// industry insights
In times of crisis: How does automation support logistics and supply chains?
Last edits on: June 30th, 2020, 5 min read.
Let’s be frank: nobody likes a crisis. Especially in these past days and weeks, all types of businesses have been challenged with unfamiliar circumstances of social distancing, unusual work rhythms and the impact on sales, operations and supply chains. But this has not been the first time that global economies are shook by new obstacles and that “Black Swans” newly define the way business is made.
In fact, in the past we’ve seen major economic crisis that resulted from unforeseen external factors – just like the current socio-economic impact of the Coronavirus pandemic. For instance, there was the financial crisis between 2007 – 2009 paralyzing financial markets, economies and domestic businesses worldwide, and even natural disasters such as the volcano eruptions in Iceland in 2010 causing global air travel being disrupted for weeks and harming all connected industries.
Clearly, these are exceptional occasions that could not be foreseen or influenced, and surely there’s more eminent volatility, uncertainty, complexity and ambiguity (VUCA) from direct market variables such as shrinking demand, dependencies on suppliers or competitive entry threats. But, what all of these external factors have in common is that – at some point – pressure is put on your business. In most cases, the stability and continuity of the entire organization is being put at risk. When left unaddressed, these problems may lead to permanent damage and business crisis which is often visible in the lack of cash flow resulting in liquidity issues to pay debt obligations and potentially leading to bankruptcy.
There’s much discussion held around the topic of how to handle a crisis the best way possible. Industry experts such as Deloitte or Capgemini play the drums very loudly around this topic and call it proactive crisis management, or even recovery crisis management. Regardless, in the end we need to ask ourselves the question: what does it take to survive this phase, to be resilient, becoming antifragile?
Industry 4.0: The technology that leads to automation for logistics and supply chains.
When it comes to how to handle your business in times of crisis and uncertainty, one does not want to deal with a black box that might determine of what happens next – at least regarding the variables that managers actually can influence: your business.
Especially you, as a supply chain manager, or you, as an operations manager, might have asked yourself; what tools do I need when I have to act quickly to overcome my operational issues, right? The answer to this question may sound simpler than it actually is: Automation.
In this context, what’s not meant with automation are high-tech IoT devices and sensors within your store locations that connect shiny robotics with AI to auto-manage your entire warehouse inventory operations. What’s meant with automation is the technology that ensures data integrity between different order sources (e.g. eCommerce platforms like Shopify or Magento) and third-party logistics (3PL’s) warehouse management systems. In other words, the type of automation that enables seamless data flows between different information sources to support managers analyze business operations, be more time-efficient and make better decisions through advanced analytics.
In fact, a report by McKinsey claims that it is very likely that automation will accelerate global productivity between 0,8% and 1,4% of global GDP annually led by supply chains being more cost-efficient and thus business being more profitable.
In times of crisis, there is no room for inefficiencies, repetitive job tasks, or time consuming “chores” that lead to overheads and long backlogs. And certainly, there’s no room for a black box within your business operations. Managers need to have all critical information up-to-date and at hand at all times to make the right decisions quickly. What’s meant here is the kind of critical information that enables managers to solve the typical supply chain management and operational tasks – just a few to mention:
- Manage relevant 3PL partners charged with executing both warehousing and distribution activities across different markets on a daily basis
- Manage stock levels and inventory across all 3PL and store locations
- Direct, optimize and coordinate full order cycle (from outbound to returns) across all sales channels
- Report weekly and monthly logistics KPIs
- Process fulfillment and return requests
Now, imagine a crisis occurs and all of these tasks need to be solved in a timely manner and with no mistakes so that the supply chain and distribution of products remains intact to keep sales and revenues stable. Collecting manually all relevant information to execute these tasks is time-consuming and robotic. Frankly, it’s often not maintained accurately or consistently as “there was no time for that..!”. But, as a matter of fact, collecting all of this crucial information without manual labor can be achieved with API-driven technology – that is Application-Program-Interface protocols. In other words, API platforms that enable automation of data flows literally “take the robot out of the human”.
In brief, what are API platforms? In most cases, an API-driven platform is a cloud-based software that bundles data pools from differing online sources, applications or other software together and allows automated interactions between these entities. For example, the everstox logistics platform collects all relevant data from differing warehouse management systems, eCommerce platforms and other sources into one dashboard and access interface to provide decision-makers with service functions, critical analytics, and KPIs in order to make better decisions.
The possibilities of automation for logistics and supply chains through API platforms
With API technology, decision-makers can receive direct and real-time alerts of orders and operational reports to monitor KPIs. But that’s only a glance of all the possibilities. Regardless of whether there’s the normal day-to-day business to handle, an ongoing business crisis to navigate through, or the opposite: an unforeseen explosion of orders and fulfillment requests to cope with, API platforms become very handy as a tool in order to be time efficient, create better user experiences and to reduce costs.
Here’s a couple of functions that can be made available through APIs, automated data collection and system interaction that facilitate operations, the management of 3PLs, and store locations:
- Data Integrity: maintain full data integrity between all order sources and warehouse management systems with no human error
- Order Tracking: track all orders, delivery times and returns in real-time
- Benchmarking: track lead times of the full order cycle to benchmark store locations and fulfillment providers
- Stock Management: manage and review up-to-date inventory levels at all times for each store location and across different 3PLs
- Demand Planning: re-stock and plan optimal stock levels according to forecasted demand
In the end, it’s about the operational decisions that are made before, during and after this process that determine the outcome.
What’s the quintessence here, is that managers need to be able to make the right decision and to have the right information at hand with the right tools – automation and APIs are the enablers. Any manager equipped with these smart gadgets becomes less prone to making mistakes and thus more resilient towards external stressors.
It’s fully automated – what now?
The perks of an automated reporting and data system are quite evident: transparency, efficiency and customer experience. The first and second apply as data flows and processes become automated without manual labor and human error. The latter mainly applies due to keeping customer satisfaction high in the long run, as managers will learn and better understand which warehouse and fulfillment provider is keeping up with performance and delivery.
Of course, there are aspects of the supply chain that shouldn’t be automated at all. One can leverage technology to support operations, processes and decision-making, but in the end, there are still managers required to make the right decisions based on analytics, experience, new learnings and, most importantly, external factors that will impact a business.
To learn more about how to get started with an API platform to automate your supply chain and operations, get in touch with one of our experts.
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About the Author
everstox is a technology and Logistics-as-a-Service (LaaS) platform enabling scalable and data-driven fulfilment for eCommerce, B2B and Retail businesses through a European network of independent logistics providers.
We enable transparent, efficient and ecological logistics solutions by forming Europe’s first tech-driven network of trusted warehousing & fulfilment partners.
Further information about everstox can be found under: www.everstox.com.