Capitalising on Supply Chain Digitisation with Robotic Process Automation – 10 Areas of Opportunities – LogiSYM August 2020
A digital workforce weaves together disconnected automation tools – Robotic Process Automation (RPA), AI, and machine learning – to think, act and analyse the way a human worker would, and work alongside humans.
RPA as it is also referred to, has the capability to transform supply chain management. RPA can automate critical yet repetitive processes, driving increased efficiency, error reduction and faster throughput. For an industry that increasingly requires higher logistics pipeline velocity without sacrificing accuracy and at lower costs, RPA is a natural choice for high performing supply chain organisations.
Gartner estimates that by the end of 2022, 85% of enterprises will have some form of RPA implemented in their business and Forrester calculates the RPA market will exceed a 50% CAGR by 2023, going from roughly $500 million to $2.8 billion.
Organisations that have successfully implemented RPA initiatives report cost savings of up to 80% and time savings of up to a staggering 40%.
In a nutshell, RPA helps businesses execute core processes faster and with fewer resources. It does this by using a digital workforce to perform redundant and manual-intensive tasks, so humans don’t have to. This reduces costs, errors, and inefficiencies.
Digital workforce is one of the obvious steps in developing digital supply chain capabilities and this can be done in a number of areas. This article explores 10 possible areas in which can help at each stage of the flow in Supply Chain Management.
RPA can automate the uploading of reporting and contract data for transactions from contracts into Transportation Management Systems (TMS) or Enterprise Resource Planning (ERP) systems with greater speed and accuracy. Procurement can also have RPA do dynamic searches of websites to source or conduct market research for future buys and tenders.
2. Purchase Order Management
Purchase order management requires a thorough review process but having to manually review every order can be labour-intensive, error-prone and cause process bottlenecks.
With RPA, purchase orders can be processed through automated criteria such as pricing, quantity, and regularity of purchase. When an approval matches optimization criteria, it gets sent through for processing with notifications to run the remaining purchase orders that do not match the criteria being sent through to procurement managers for a formal review. With RPA only non-conforming orders will need to be reviewed with more mundane non-value adding processes performed by a digital workforce.
3. Inventory Management
Regardless of how efficient and effective, all supply chains carry inventory. Managing inventory to ensure optimal volumes while tracking data along the way can be extremely complex and inaccurate demand and supply signals can cause stockouts, supply chain disruptions and inventory build-up like the ‘bullwhip effect’ – which is caused when forecasts yield supply chain inefficiencies. The bullwhip effect refers to increasing swings in inventory in response to shifts in customer demand as one moves further up the supply chain.
RPA can help continuously monitor inventory, notifying you when levels are low and signal when new shipments need to be ordered and even perform the job function of an employee by ordering new shipments at the right time.
Information is critical to the success of any supply chain and RPA can also be used to track inventory as it flows throughout the supply chain, if correct integration and tools are used. Manually tracking thousands or millions of items is time-consuming and prone to error. RPA can automate this process by deploying a digital workforce to track inventory as it flows from each stage of your integrated supply chain.
Within your distribution centre, RPA can perform a similar function and make inventory management easier by tracking inventory from the time it enters and exits the facility.
4. Contract Review
Today many companies spend countless hours reviewing contracts to track and review amendments to original documents. This activity in not necessarily confined to the supply chain function but also extends to the legal and finance functions. Much of this can be overcome by adopting RPA functionality during this crucial but often mundane activity.
5. Freight Management
Freight management is driven by time-critical, manual tasks. RPA brings efficiency to these tasks while saving time and reducing errors. By automatically processing requisitions transactions using RPA (from orders received from disparate systems or multiple formats from customers) the effort required can be significantly reduced.
RPA bots can be further programmed to deliver on-demand reporting and tracking. This will improve the ability for data analytics to be used to improve operations and provide an efficient and scalable freight management workflow.
Another area where RPA is coming to the fore is in communication. A large part of any supply chain is maintaining proper communication with suppliers, manufacturers, transportation service agencies, and customers. Even though concise and effective communication is such a critical part of supply chains, it is often the one that has a major need for improvement.
To ensure proper collaboration email communication can be set up with RPA. When shipments have been successfully delivered, when they are stuck midway or delayed, and when they need to be cancelled.
Effective communication between all parties involved needs to be ensured such that the customer gets a smooth experience. RPA can be used to automate this communication process by triggering emails and text messages when a specific event occurs.
RPA can enhance other aspects of freight management, such as route optimization, freight accounting, and freight claim management.
6. Returns and Refunds Processing
Processing returns and refunds is both a high-volume and high-value business. With the tremendous growth in e-commerce, returns and refunds processing is set to grow tremendously and businesses that rely wholly on human intervention in their processing workflows will be quickly overwhelmed.
Fortunately, refunds and returns processing are the perfect application for RPA. By using rules-based task automation, RPA can reduce the need for human intervention in most cases, freeing up labour to focus on processing that relies solely on human decisions. By reducing human intervention and automating processing, RPA accelerates resolution and reduces the risk of errors.
7. Invoice Management
Managing invoices is vital to the success of every logistics and supply chain business and many organisations have dedicated backroom processing centres that handle these tasks manually. Manually tracking and entering invoice data is a labour-intensive yet mission-critical process, making it perfect for automation.
RPA can make it easier to process invoice documents from vendors and suppliers with less chance of error. RPA speeds up tasks such as extracting information from invoices and validating and verifying information, so you can free up labour to perform higher value-added work whilst ensuring invoices are accurately handled.
8. Price Lookup and Comparison
Costs reduction of sourced materials is one way to drive down costs but manually conducting price lookups on multiple options for hundreds of products can prove untenable very quickly.
RPA can routinely search for pricing data on specified materials and structure this data in a way that makes conducting comparisons easier. This translates to getting better prices more efficient – and accurate.
9. ERP Integration & Communication
Handling data entry and migration is often cumbersome, repetitive, and prone to error. With RPA, these processes can be handled automatically and quickly, from invoice data entry to data validation and monitoring. RPA can enhance ERP utilities by increasing information accuracy and reducing costs related to manual data entry.
10. Order-To-Cash Cycle
The three essentials that must flow effectively in any supply chain is the product flow – either forward or reverse, the information flow and cash flow. With the latter, the entire order to cash process can be automated with RPA.
From the moment the raw material order is placed to the time the customer books or places the order to the moment they are engaged in the process of making payments RPA is able to help with the emails queries. This is especially useful for companies in e-fulfilment as the throughput in these facilities often number in the thousands of transactions per hour or day.
RPA in Supply Chain Management – Use Cases
Robotic Process Automation is still in its infancy in supply chain operations, however, organizations have accelerated towards including RPA in their supply chains to make them lean and efficient. MAERSK the integrated shipping company, for example, has implemented RPA to achieve significant ROI.
Today, an intelligent digital workforce with machine learning and cognitive abilities have led us to make RPA systems resemble humans to an extent. RPA can be used to predict outcomes and support complex decision making, thereby, helping employees with more than just robotic tasks.
Challenges in RPA implementation for Supply Chains
According to Deloitte, there are still many challenges organizations face when they begin to strategize RPA or go at it for the first time. Here are the top 5 challenges the report highlights –
- Process Standardisation – Complex processes lead to complexity in the robot. At all stages of the RPA journey, organizations face process standardization as a critical challenge. Complexity in processes hike the costs of implementing RPA while increasing operating costs and business disruption. Organizations, unfortunately, realize that where proper documentation exists, even in those places, the processes are not always well understood.
- IT Support – The support and consultancy of an IT organization are vital while strategizing RPA in the supply chain. It is essential and advisable to include an IT organization throughout the RPA implementation process.
- The Flexibility of Solution – RPA, at the outset, used to be considered a stagnant automation process. It carried a notion that robots will only learn once and that they need to be taught perfect lessons for them to perform later. Thanks to Artificial Intelligence and Machine Learning, solution flexibility can now be added to all stages of automation, though agility is perceived as a challenge.
- Stakeholder Expectations – Stakeholders have now started warming up to RPA, but it is a significant challenge to move RPA in Supply Chain up the priority ladder, and make sure it does not amount to complete disruption.
- Employee Engagement – Organizations that have succeeded in scaling RPA had first engaged their employees and built buy-in to change processes org-wide. Though things vary across organizations, there is a need for enterprises to take steps so that employees accept RPA with minimal resistance.
The RPA Reality
RPA has emerged as a cost-effective way for supply chain and logistics operations to optimize their processes whilst at the same time cutting costs.
Orchestrating these pieces together is an understandable challenge but strategizing and planning each part of the RPA implementation process and integrating a transformation mindset into everyone in the organization is crucial.
If you are looking to partner with a digital transformation facilitator organization, enterprises need to take an end-to-end approach with RPA in Supply Chain implementation to achieve full benefits and realize the anticipated ROI and finding the correct partner to work alongside and with them on this journey is crucial.
There is no one-size-fits-all model for digital transformation. Your organisation will need an IT partner who can tailor RPA implementation to your needs, being mindful of the operating scenario and the organisational end goals. RPA in comparison to traditional automation not only frees up labour to perform higher-value activities but revamps everything an organisation was built upon. New issues may arise in the service delivery process, and entire operations may need to be reworked, all for better productivity and efficiency that will pay dividends at the end of the day!