Supply Chain Automation: Where to Start for Maximum Impact

Where to Start for Maxium Impact

Supply Chain Automation

Calling All Automation Officers:

In 1913, Henry Ford automated his assembly line

to increase productivity. A car was completed every

10 seconds and he was able to cut prices, double the minimum wage, produce a superior product and

make a profit.1

www.ford.co.uk

Calling all Automation Officers - Where to start if you’re responsible for automation.3

How do you take an organisation with a supply chain firmly based on manual processes and successfully make the move to automation? Where do you start? What options do you have? In this document we draw on over a decade of experience in order to cash automation to present the answers to these questions and give you insight into how to begin your own automation journey.

Automation in its current digital form has been with us for long enough to establish it as a mainstream trend – and the inherent complexities of global supply chains make them an ideal target for automation projects. However, here in 2016, there are still many organisations who are yet to take advantage and capitalise on what automation can offer. Despite the maturity of the field, there are still conflicting views and misunderstandings on the best way to proceed.

In our opinion the time to act is now. Organisations who are starting their implementation journey today are in the fortunate position of learning from the success of others. Automation can require a major change in mindset for many, and the right approach will need to generate positive results early if you are to allay fears and doubts of those involved – from board level to warehouse staff.

Automation technology itself continues to develop at an incredible pace and, depending on your industry, can mean different things to different people. In this document we list the different types of automation tools available and explain why flexibility and independent advice are essential, no matter which route you take.

We advocate a proof-of-concept automation project; one that mimics the wider logistical complexities in outcome, and choosing the right processes for this is fundamental to achieving early success. This approach is illustrated in a case study example.

Once automation is established, the possibility for further growth is much easier. Large, global organisations are able to respond with the speed and attention to detail of their smaller counterparts. As a company dedicated to bringing automation to the supply chain of large, global brands, we too have a vested interest in seeing automation done right first time.

And we hope that this document gives you some of the information you need to take the first step of your automation journey.

Executive Summary


The goal of automation is not new. Over the centuries we’ve seen cheap labour, industrialisation and outsourcing (which is really only cheap labour with better freight networks) all employed to increase profit margins and gain a competitive edge. Today, organisations are turning to digital automation to help them achieve better productivity, profitability, gain market share and cope with the complexity of global sourcing and supply.

Introducing Automation in the 21st centuryWe are living in the Age of Agile. Responsiveness, speed of innovation and time to market are the goals of today’s successful organisation. However, those of us who have worked in global business know that a large, sprawling organisation and ‘nimbleness’ is not a natural partnership. However, this is exactly what automation can bring: the ability to respond as if you were a lean start-up.

And if you are a lean start-up you can design your supply chain from the ground up with a high degree of automation, designing your enterprise to be scalable and efficient.

Digital automation, including: data entry, analytics, end to end systems integration, and increased visibility have the capacity to transform the 21st century supply chain in a similar way that the introduction of the assembly line revolutionised manufacturing. Whether you are an established global organisation or a new venture, automation can support business growth without the need for increased operational costs.

Why there is a need to act nowAllied Market Research2 has predicted that the robotics technology market is likely to experience significant growth until 2020. As more global businesses automate their key processes, documentation creation, process sign-off and record keeping, it becomes more of a requirement to remain competitive. Using automated data capture and record keeping to demonstrate rigorous regulatory requirements is an additional benefit.

It is sensible to assume that business who achieve the efficiencies and responsiveness that supply chain automation promises, will be the ones to enjoy the most success going forward.

Introduction

Automation RoadblocksAs a strategy for dealing with complex supply chains, automation has proven to be a good one, with OmPrompt clients achieving an average cost reduction of 40% across their order to cash processes. However, automation as a concept and the actual implementation are two separate things. As with many projects, the execution can be the sticking point.

Add to these the often real, but difficult to quantify, barriers of an unwillingness to change legacy systems, disparate enterprise systems, and staff fearful of their jobs, automation doesn’t always go down so well, even if it may be the best thing for your company long-term.

Finally, there is some confusion about what, exactly, is automation. For some, it’s automatic data entry, for others it’s robotic warehouse distribution. An understanding of what is meant by the term automation is beneficial.

iIn a 2014 Peerosity3 survey, the biggest obstacles to automation in the order-to-cash process was lack of standardisation of processes (36%) followed by a lack of resources (29%).


What is ‘automation’?

Within a modern business environment, automation can be split into two broad categories:

Automation tools tend to be categorised within the following four terms:

1

2

Data entry automation. Data from one source is entered into another system without human intervention. The benefits to the business here are speed, accuracy and reduction of headcount or the ability to grow without recruiting.

Business Process automation. This type is more complex and is rules based: if A happens do B, else do C. For businesses, this is where breakthroughs are made. Results of this kind of automation can be from improved customer service to accelerated product launch.

In reality, the boundary between each category is blurred, with available automation tools falling into more than one definition.


What to automate?As mentioned previously, data entry and rules-based business processes are good candidates for automation. Many businesses find a wealth of processes that are suitable from order entry to submitting an invoice. To begin, it’s prudent to choose one or a cluster of related business processes to automate within the order to cash process. Ideally, this proof-of-concept project will be one that replicates the larger-scale automation to come, yields results quickly and gives you the opportunity to learn from the process.

Ideal proof-of-concept projects are:

These kinds of processes are usually highly repetitive, performed frequently, currently need a person at a computer and are rules-based. Any kind of data entry task usually fits this description.

You will get the most recognition and support from an executive level if your initial automation project gets results in an area that has been identified as ripe for improvement by your executive management or board. And for many businesses, logistics and supply chain fit this bill perfectly.

Global supply chains are under more pressure than ever to deliver the right product in record time. Competition, online shopping and rising consumer expectations, such as same day delivery, is highlighting the supply chain as an area ripe for transformation.

Aligned with areas identified as needing improvement in your organisation’s strategic plan

It will help to choose processes that already add value. Identifying and eliminating processes that are inefficient or add no value will help you close in on the right process. Choose processes that are currently being measured so you can easily provide evidence of superior results once automated.

Valuable with significant and measurable results

Target those processes that are most likely to yield returns in a relatively short time. Demonstrating that automation works in principle early on in your project will help lay the foundations for more widespread, transformational automation projects later on.

Ideally suited for ‘quick win’ automation


How to automate?Because the supply chain sits in the heart of your organisation’s operations, you’ll need cross-department buy-in and support from all areas of your organisation, including: IT, finance, HR, customer service and logistics, as well as board level backing.

Probably the biggest question on how to proceed is whether to get third party help.

Do it Yourself. Doing it yourself means that you apply the technology (usually written by a third party) to your own ERP systems, or specify a bespoke automation solution that you apply and implement with your own in-house team. You will gain a lot of knowledge along the way, but unless you have spare in-house IT capacity, you will probably find this the most costly approach. It is also unlikely that you’ll get results anytime soon, as it can take years to specify, develop and implement such systems.

Business Process Outsourcing. Your next option is to outsource select processes to a third party business process outsourcing (BPO) provider. They will use their scale to offer cost-based efficiencies to you. However, it’s worth noting that the ‘automation’ here in the real sense may be limited. You are simply transferring the work you do in-house, to another set of people elsewhere. There is no technological transformation. Not only will this mean that once initial cost-savings are made, little extra benefit will be realised, but it also means that the secondary benefits of automation, such as improved customer service and reduced DSO are not achieved.

Managed Service Provider. The third option is to form a partnership with a managed service provider. You will still offload your key business processes, but they will use technology, rather than people, to carry out the processes. The advantage here is that they will then directly integrate their technology with yours, giving your own systems a boost and cleaning up your data. The level of complexity and integration between their systems and yours can be very high, and some order to cash automation providers create interfaces to allow you see the performance of your business processes at a glance. Crucially, the competitive nature of this market space means that these providers are constantly developing their systems to meet new market demands, allowing you continue to get new benefits from automation year on year.

Questions to ask of any automation provider.1. Industry experience. The drive for automation is driven by the market and the need to gain

market share. It’s critical that your partner in automation understands the very specific needs of your market.

2. Data security and ISO27001 compliance. Any third party provider will be dealing with your, and possibly your customers’, sensitive, proprietary information. Make certain that data will be safe.

Be flexible. The rate of technology development right now is fast. You’ll need to balance the need to prove a concept relatively quickly, with the need to go for a flexible solution. Out of the box static solutions may give you a head start, but you could find yourself stuck with an outdated technology in five years’ time. Check contracts, look for signs of continuous development and upgrades and see whether you have to pay for these.

Get independent advice. Automation is not new anymore. That means that over the years key players have emerged and industry commentators, such as Gartner, have been able to assess and evaluate the performance of technology providers. Gaining an objective, but expert, viewpoint will go a long way to helping you choose the most suitable partner or provider for your automation project.


Where to begin?For a proof-of-concept, you’re looking for data entry or manipulation type processes that you can automate quickly. Specifically, look for processes that are carried out over 50 times per day. Good candidates are: processes that include data conversion from one format to another, mass email generation, data analysis and archive or record keeping.

In example below, our client took data entry as their starting point for a successful supply chain automation implementation project.

Case Study The approach outlined above is one used successfully by many of our clients, and as such is an approach we recommend. This case study serves as an example of this process in action. Our client in this example is the UK’s largest dairy co-operative – in order to honour our client’s confidentiality we have not referred to them by name.

The business level driverWhen our client came to us their business focus was on logistics. Within a single week they were receiving nearly 2,500 proof of delivery (POD) documents and goods receipts notes (GRN) containing 70,000 lines of data – from a single customer alone. Add to the complexity that those documents were produced and sent in customer-specific formats, it’s not surprising that a member of the logistics team was spending a whole day per week, just going through discrepancies.

Start with data entryOur starting point was to automate the simplest part of the logistics manual process, and that was data entry and manual filtering. All POD documents and GRNs were automatically routed to us. We used our bespoke technology to extract data from all these documents – regardless of format – convert the data into a meaningful format, and send it straight back into our client’s ERP system. Already, significant time has been saved and data entry errors reduced.

Move to business processesOur next phase was to move into something more complex, and a significant problem for our client – sorting out those delivery discrepancies. Using logic, business rules and our self-learning technology we could check and rectify delivery discrepancies. Now, every day, our client’s logistics team receives a clean list of delivery claims that are ready to be processed. No time-consuming manual checking necessary.

Business level consequencesStaff who were responsible for data entry and claims checking are now free to spend their time on more value-added tasks. Additionally, our client is now able to look at the combined claims for a single retailer and identify trends and isolate root-causes; something that was not possible when manually trawling and cross-checking thousands of lines of data.


SummaryIf your organisation is venturing into transformative automation of your supply chain for the first time – or building on what you’ve already adopted – then you’ll be breaking new ground. To reduce risks inherent in any new project, the method of your approach is critical. As a company well-used to seeing order to cash automation from ‘the other side’, this is our core advice on how to approach any new automation project:

1. Run a proof-of-concept that is illustrative of your long-term vision. Furthermore, the proof-of-concept should deliver results quickly in an area of your business that has been identified as needing efficiency improvements.

2. Choose specific processes that give measurable results. Some processes are more suited to automation than others, and to be able to report early success to stakeholders, you’ll need to choose carefully. Processes that are most suited include: computer-based repetitive tasks, document creation and management, and complex, rules-based decision making.

3. Research to find the best tool for your situation. The simplest and quickest way to adopt automation with minimal disruption is to partner with a managed service provider. However, different providers offer different types of automation tools, from basic to hugely complex. Consult third party expertise, such as Gartner, and – whichever you choose – bear in mind that this field is changing rapidly and flexibility is essential for your business to continue to grow through the adoption of new automation technologies as they are, inevitably, created.

Automation is a truly exciting and enabling area for logistics. With it businesses are becoming more cost-effective, giving better service to their customers and gaining market share without a proportional increase in operational costs. With the right approach, automation will bring these benefits to your own organisation.

Further readingIn addition to the reference material cited at the end of this document, you may find the following information of use:

Supply Chain Automation: Does change have to be painful?(https://www.omprompt.com/supply-chain-automation-does-change-have-to-be-painful)

How to Build a Business Case for Automation(https://www.omprompt.com/how-to-build-a-business-case)

Robotics Technology Market - Allied Research(https://www.alliedmarketresearch.com/robotics-technology-market)

References: 1. http://www.ford.co.uk/experience-ford/Heritage/EvolutionOfMassProduction

2. https://www.alliedmarketresearch.com/robotics-technology-market

3. https://www.peeriosity.com/shared-services/articles/2014/04/automating-the-order-to-cash-process/

https://hbr.org/2003/09/why-good-projects-fail-anyway

https://www.siemens.com/customer-magazine/en/home/industry/process-industry/the-digital-vein.html

http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/automating-the-banks-back-office

O2C Automation Guide 2016: Institute of Finance and Management

Deloitte: Automate this: The business leader’s guide to robotic and intelligent automation

Robotics and the “New” Supply Chain: 2015-2020: Next-gen Supply Chains: Decentralization, Digitization and Robotics: http://adverbum.hautetfort.com/media/01/00/172552389.pdf

About OmPromptOmPrompt are a managed service provider of order to cash automation solutions. Established in the UK in 2005, OmPrompt’s solutions enable many global brands in the FMCG and healthcare sectors process and fulfil orders with the maximum efficiency and minimal errors.

Our suite of customer automation solutions guarantees 70% automation of customer orders within 12 weeks of implementation, with only a minimal amount of support required from your IT department.

Our clientsWe serve clients in over 50 countries with our award-winning platform. We are ISO 9001 and ISO 27001 security accredited and work with the largest and most reputable brand names worldwide:

Get in touchIf automation is your responsibility and you need advice where to begin, we’re currently offering a FREE consultation to businesses that are ready to find out how automation can help them achieve their goals.

We can also help you build a no obligation business case so you can see exactly how automating the top 20% of your customers will save you money.

To book your consultation, get in touch:

Contact details

OmPrompt Ltd, 67 Innovation Drive, Milton Park, Abingdon, Oxfordshire, OX14 4RQ, United Kingdom

+44 (0)1235 436000 www.omprompt.com [email protected]

Supply Chain Automation: Where to Start for Maximum Impact

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