Navigating Supply Chain Automation: Benefits, Examples & Strategies

For businesses large and small, the supply chain is the lifeline that keeps products moving and store shelves stocked. When the supply chain runs smoothly, costs are contained, sales remain strong and customers quickly receive the products they need. But if the supply chain is interrupted, businesses can suffer severe repercussions. Consider the most striking disruption in the past decade: the COVID-19 pandemic, which exposed significant vulnerabilities in global supply chains, with manufacturers facing product shortages, logistics providers hitting bottlenecks and retailers struggling because of delayed shipments and empty store shelves.

Today, many companies are still experiencing significant supply chain-related delays and lost sales opportunities. However, a growing number of companies are also discovering that automation is the key to building more resilient, agile supply chains. Automating tasks like inventory management, order processing and shipping can help companies react more quickly to disruptions, minimize human errors and maintain visibility across the entire supply chain. This article explores the benefits of automation and provides examples of how this advanced technology can ease pain points in the supply chain workflow.

What Is Supply Chain Automation?

Supply chain automation involves using advanced technology like AI, RPA, and IoT to keep the movement of products among suppliers, manufacturers, retailers and customers running as smoothly and efficiently as possible. Rather than relying on slow, manual processes, businesses can automate a variety of supply-related tasks, including sourcing, warehouse storage and customer service, to minimize errors, save time and reduce costs in their production, inventory and delivery processes.

At the heart of supply chain automation is software that connects the various pieces of the product life cycle — from manufacturing and logistics to order fulfillment and customer delivery. Enterprise resource planning (ERP) software can unify a company’s purchasing, inventory and sales processes in a single system while integrating smoothly with other critical systems, thus extending automated processes to warehouse and transportation management to coordinate the storage and shipment of goods. The result is a more seamless connection linking all parties to keep the supply chain progressing on schedule.

Key Takeaways

• Supply chain automation relies on advanced technology to ensure that products move along smoothly and efficiently.
• Supply chain automation improves efficiency, reduces errors and leads to faster, more accurate decision-making.
• Key steps to implementing effective supply chain automation include defining clear objectives, selecting appropriate vendors and continuous monitoring.
• Current trends in the world of supply chain automation include the rise of artificial intelligence (AI) and advanced robotics.

Supply Chain Automation Explained

Inflated costs, a global talent shortage, unpredictable customer demands and perpetual disruptions and shortages in their supply chains are among supply chain leaders’ top challenges, according to a 2024 annual report by Material Handling Industry (MHI), a leading trade association.

Indeed, in an age of next-day deliveries and instant gratification, today’s business leaders know they can succeed only if they address these issues, respond immediately to customer demands and manage higher product volumes with fewer errors and lower costs. Businesses that rely on manual supply chain workflows may have trouble scaling their operations without facing serious risks, like inventory shortages, delayed shipments or process errors, all of which can cost them significant time and money.

Supply chain automation, which entails integrating technology to streamline supply chain processes, has become critical for many industries, including ecommerce, manufacturing and logistics, which rely heavily on fast, accurate deliveries and high-volume processing. Even minor delays or mistakes can disrupt the entire supply chain, leading to costly setbacks. Automation helps minimize these risks by offering real-time tracking, tight coordination among partners and rapid responses to changes in demand. In an industry like healthcare, for example, where mistakes in the supply chain can create product shortages that interfere with the provision of prompt medical care to patients, automation is helping to secure the accurate delivery of life-saving supplies.

How Does Supply Chain Automation Work?

Supply chain automation integrates technology into each stage of the supply chain process, boosting the speed and efficiency of everything from sourcing to delivery. At the heart of automation is specialized software that replaces time-consuming, cumbersome manual tasks with quicker, smoother automated workflows. For example, an ERP system might unite purchasing, sales and inventory into a streamlined process that automatically checks inventory, triggers the warehouse to prepare shipments and updates the status of products for warehouse staff, suppliers, logistics teams and customer service representatives.

A warehouse management system (WMS) can then coordinate with the ERP to extend the process by automating the storage and shipment of goods. For example, when an order is placed, the ERP system tells the WMS which products need to be picked from the warehouse; the WMS then directs robots to locate the correct items, pack them and prepare them for shipping. Once the order is ready, the WMS automatically updates inventory levels and informs the shipping department, eliminating the need for manual inputs at each step.

Similarly, a transportation management system (TMS) can help companies optimize their shipping routes, track deliveries in real time and adjust logistics, allowing companies to pivot quickly if disruptions occur. For example, if a delivery route is blocked due to a natural disaster or intense port congestion, the TMS can automatically reroute shipments to avoid delays. In addition, data analytics also serve as a foundation for supply chain automation by predicting demand and adjusting inventory levels accordingly to reduce risking stockouts of in-demand products or overstocking, which often incurs high storage costs.

Benefits of Supply Chain Automation

Nearly 80% of global supply chain executives surveyed by Deloitte in 2023 said they had faced supply chain problems in the previous year, with causes ranging from geopolitical tensions to climate events. In assessing supply chain management imperatives, a growing number of organizations are recognizing that investing in automation offers the potential to navigate these challenges, making supply chains more resilient in the face of disruptions and more responsive to changing market conditions.

The benefits of supply chain automation include:

• Cost reduction and efficiency improvement: Cost management was the top priority of C-suite executives in 2024, with 65% who said they were targeting supply chain and manufacturing operations as areas to lower expenses, according to a survey by the Boston Consulting Group. After all, the supply chain is one of the biggest cost drivers in industries such as industrial products and consumer packaged goods, the consultancy said. Supply chain automation cuts costs by reducing repetitive manual tasks that can be slow, costly and prone to error, like data entry, inventory counting and order processing. An automated warehouse using robotics can process orders much faster than manually gathering products, and it cuts back on labor costs and mistakes that can lead to lost sales or product returns. As a result, companies can handle larger order volumes with fewer resources, improving overall efficiency and profitability.
• Improved production and delivery speeds: Automation can dramatically improve the speed of production by using robotic assembly lines and software-enabled machinery to increase output compared to manual processes; for instance, some automotive manufacturers use robotic welding and painting systems to help assemble cars. Automation can also enhance delivery speeds, using storage and retrieval systems to locate and gather items quickly to shorten fulfillment times, while transportation systems automatically optimize shipping routes based on real-time conditions to reduce transit times. Together, this leads to faster deliveries and helps businesses keep pace with growing customer demand.
• Enhanced visibility and transparency: Supply chain visibility remains a work in progress for most companies. In a 2022 KPMG survey, more than four out of 10 businesses said they had no visibility or were “largely unclear” about the operations of their direct tier 1 suppliers. Thanks to features that allow real-time tracking of inventory, shipments and production processes, automated systems can help with this deficit, giving all stakeholders access to the most up-to-date information to support better decision-making and quicker reactions to hiccups. And with an integrated ERP system, businesses can monitor and share the status of products and shipments at every stage. This level of transparency helps companies quickly identify and address any issues that might otherwise slow an order down.
• Increased accuracy and error reduction: Automation takes the guesswork out of complex processes, boosting accuracy while reducing costly errors. Picture a busy warehouse: Instead of relying on a human to jot down individual product codes by hand, automated systems, like barcode scanners and radio frequency identification (RFID) technology, capture product information as items move through the supply chain, instantly recording data and updating systems without the need for manual intervention. This level of precision eliminates common mistakes, ensuring that the correct products reach customers.
• Cost reduction without compromising quality: Automation helps reduce costs by making processes more efficient without cutting corners on quality. For example, robotic manufacturing systems can accomplish repetitive tasks faster and more consistently than humans can, so labor costs are lower and precision is higher. Quality control can be automated, too, using cameras and other sensors in addition to AI-based pattern-recognition tools. Automating quality control can bring greater accuracy as it replaces manual inspections, enhances supply chain audits and enables faster identification and resolution of issues. Additional savings accrue from related reductions in returns and recalls.
• Faster decision-making and responsiveness: In a fast-moving supply chain, companies with immediate access to real-time data can make important strategic decisions instantly. For example, when a sudden spike in demand occurs, automated systems can alert managers, ramp up production and add new shipment routes to make sure products are getting into the hands of customers in a timely manner. AI-enabled systems can also provide help with a variety of decisions, from how to predict demand to ways to optimize sourcing choices. In fact, in MHI’s poll, 40% of companies said they expect AI to provide a competitive advantage.
• Improved customer satisfaction: To improve profitability, it’s important that companies embrace customer-centric supply chains. After all, customer preferences are capable of redirecting supply chain priorities. Based on changing consumer values, for instance, the farm-to-table movement in dining has many in the restaurant business revamping their sourcing of ingredients as they also demand detailed information to share with diners on the environmental or organic qualities of the products they buy. Transparency is driving similar changes in fashion industry supply chains in response to consumer concerns about poor labor conditions and the need for companies to reduce their carbon footprint. Automation technologies, including supplier relationship management software, underpin the visibility and traceability required to meet these evolving consumer expectations.
• Automation of manual processes: The list of manual processes ripe for automation grows ever longer, accelerated by the rapid uptake of AI in supply chains. Repetitive, low-value tasks can be handled automatically, such as purchase order generation, the completion of customs forms, robotic picking and packing of items in warehouses and the consolidation, booking and dynamic rerouting of shipments. Nearly one-quarter of companies polled have implemented robotic process automation (RPA) in logistics and warehousing, with another two-thirds planning to do so, according to the American Productivity & Quality Center (APQC) in a 2024 report. In these two areas, RPA extracts transport and storage data from various sources, then automatically enters it into relevant systems, enabling the automation of shipment scheduling and tracking, inventory management and order fulfillment.
• Increased agility in response to unforeseen events: Better visibility into both a supply chain and AI-fueled decision-making can empower companies to respond more strategically when things go wrong. Equally as essential to agility are supply chain flexibility and scalability, which benefit from cloud-based systems, strong supplier relationship management and, in some cases, alternative sourcing and production locations. The advantages of agility are crucial given the nature of ongoing supply chain disruptions — such as interruptions along transportation routes, which can drive up costs, delay deliveries and negatively impact customer satisfaction and brand loyalty.
• Regulatory compliance assurance: The automation of supply chain processes significantly minimizes the likelihood of mistakes that could jeopardize a company’s ability to maintain regulatory compliance and provide detailed audit trails. For example, systems can track and log every step of product handling so safety and legal standards are met without extra effort. This reduces the risk of compliance issues and fines while also giving companies peace of mind that they’re following all the rules.

Challenges of Supply Chain Automation

Supply chain automation offers significant benefits for businesses, but the path to adopting automated processes also comes with some risks. Companies face everything from hefty up-front costs to the need for employee training and adapting to software changes. Here are the most common challenges businesses face on their journey to a more streamlined, automated supply chain.

• High initial investment and implementation costs: High up-front costs for the hardware, software and infrastructure needed for automation can pose a barrier for some companies, especially smaller ones. Still, 55% of businesses recently surveyed expected to increase their supply chain budgets in 2024, according to APQC, which also anticipated increasing returns on such investments.
• Data security and privacy issues: The more digitized and interconnected a supply chain is, the more exposed it becomes to cyberattack. Indeed, in a 2024 report, the Identity Theft Resource Center identified supply chain attacks as a prevalent trend, noting that cybercriminals often target smaller vendors to break into the larger companies that purchase supplies from them. Given these risks, any automation initiative needs to incorporate cybersecurity and compliance with data privacy regulations from the start.
• Workforce training and adaptation: With persistent labor shortages ranking as a top supply chain concern, it’s important for companies to prioritize training and adaptation to new technology. The good news is that some automation technologies, such as generative AI, can facilitate the necessary instruction and help establish a stronger comfort level with new processes, allowing people to adapt to changes quickly.
• Effective change management: Resistance to change can deter progress, so teams shifting to automation need to receive plenty of advance notice and clear communication about how to execute the plan. For example, if a company rolls out a new ERP system without fully engaging employees in the process from the get-go to gain buy-in, confusion and pushback can delay adoption. Company leadership should establish a strong change management strategy to establish new processes, roles and responsibilities to help overcome aversion to change and create a smoother transition that allows businesses to gain the full benefits of automation.
• Demand fluctuations: Automated supply chains are, by their nature, more flexible and capable of managing demand fluctuations, given that they incorporate capabilities that include real-time data collection, predictive analytics and preprogrammed responses. But there’s a proviso: Integration and scaling issues can temporarily interrupt the flow of information and materials. Project managers need to ensure the seamless integration of automated systems with existing processes, legacy systems and ERP software. The newly automated systems should also be deliberately designed to flex and scale — for instance, by leveraging cloud-based infrastructure — to manage fluctuations in demand.
• Evolving regulations: Regulations are constantly changing, making it difficult for companies to keep up. For example, a company automating its supply chain for international shipping might need to reconfigure its processes when new customs regulations are introduced. Automated system designs must be adaptable to the ever-changing compliance requirements inherent in business and international trade and be able to handle regulatory alterations in taxes, customs, industry-specific standards, data privacy and workplace safety. Designed well, automation can also improve compliance in another critical area: the heightening regulatory oversight of environmental and social responsibility in supply chains. For instance, AI-enhanced supply chain transparency can help a company trace raw materials to their source in order to monitor sustainable and ethical production in multiple locales.

6 Steps to Successfully Implement Supply Chain Automation

In 2024, more companies are automating their supply chains, according to the Association for Supply Chain Management (ASCM), with some aiming for holistic digital transformation while others phase in tools and more gradually whittle down manual tasks to refocus employees on higher-value work. ASCM survey participants singled out two overarching trends that will make the biggest impact in the coming three years: technological advancement and better data and process management. To implement supply chain automation successfully, companies should consider the following best practices:

1. Evaluate current processes: It’s important for companies to assess current supply chain processes for financial and operational performance, including benchmarking against peer organizations and industry best practices to identify inefficiencies and bottlenecks. This involves auditing the entire supply chain — from order processing to shipping — to understand where manual tasks are causing delays or errors. A company might determine that its inventory tracking process is too slow, making it clear that introducing automated, real-time tracking systems should be a high priority.
2. Define objectives: After evaluating current supply chain processes, the next step is to define clear objectives for the goals that supply automation should achieve. Whether it’s reducing delivery times, cutting operational costs or improving accuracy, outlining expected outcomes keeps the company’s focus on the areas that are likely to make the biggest impact. For example, a company might set a goal of reducing order processing time by 20%, an objective that could guide its automation strategy and software selections.
3. Select technologies and vendors: Once objectives are clear, it’s time to choose the appropriate technologies and vendors that align with the goals and best practices the company has established. When researching and choosing software, it’s important to find hardware and service providers that can deliver automation tools that easily integrate with existing systems and provide sufficient scalability. For example, a retailer might choose a WMS that integrates seamlessly with its existing ERP to simplify implementation and inventory control.
4. Create an implementation plan: Building a solid implementation plan is critical to smoothly transitioning to automated systems. Businesses should sketch out timelines, assigning specific responsibilities to certain departments and detailing how each part of the automation process will be rolled out across the supply chain. A manufacturer may plan first to automate inventory tracking, followed by warehouse operations, gradually phasing in each new stage to minimize disruption and allow workers to adjust to changing processes.
5. Execute training and change management: Rolling out new technology is only half the battle — getting employees comfortable with using it is just as important. Effective training allows employees to confidently adjust to new tools, while change management helps erase any concerns about the shift. When a warehouse implements robotics, for example, hands-on workshops to demonstrate the changing process, plus clear communication about its benefits as well as employees’ new roles, can turn skepticism into excitement.
6. Monitor and improve: Once automation is in place, the job isn’t done, of course; it’s important to continually monitor performance and make periodic improvements. By regularly analyzing data and identifying inefficiencies, companies can fine-tune their automated systems to steadily achieve better results. For instance, after implementing a new WMS, a retailer can track order accuracy and shipping times and make adjustments on the fly to keep operations running at peak efficiency.

7 Examples of Successful Supply Chain Automation

From procurement to customer service, automation is reshaping the way companies simplify operations and jumpstart efficiency. The following examples showcase the powerful impact automation is having on several critical segments of the supply chain.

1. Procurement and Sourcing

   Automation has revolutionized procurement and sourcing, making the process of purchasing supplies significantly more efficient. With automated procurement systems and data analytics, companies can instantly compare supplier prices, track order histories and predict future sourcing needs. A manufacturer might set up automatic reordering of raw materials when inventory falls below a certain threshold so the company never runs out of critical supplies. This eliminates time-consuming manual checks and lowers the risk of delays due to sudden, unexpected shortages. The result is a more streamlined procurement process that saves both time and money and keeps the flow of products moving.

2. Manufacturing

   In manufacturing, automation has reimagined production lines, boosting both speed and precision. Automated systems, like robotics and AI-powered machinery, handle repetitive tasks with accuracy, paring the need for manual labor. Car manufacturers, for instance, use robots to assemble vehicles from welding to painting, all with minimal need for human intervention. This not only accelerates production but also cuts down on errors and improves overall product quality. By automating key processes, manufacturers can increase output while maintaining high standards — all at scale.

3. Inventory Management

   Keeping close track of inventory levels used to be a time-consuming chore, but automation has significantly simplified the process. Today, businesses are monitoring their stock levels in real time with systems that automatically update inventory counts when products are sold or restocked. An ecommerce company, for example, might rely on RFID tags to keep a constant eye on inventory and to trigger reorders the moment supplies start running low. This smart approach keeps supplies in balance with demand, preventing both stockouts and overstocking. By leveraging automation, companies don’t just save time — they gain the insight needed to make faster, smarter decisions about their stock.

4. Warehousing and Storage

   In modern warehouses, automation has turned what was once the slow, manual process of locating products into a veritable snap, with finely tuned robots gliding across the floor, fetching items from shelves and delivering them directly to packing stations. Instead of workers literally having to walk miles each day retrieving products, robots handle this busy work in a fraction of the time. This not only speeds up order fulfillment but also maximizes the use of both warehouse space and personnel. By letting automation take the reins, businesses can move larger volumes of products more quickly and with far less effort.

5. Transportation and Logistics

   Traffic jams, bad weather and other events that cause unexpected delays no longer need to bring transportation and logistics to a standstill, thanks to automation. Delivery trucks can constantly adjust their routes mid-drive, guided by real-time data to determine the fastest, least congested routes. Companies like UPS have turned logistics into an art form, using smart technology to cut down delivery times and optimize the basics of every trip. It’s like giving each driver a high-tech copilot that navigates every move. The result? Faster deliveries, happier customers and a supply chain that’s always moving.

6. Order Fulfillment and Delivery

   Automation in order fulfillment and delivery allows companies to get products to customers more quickly and with greater accuracy than ever. An ecommerce company with automated systems can receive orders, instruct robots to choose items and prepare them for shipment — all without human intervention. From there, real-time tracking lets customers know exactly when to expect delivery. This simplified process reduces errors and helps businesses meet the ever-growing demand for quick, reliable service.

7. Customer Service and Support

   Answering customers’ questions and resolving their problems used to require long wait times, but automation has flipped that script. Now, when customers have a question, need to track an order or discuss a billing problem, they can interact with an intelligent chatbot that responds instantly, no matter the time of day. An online retailer, for example, can use automated systems to solve common issues on the spot, passing only complex problems on to human agents when necessary.

Future Trends in Supply Chain Automation

In the next 10 years, supply chains are expected to become more agile, transparent and responsive, allowing companies to operate with increasing levels of precision and efficiency. One of the biggest emerging trends driving that change is AI, which can be used to analyze vast amounts of data to predict demand shifts, optimize routes and foresee potential disruptions. Meanwhile, machine learning algorithms can anticipate inventory shortages before supplies run dangerously low so companies can proactively submit new orders to meet demand.

Another major development is the rise of autonomous vehicles and drones. Some retailers are already testing drone deliveries, promising faster shipping times and less reliance on human drivers. Over the next decade, these technologies could transform logistics, making deliveries significantly quicker and more cost-effective.

Blockchain technologies are also poised to bring a new level of transparency to the supply chain, for example, by tracing a product’s journey from the factory floor to the customer’s door with absolute precision. This level of visibility, with every step in the process crystal clear, strengthens trust among customers and helps stamp out fraud.

In addition, robotics will continue to take center stage in warehousing, with machines handling a variety of complex tasks — such as sorting, packing, assembling and distributing products. These smart robots will make supply chains more responsive and flexible, ready to adapt to shifting demands with ease, allowing warehouses to hum with efficiency, powered by technology that can keep pace with change.

Streamline Your Supply Chain With NetSuite

NetSuite offers a suite of cloud-based tools designed to help companies streamline their supply chains by leveraging a range of automation tools. NetSuite Supply Chain Planning provides businesses with a robust scheduling engine and predictive analytics to help supply chain leaders balance supply and demand to ensure that enough products are available to meet customer demand, while avoiding the high storage costs involved with carrying excess inventory.

Meanwhile, NetSuite Supply Chain Execution offers real-time visibility into the entire supply chain, helping companies create an efficient production process by taking into account needed inventory and availability of labor and machinery in response to large volumes of orders. NetSuite’s central database connects procurement, planning and production systems, updating inventory and production data, financial reports and order information in real time. This ensures that procurement, planning and production teams are all using the same data to make informed decisions and are able to consistently deliver high-quality products to meet customer demand with speed and precision.

Because NetSuite is cloud-based, companies don’t have to worry about maintaining expensive hardware or dealing with cumbersome updates. The system is always up to date, scalable and accessible from anywhere, which is critical for companies managing supply chains that span multiple locations. This flexibility gives businesses the agility to adapt to changing market conditions quickly and efficiently.

Automation not only increases the efficiency of supply chains, it creates resilience, allowing companies to pivot in the face of uncertainty to stay ahead of changing market conditions. The question today is no longer whether to automate but, rather, how much automation to employ, where exactly the technology can be used to provide the strongest business gains and how quickly it can be implemented. Companies that invest in faster, smarter, more flexible supply chains today are likely to be the ones shaping the future of business tomorrow.

Supply Chain Automation FAQs

What is RPA in the supply chain?

Robotic process automation (RPA) in the supply chain involves using software robots to automate repetitive, rules-based tasks like data entry, order processing and inventory management. RPA can streamline operations by reducing human error and speeding up tasks that would otherwise take much longer to complete manually. For example, RPA can automatically update inventory levels when stock is received or generate shipping labels when an order is ready for delivery. This allows supply chain teams to focus on more strategic work, which improves overall efficiency and accuracy.

What role does data analytics play in supply chain automation?

Data analytics is critical to supply chain automation, as it turns raw data into actionable insights to help businesses predict demand, optimize inventory and identify inefficiencies. By analyzing large volumes of data from various sources across the supply chain, companies can identify patterns that can inform decision-making. An electronics manufacturer, for example, might use predictive analytics to forecast demand for products based on historical sales data, current market trends, new product launches and economic indicators. This forecast could then be used to automatically trigger adjustments in production schedules, inventory levels and supplier orders to improve supply chain responsiveness and more accurately meet customer demand.

Will supply chains become automated?

Supply chains are becoming increasingly automated, with many processes streamlined by technologies like AI and robotics. As automation continues to advance, more and more tasks — such as inventory management, order processing and shipping — will be handled by machines and software. While many companies have not yet achieved full automation across every aspect of the supply chain, many are moving toward automating several supply chain processes to gain greater efficiency, accuracy and speed. However, even in a highly automated supply chain, human oversight will remain essential to monitor the technology and make strategic decisions.

How can companies automate the process of SCM?

Companies can automate supply chain management (SCM) by integrating software solutions like enterprise resource planning (ERP) software, warehouse management systems (WMS) and transportation management systems (TMS). These tools can automate tasks, such as inventory tracking, order processing and logistics coordination. Robotic process automation (RPA) can further streamline repetitive tasks like data entry and invoicing. By using these technologies, businesses can improve efficiency, reduce errors and enhance visibility across their supply chain functions.