A survey we recently published showed that nearly half (48%) of UK office workers are optimistic about the impact automation technologies can have. Respondents to the survey, conducted on our behalf by Opinium, an independent research company, had a general idea of the benefits that might accrue but were less clear as to how these technologies can be applied to their area. What’s more, our survey found that fewer than 20% of those surveyed felt their organizations were currently benefiting from automation. Which prompted two questions for me:
One, is this low level of adoption specific to the UK?
And two, how can automation be applied to the supply chain?
The first question is easily addressed, and the answer is no. Capgemini serves multinational enterprises across the globe, and our sense is that in other parts of Europe, in the US and elsewhere – not just in the UK – while levels of understanding about the reasons for adopting automation, artificial intelligence (AI) and machine learning are relatively high, understanding of how to adopt these technologies within specific industry sectors is still low, and companies are looking to partners to help them.
The second question needs more consideration, because supply chain is clearly a focus for automation. Indeed, when asked where they thought automation benefits were mostly likely to be found, our survey respondents showed distinct differences. Around half (47%) of the total pool saw potential applications in supply chain.
In my experience, the biggest obstacles to automation envisaged by those with supply chain responsibilities are largely matters of perception. Decision makers are concerned about the implementation costs, they are unsure of the security implications, they doubt they have the requisite in-house skills and experience, and, as our survey shows, they are unclear as to what the benefits of implementation might be. In a nutshell, they are apprehensive of taking on such an ambitious project all at once, as it may jeopardize the operation of their whole supply chain. In contrast, they want a step-by-step approach in adopting automation.
Accentuate the positive…
I could spend the next few paragraphs advising supply chain executives of the perils of this mind-set and of the inertia it generates, but by nature I’m a more positive person. I’d rather talk instead of the opportunity automation represents:
- Greater visibility – for instance, web-enabled sensors installed throughout the supply chain improve not only traceability but process knowledge. People know where things are, what’s happening and how well things are working.
- Lower costs – greater efficiency means lower overheads.
- Improved accuracy – greater knowledge delivers not only more accurate forecasts but greater responsiveness. Organizations can respond more flexibly to changing market conditions.
- Time to focus on more valuable tasks – greater insight into daily operations, better process control, more efficient order management and fulfillment and more besides – all these improvements reduce the demands made on time and resources, enabling people to focus on other areas including…
- Improved innovation – when supply chain operations are transparent and streamlined end-to-end, there’s more room for organizations to think about how to introduce exciting new approaches to product and service fulfillment that will delight and enthuse their customers.
There’s also an opportunity in those current low adoption levels. Organizations implementing an automated approach to their supply chains before their peers have first-mover advantage and are likely not just to see the benefits outlined above but to see gains in cost-competitiveness and also in market share. They’ll be ahead of the game.
… conquer the negative
Of course, to realize these advantages people first need to overcome those negative perceptions I mentioned earlier:
- Misgivings about implementation costs.
- Lack of awareness of the benefits.
- Concerns about security.
- Lack of sufficient in-house skills and expertise.
- A lack of a digital ecosystem.
- The right operating models.
All these concerns are a product of fear of the unknown – but I’m not recommending organizations should simply ignore that fear and march blindly in. Instead, I’d suggest a proof of concept (POC) approach. Automating part of the supply chain will enable the enterprise to gauge both costs and returns. The benefits of AI can be seen and better understood, and rigorous cloud-based security measures will become both tangible and reassuring.
Working on the POC with an experienced external services provider will not allay not only these misgivings but also any doubts about on-board expertise: the services provider will work alongside the in-house team to make things happen, sharing knowledge while at the same time freeing up internal resources to address other projects – the next phase of the rollout, perhaps.
For one of our global CPG clients, for example, we started with demand planning in one country and delivered a POC for three months, demonstrating that by leveraging Capgemini patented tools we could make substantial improvements in their forecast accuracy. We formulized this approach and expanded it to other regions, which has led to us now managing global demand planning for the client.
A POC is a good start, but it won’t deliver all the benefits of supply chain automation. These can only be realized when digital transformation is fully implemented across the enterprise. For instance, a POC might streamline activity in one business area or geography – but a comprehensive implementation that makes possible full visibility of processes end-to-end will provide efficiency improvements on an entirely different scale. To my mind there are few better examples than this of a case where the whole is so much greater than the sum of its parts.
One of the main positives from our survey was that people do see the benefits of automation and, despite misgivings and gaps in their knowledge, are beginning to warm to its possibilities. However, with all the noise around robotic process automation (RPA), AI, cognitive analytics and the digital customer experience, companies often deploy technologies randomly, generating benefits without delivering enterprise-wide added value. My advice is, don’t do it. It’s too big a thing to get wrong. The supply chain may once have been merely tactical, but it isn’t any more. It’s more than that. It’s core to the customer experience and hence to the brand identity of the enterprise.
And as I mention in my recently published Point of View entitled “Reimagining the Supply Chain in the Era of Intelligent Automation,” the key is to focus not just on automation technologies but to make them part of a comprehensive and strategic approach to the delivery of services.
And that’s why your approach to supply chain automation needs to be planned, considered, tested, comprehensive and above all, strategic.