The development of new technologies and the specialisation of organisations have driven the need to extend automation beyond the factory gates and across the whole organisation. The automation of supply chains is concerned with reducing the costs and effort involved in decisionmaking and management of design, production and logistics. To this end, the current state of automation in the supply chain can be grouped into four main classifications explored below.
1. Material flow automation
The complexity of many production processes and the distribution of production across multiple organisations creates a pressing need to track and manage the supply of materials, particularly around bottleneck processes to ensure they are not starved of material. Material flow automation covers the flow of information relating to stock levels within the supply chain and the increasingly automated processes involved in initiating a request, whether that is a restock request or a logistics move request. The overall focus of this form of automation is to reduce inventories and avoid delays, ultimately contributing to shorter overall production lead-times.
2. Information flow and decision automation
It has only been in the last 20–25 years that the technology has existed to allow design teams to collaborate across multiple sites in the development of new processes and technologies. The ability to share information, to undertake research and even to undertake trials remotely has led to a step change in the way that design occurs. Activities that previously were linked together sequentially, massively increasing lead-times, can now occur concurrently. In addition, this aspect of automation covers operational activities, as well such as production planning – including MRP/ERP systems – and the use of eMarketplaces to enable suppliers to access customers – and vice versa – more easily, all of which are aimed at improving the procurement of parts and the planning of production. The overall focus of this aspect of automation is to reduce delays and inventory costs, but also to assist with improving the overall operation of the supply chain by providing information to enable decisions to be made, such as details of scrap rates and other rework costs and production bottlenecks.
3. Management and control automation
Factory automation and the introduction of robotics is a phenomena of the late 20th Century and has had one of the biggest impacts on productivity and the costs associated with production in the whole of human history. With the advent of networks, such as local area networks (LANs), it is now possible for a single person to control multiple machines, whilst the improvement in sensing technologies means that processes that previously relied on human intervention have been completely automated. It is not only in the production process where this element of automation can be found, because warehouse management systems (WMS) focus on improving warehouse efficiency and advanced planning and scheduling (APS) tools help to match demand to capacity more closely.
4. Relationship automation
This last aspect is concerned with co-ordinating activities across the supply chain, possibly involving three or more tiers of suppliers. Improving accessibility through telephones, email and the internet has created the infrastructure for 24/7 customer service, whether that involves human beings or automated customer service interfaces where customers can place orders themselves without interacting with real people.
However, this aspect of automation is also concerned with partner-relationship management (PRM) tools that help organise information on leads and orders, profiles of customers/suppliers, records of communications and transactions between parties, and even assists in the organisation of face-to-face or other forms of meeting are becoming part of everyday life for most organisations.
Not every business needs every type of automation and the art of success for most organisations is to have the right level of technology required to meet the needs of the market in which they operate. Having said this, technology and the selective automation of activities can either be an order qualifier or and order winner.
Order qualifying automation is the minimum level of automation that is expected by customers. For many, this might be as simple as a website and an email contact; for others, it might be the ability to undertake complex design drafting projects remote from the site and across multiple design teams. Without the minimum level of order qualifying automation, businesses are unable to remain within the market successfully.
Order winning automation leads to enhanced competitiveness. This includes automation that reduces costs and lead-times, as well as that which makes it easier to deal with customers. The problem with order winning automation is the arms race it creates as the development of order winning automation is rapidly copied by others in the market, and it therefore moves from being an order winner to being an order qualifier.
The successful automation of the supply chain is concerned with a focus on maintaining and enhancing your organisation’s order qualifying automation whilst selectively investing in order winning automation as appropriate, and at the same time avoiding investing in technology that does not ultimately lead to improving your ability to compete and, more importantly, to win.
How the Institute of Operations Management can help
The Institute of Operations Management (IOM), in partnership with Amnis and Unipart, provides a wide range of training and support options to help you develop your supply chain training needs.
To see what the IOM has to offer, visit our website: www.iomnet.org.uk