Supply Chain Automation vs Augmentation

Supply Chain Automation vs Augmentation

Will supply chain professionals be eliminated by artificial intelligence (AI) software and automation that autonomously runs the supply chains of the future? The answer to this question depends on a multitude of factors from technology advancements to strategy decisions. Today, two polarizing views dominate the industrial supply chain. The first is that AI will replace what humans do in the near term – i.e., “Autonomous Supply Chains” – and the second is that AI is a niche big data analysis tool for “Automated Insights” that might be broadly applied in the future.

No one has a crystal ball for what the future holds. To navigate the unknown, leaders need to decide what type of world they want to live in. Do we fear or embrace new ways of working and new technologies? Do we let the future happen to us, or do we act to create the future we want to see? 

If history is our guide, sitting on the sidelines is not the answer. The cases of former industrial forerunners like Kodak, Compaq, and Briggs & Stratton offer cautionary tales of companies who let the future pass them by. We put off co-creating the future at our own peril.

Why Vanquish Waste

When approaching the future of work, it’s important not to get lost in the technology jargon and buzz words of the day. Software, after all, is just a tool to do a job. Each tool must do the job better than its predecessor by reducing waste in the value chain to maximize customer value.

In our quest to vanquish waste, we must subscribe to a practical Lean approach in the theme of productivity gains, not just adopting any one technology. Focus on waste reduction in the form of work minutes required to complete tasks within broader supply chain processes. This micro-focused, continuous improvement mindset is critical to generating and sustaining supply chain performance results.

An alternative viewpoint with a productivity focus, Augmented Automation, is gaining traction, as it enables both near-term results and establishes a foundation from which to build an intelligent supply chain competitive advantage. Most importantly, the viewpoint approaches software as a tool to empower, not replace, humans. Augmented automation software acts as a productivity tool to execute specific, lower value-adding tasks to accelerate professionals’ day-to-day activities; we can work in tandem with intelligent software applications to elevate our performance and our profession to achieve far more than is possible today.

This viewpoint also highlights a more practical path forward. Professionals today can more easily pilot automation technologies by attacking select task inefficiencies first, gain confidence through realizing results, and then scale success across more tasks.

How to Optimize Processes

Tasks like supplier identification and qualification within the procure-to-pay (P2P) process can be augmented with software to both advance and improve business outcomes. These technology assists, although less dramatic than alternatives, reduce the time required to complete tasks and balance workloads across processes.

It’s true that if you want a step change in productivity you need to rethink the end-to-end process, as many tasks can be eliminated and/or rearranged. Business process reengineering (BPR) is key to capturing the full waste reduction and workflow benefits of automation; however, you don’t have to start with a complete process reboot. Instead, start with automating select tasks which then afford small additional adjustments over time. You can build up toward more impactful work productivity gains.

As an example, a complex product assembly like a truck interior door trim panel contains 17 parts. Once customer model and color configurations for a vehicle program are considered, the total bill of materials (BOM) line items can swell to over 900 parts. The cascading volume of part engineering releases and changes forces professionals to track part data within manual, offline spreadsheets to keep pace with new program launches; automotive Tier I supplier teams tend to manually track up to 400 supply chain data points to bring new programs to market. The result being that supply chain professionals today spend a disproportionate amount of time gathering, organizing, analyzing, and sharing data.

The number of datapoints required, along with their interdependencies, to bring a complex product assembly to production has hindered automation applications to date. Further, many tasks are non-linear, requiring more agile adjustments based on a multitude of datapoint changes from raw material availability to supplier lead times.

Non-linear supply chain processes where professionals know the datapoints required, but task sequences and priorities force continuous iterations, become more predictable when focusing on task automation. Augmented automation of select tasks can then act as valuable capacity improvement and risk reduction tools to help busy professionals accomplish more.

What to Automate Now

To best identify near-term supply chain automation opportunities, IndustryStar mapped each of the supply chain sub-functions (Leadership, Procurement, Supplier Quality, Production Control and Logistics) and 465 required, current best practice tasks to bring a complex product assembly to production.

A ground-up analysis was conducted of the specific tasks that make up the processes within each supply chain subfunction. Further, the team ranked each task based on the likelihood that the task would be fully automated by 2025. The results reinforced the viewpoint that augmentation of supply chain work with software, not full automation, is far more likely in the near term and foreseeable future.

One task-augmented automation example is the automated pulling of new program part and supplier data into Automated Plan For Every Part (PFEP) software. This technology assist saves professionals hours of time from having to manually gather and organize known data. Subsequently, professionals can then reinvest their time, focusing on higher-end skills like building better relationships and negotiating improved contracts with suppliers for new supply needs.

Elevating Future Work

Our research identified 198 tasks that offered near term opportunity for automation. We also identified 107 new potential tasks not presently outlined in most industrial manufacturers’ job descriptions or pursued by most professionals.

Continuing with a Lean mindset, employees that are displaced by technology, for example if their tasks are automated, should be reassigned to focus on other supply chain tasks. Communicating the company’s automation viewpoint to employees early and often is key to generating automation buy-in and results. Following through with new skills training and workload rebalancing is crucial for sustaining success.

Future tasks offer exciting, expanded job scope, security, and opportunities for professionals. In general, professionals could spend more time on more value-adding tasks like leading and facilitating action based on enhanced information flows.

When estimating task time saved and reinvested from our research, automation presents substantially more work upside than downside for supply chain professionals in the future. This point of view is just that, a perspective on the future we want to realize. To shape this vision, forward-thinking leaders need to act now to maximize value for all stakeholders, including employees.

-William