compromise on responsiveness,” he adds. “Again, begin with the process estimated at the highest potential value and lowest cost/effort to modify, but in this case being mindful not to compromise your key advantage. Utilise your business intelligence to identify pre- and post- constraint unit costs.”
After completing the above exercise, you can start to build your automation business case, including projected ROI. The key points are:
- Understand your business and your strategic advantage;
- Look at processes that have potential constraints;
- Baseline the current cost of the process (best calculated at unit cost level); and
- Determine what the cost of the process would be post automation.
Similarly, Andrew Clark, Founder and Managing Director of Logistics Help, offers these top recommended tactics and technologies for optimising the supply chain within a business:
- Faster materials handling equipment that carry more. Modern semi-automated or remote controlled equipment is significantly more productive than older manual units.
- Storage systems that allow you to store more in less space.
- Computer-aided storage systems such as carousels and pick to light systems.
- Improved warehouse layout that reduces travel path.
- Better building and/or location.
- Faster, more efficient freight service or vehicle fleet.
- Improving your forecasting of sales.
- Changing purchasing patterns to reduce warehouse processing, improve stock availability and reduce inventory.
- Pareto based product slotting rather than storage in family groups.
- Continuous cycle counting rather than annual stock take shutdowns.
- Advanced picking methods that increase the throughput in your warehouse.
- Replacing manual data entry with a file upload.
Automation may include:
- Any data entry task that can be replaced with a system integration or an automated agent such as Letlucy.com.
- Upgrading to cloud software systems that are more connected to your trading partners and extend functionality by connecting to other applications.
- Automated pallet wrapping machines.
- Conveyor systems to transport goods in the warehouse.
- Automated forklifts for bulk pallet movements.
- Automated storage and retrieval systems.
An increase in competition is driving advancement in the supply chain and changing the face of retail as we know it. For a more comprehensive understanding of what’s happening in the supply chain space and where we’re headed (as well as more practical tips and recommendations from the experts), download Power Retail’s free Special Report.