The supply chain industry is going through a number of natural transitions as it advances and new technologies become part of the overall business landscape. A key driver of this change is automation, which impacts every area of the supply chain – from procurement to delivery to staying compliant with government regulations. Automation plays an important role in standardizing the industry and enabling supply chains to be more productive and cost-efficient. But how, exactly, can companies automate their best practices?
The advantages of automating the supply chain are fairly straightforward: doing so frees up the time supply chain managers and their employees would spend manually conducting operations and allows them to instead focus on innovating and getting ahead of the competition. Complete automation is achieved through having the right technology, such as a transportation management system (TMS). A TMS provides complete visibility into the inner operations of the supply chain, which brings about improved collaboration among suppliers, partners and customers. A TMS is also available to multiple users within a business, meaning everyone has access to the same dashboard and information, better aligning company goals and strategies.
With its many moving parts, the warehouse is an area that is ripe for automation. Inventory was one of the first parts of the warehouse to become automated through computerized processes. Inventory automation saves workers from having to check available inventory by walking around the warehouse floor with a pen and clipboard. Today they’re able to instead log into a database to double-check numbers, see if there are any disparities, and more.
The continuing rise of e-commerce – with sales during the 2015 holiday season rising 13 percent compared to 2014– and the consumer-driven “buy-it-now” culture are key catalysts for additional warehouse automation. In order for consumers to get their goods in the quick time frame they’ve come to expect, the warehouse picking process must go off without a hitch. There are many factors that can go wrong in the warehouse that can delay an order, such as damaged goods or choosing the incorrect color, size or the wrong item completely – all of which can be detrimental to the customer relationship. For bulk orders in particular, picking the right items the first time around is critical to avoid having to start over mid-process or, worse, having to process the inevitable returns.
Automated warehouse technology takes human error out of the equation. These systems, commonly referred to as goods-to-person technology, are incredibly accurate and have built-in technology that keeps users apprised of what the machine is picking through the entire process. The users are also able to make any changes necessary while the machine is in use. The software has advanced algorithms to manage complex tasks and enable it to handle batch-pick orders, speeding up the order fulfillment process. The time saved shrinks the overall shipment time, moving the supply chain along faster.
While warehouse automation is a choice that most companies are making, some parts of the supply chain are becoming automated due to government mandate. One such instance is the Automated Commercial Environment (ACE) in the United States, which requires that all trade, import and export filings be done electronically. The overall goal of ACE is to streamline and automate manual processes through the elimination of paper records.
However, the transition to the automated environment hasn’t been easy, and each industry historically has had its own set of regulations to follow. To make sure enterprises are prepared for the changes that ACE will bring, last fall the deadline for the first phase of its implementation was pushed to Feb. 28. The original Nov. 1 deadline was expected to instead mark the start of a transition period that would allow businesses to get used to the electronic system. But thus far, adoption has been slow, which demonstrates how tricky it is to obtain complete automation, particularly in industries that have heightened government regulations, such as pharmaceuticals.
One of the big challenges in the adoption of ACE has been the additional data elements that are being sought by government agencies. Importers don’t always have all the required information in one system and will now need to consolidate all the data in order to pass it along to their brokers so it can be filed with Customs with minimal additional keying.
Despite these initial challenges, the long-term benefits of ACE – faster processing, improved productivity and cost savings – will outweigh the headaches. When all is said and done, ACE will enable shipments to move faster through customs, minimizing the risks of delay or lost revenue.
ACE will improve productivity throughout the whole of the supply chain, with the move away from manual documentation streamlining entrants and criteria corrections. Lastly, ACE automation is delivering clear financial benefits through the switch to an account-based model. By simplifying the payment and collection of duties and fees, with users now able to make payments monthly rather than an upfront basis, customs brokers are seeing welcome improvements to their cash flows. The productivity benefits above also bring associated financial benefits through lower processing costs. All in all, ACE is an example of automation in the supply chain that will bring an enormous benefit even if it takes time to implement correctly.
What is Ahead?
Automation will continue to spread through the supply chain – on the road, in the warehouse and at the border. New technologies we’re just starting to hear about, such as driverless trucks and drone deliveries, will be developed that take automation to new levels, further enhancing productivity, cost savings and the user experience.