A How-To Guide for Automating Your Supply Chain Business

As a supply-chain business executive, technology lead, or member of an internal improvement team, you’re more aware of automation than most people, in most industries. Pick-and-pack warehouse bots have been all the rage for a while now.

But that barely skims the surface—and the potential benefits to your supply chain operation. Consider all the technologies that are floating around these days:

• GPT or generative pre-trained transformer
• LLM or large language models
• RPA or robotic process automation
• Agentic AI—with the AI of course being “artificial intelligence”
• Others

What are these technologies, and which ones deliver the most value for supply chain operations? The Lab is technology-agnostic and does not sell software, making our evaluation of automation options vendor-neutral and objective.

This article covers where and how automation applies to supply chain knowledge work, how digital workers (a.k.a. bots) can handle half or more organizational processes, and a realistic path to getting there in six to twelve months, regardless of supply chain model (lean, push, pull/just-in-time, e-supply, or global).

The distinction between “digital worker” and “AI” in supply-chain operations is less clear-cut than it might seem. The term “digital worker” is an umbrella term that includes AI, agentic AI, robotic process automation (RPA) and others. Definitions vary across supply chain businesses, and the lines blur further outside the industry.

For this article, terminology is less important than application. The focus here is on what today’s business-process automation tools can do for supply chain operations and not a comparison of platform features.

Agentic AI is a tool that can take action (i.e., have “agency”), meaning it can coordinate multiple automation tools simultaneously. These other tools (and acronyms) it works with include:

These tools can be combined to automate a wide range of activities across your supply chain businesses, whether you work in tech and electronics, e-commerce, automotive, food & beverage, consumer goods, pharma, fashion, manufacturing, or any other sector. For the purposes of this article, these technologies are referred to collectively as “digital workers.”

The key word in “digital worker” is “worker.” Like human workers, digital workers can plan, review, and perform tasks. The more tasks they handle automatically, the greater the scalable capacity for your supply chain business.

There is an element of synergy here. More digital workers equate to more than the sum of their parts. Once onboarded and assigned their jobs, they can provide a substantial labor lift to your supply chain business, with less and less human intervention required vs. just a few years ago.

You may be pleasantly surprised to learn that the pricing for many automation tools is quite modest. License fees are typically nominal. Many apps provide as-needed pricing (pay as you go), with minimal subscription pricing for worker “seats.” The days of huge onboarding fees are largely legacies.

It gets better. You don’t even need to change your existing platforms, which can include:

• ERP (enterprise resource planning), e.g., NetSuite, Oracle, SAP
• WMS (warehouse management system), e.g., HighJump, Manhattan Associates
• SCP (supply chain planning), e.g., SAP IBP, Kinaxis
• TMS (transportation management system), e.g., Blue Yonder
• SRM (supplier relationship management)

With today’s automation and AI tools, digital workers can be layered atop your existing platforms without replacing them. Some of these tools may already be available to you; for example, Power Automate is bundled in with your Microsoft e365 license; you simply need to switch it on.

We can safely assume that if you’re reading this article, not only do you want to accelerate your supply-chain automation transformation, but you also want to do it as quickly and smoothly as possible.

Before we dive into the three prep steps, it’s important to note that standardization is the number one prerequisite. You can’t have your supply chain knowledge residing solely in the heads of your employees. Outdated training manuals and SOPs won’t suffice, either—although they’re a step in the right direction.

This begins with standardizing tribal knowledge, which entails gathering, organizing, analyzing, and structuring it for automation. The three steps below outline how to accomplish that.

The three steps are detailed below:

Many supply chain executives and teams find this step difficult because they instinctively compare to-be processes to as-is processes. At this point, that comparison is counterproductive.

The current state is addressed in Step 2. For the time being, let’s focus on remaining entirely on the desired future state of the supply chain operation.

The Lab has templatized the baseline future state for your supply chain operation, harnessing the more than 30 years of client engagement IP and best practices residing in our Knowledge Base.

A gap analysis between the future state from Step 1 and the current state of supply chain automation is the objective here. The goal is to identify which workflows, activities, tasks, and tools require updating or addition to reach the to-be state.

At this stage simply document the gaps without attempting to resolve them. Examples include modifying a data format for automation compatibility or defining a process checklist for the automation to reference.

The as-is processes you’ll want to compare and contrast against the goals listed in your to-be state:

• Quality of supply chain data intake
• Structure and formatting of supply chain data
• Your extant supply chain automation capabilities
• Requirements for supply chain automation
• Workflows design, such as detecting and handling exceptions
• Capabilities for supply chain performance management

At this point, the gap list from Step 2 needs to be prioritized. This means evaluating not just the impact an automation has at the specific process level, but also its upstream and downstream effects on the broader supply chain operation.

Prioritized in this way, the list becomes a sequenced action plan for implementing future-state supply chain automations with your digital workers assigned accordingly

While you will have done a decent amount of internal work to create your list of action items for automation, there are external resources available, too, with proven automations for supply chain businesses easily accessible.

The Lab’s Knowledge Base contains more than 100 industry-tested use cases for Supply Chain Distributors & Manufacturers, with the Top 40 readily available in our popular Automation & AI Use Case Catalog, so you can start automating ASAP.

The Lab can help you to implement, roll out, and grow your supply chain automation initiative, with:

a) Automation use-case catalogs, helpful for prioritizing

b) Supply-chain-specific development frameworks for code that can be rapidly scaled

c) KPI dashboards to measure and monitor supply chain automation performance

d) Templatized requirements documentation

e) Standards and tools geared toward project management

f) Process improvement guidelines

g) Sequenced maturity models to aid in supply chain capability enhancement

h) Training courses which we can recommend to your internal resources

The automations identified through the to-be-process-mapping, combined with those from The Lab’s catalogs, shorten the path to a fully automated supply chain operation. End-to-end implementation of digital workers is where the most significant enterprise benefit is realized.

Supply chain business relies on a number of core and ancillary systems, from ERP and WMS to supplier relationship management systems to everyday workhorses like Excel and Outlook.

All of these systems can be automated. The specific systems in use, and how they are interconnected across supply chain workflows, are not limiting factors. Digital workers are truly platform- and vendor-agnostic.

Today’s bots can routinely perform tasks that you may have considered beyond the possibility of automation, regardless of how platforms are configured.

Check out, for example, these three demo videos, all available on The Lab’s YouTube channel, showing actual client-anonymized automation at work for distribution, manufacturing, and supply chain operations:

• Distribution & Manufacturing: Quote-to-Opportunity Conversion AI+ RPA Automation for ERP + CRM 4.5-minute video
• Vendor Invoice Processing AI+ Automation for Accounts Payable Robotic Process Automation Demo 3-minute video
• Supply Chain & Manufacturing Operations: AI & Automation for Daily OEM Reconciliations Reporting 2.5-minute video

The Lab has developed and refined this roadmap over decades of client engagements. Following it, supply chain operations can implement digital workers in less than a year.

The four-step process is outlined below, including a best practice agile development process for Step 4, which covers how to automate supply chain work activities in detail.

Yes, there are. But you can avoid them, if you know what they are. Being aware of these traps in advance makes them easier to avoid:

Supply chain businesses are driven by metrics, KPIs, and SLAs. When quantifying the benefits for automation, you don’t want to fall into the common trap of merely looking at the number of hours saved for each incremental activity you automate.

Automating discrete tasks, you’re actually empowering the entire business to scale up its capacity, end-to-end.

Obsessing over minuscule time saving of things like keystrokes recouped. Instead, zoom out to properly gauge the value of your entire complement of digital workers.

Supply chain managers will often create “requirements” along the lines of “Each supply chain bot must save at least 1,000 hours of manual labor a year.”

A digital worker may save fewer than 1,000 hours per year at a specific task, but that measure does not account for the downstream benefits, which can often be many multiples of what’s saved at the actual point of supply chain automation.

A more useful question is: “What portion of the entire business process is being automated?” The more this is automated upstream, the more you can automate downstream. Automation frees you to introduce even more automation, in a truly virtuous cycle for supply chain businesses.

As referenced earlier, here is the best practice agile development process for Step 4, covering how to create actual supply chain automations.

The Lab is an implementation firm. Our role is to help supply chain organizations build automations that deliver measurable enterprise value.

In this review-light environment, any two questions answered as “Yes” equates to your go-ahead to move forward.

Whether you’re looking to increase resilience, innovate last-mile delivery, or overcome persistent labor challenges, you’ll find a broad range of valuable benefits that come with automating your supply chain business, which extend far beyond the mere cost savings:

Supply Chain Benefit from Automation Number 1: Improve elasticity among processes. Digital workers decouple operational capacity from headcount. They can be scaled to match demand, eliminating the need to rely on hiring or layoffs to accommodate workload changes.

Supply Chain Benefit from Automation Number 2: Elevate CX. It doesn’t matter if your supply chain customers are in retail, manufacturing, automotive, fashion, pharmaceuticals, or any other vertical; when you standardize and automate your supply-chain business’ activities and processes, your customers will enjoy more consistent, accurate, and proactive customer experience or CX.

Supply Chain Benefit from Automation Number 3: Decrease your reliance on tribal knowledge. Supply chain automation institutionalizes your workflows, outside of individual rules of thumb or other bits of tribal knowledge. That reduces your risk from turnover, so daily workflows can continue unimpeded.

How much is turnover costing your supply chain operation?

The cost to replace a single employee, salaried at $80k, costs about $240k in actual value. Here’s how we calculated that number: Typical turnover rates hover just below 20 percent. Add in the per-resignation cost of about $36k. Then add in the gap in productivity, typically 10 months in duration. So, the cost of turnover for that single $80k worker is anywhere from 150 percent to 250 percent of their salary. Which of the above factors apply to digital workers? You guessed right: None.

Supply Chain Benefit from Automation Number 4: Reduce data errors. So many supply chain data errors emanate from the transfer, or even original entry, of data. Your data will be better governed once you install a centralized, AI-ready repository of data definitions.

What does bad data cost your supply chain business?

The Lab coined the term “NIGO,” or “not in good order” data which costs anywhere from 24 to 36 percent of lost time, just to repair the data. This amounts to $14k to $18k, per employee, per year, just to fix mistakes. Remediating subpar data costs the typical supply chain business millions each year.

Supply Chain Benefit from Automation Number 5: Elevate your employees’ experience. No one on your team enjoys performing repetitive tasks like copying and pasting data from one system into another. When you automate these activities, you free up your employees for more satisfying tasks that add value to customers and the enterprise.

Consider as just one example: Processing vendor invoices for Accounts Payable. Watch this three-minute video from The Lab, showing how we “built a bot for that.”

Supply Chain Benefit from Automation Number 6: Increase KPI effectiveness. Automating your supply chain business comes with the benefit of more granular KPIs for both executives and management. This increases visibility, enhances decision-making, and boosts performance of vital metrics. You’ll tear down the walls that currently stand between your data… and data-empowered insights and action.

Supply Chain Benefit from Automation Number 7: Boost sales. Few benefits of supply chain automation are as compelling as this one. Imagine your sales team’s performance amplified with digital workers and data analytics: They’ll be more effective, with more time for upsell and prospecting alike.

Supply Chain Benefit from Automation Number 8: Enhance compliance. Whether it’s proper labeling of packages containing rechargeable batteries, or adhering to ever-evolving global sustainability regulations, you’ll fortify your audit trail and reporting when you automate your supply chain operational processes and activities.

Once the engagement with The Lab concludes, your supply chain operation will be equipped to continue automating independently.

This starts early in the process with The Lab working alongside your team during the development and onboarding of the digital workers, so there’s a great deal of knowledge transfer. Still, we offer executive sponsors and their supply chain organizations a variety of ongoing support of installed automations. These include:

• Supply chain bot maintenance. Prevent issues before they occur. When large-scale system changes loom on the horizon, The Lab can assess the impact on different activities and the bots that perform them. We can even help to re-train your digital workforce. Schedule maintenance and performance audits are offered as well, reflecting the fact that digital workers typically require approximately one hour of preventative maintenance per month.

• As-needed repair of supply chain bots. The Lab provides break-fix services on an as-needed basis, with same-day services available. This service is a pay-as-you-go option, with no retainer or commitment.

• Training for the support of supply chain bots. The Lab has curated the best available training materials (many of which are free) to elevate your team’s skill-set in minimal time. This approach is designed to build long-term self-sufficiency, as your developers transition to managing and supporting automation independently.

• Support for core technology transfers. On the rare occasion that you need to swap out a core supply-chain system, The Lab can help to re-train your digital workers for the new regime. The Lab can assess the impact, provide a quote, and proceed accordingly.

Data is the foundation for achieving the supply chain automation benefits outlined in this article.

That data already exists across your systems and data lakes/repositories. The next step is optimizing it for digital workers, which involves standardizing it with a proper glossary, taxonomy, and tagging. Once in place, human and bot performance can be measured and monitored with a high degree of precision:

• See their performance in real time or near real time.
• Manage performance based on actual, actionable data, no ambiguity.
• Reduce risk by spotting patterns that could raise it.
• Automate even more activities than you’d previously considered possible.

Be sure to check out The Lab’s deep-dive article concerning Data Intelligence, Analytics & Executive KPIs. With The Lab’s Knowledge Base templates, you can transform your supply chain business often in just 6 months.

For over three decades, The Lab has worked with executive sponsors at supply chain businesses to accelerate their automation initiatives as part of larger-scale transformations which yield quantifiable business value.

Our patented Knowledge Work Transformation™ methodology, industry-tested solutions and services, and unique Knowledge Base of templatized client-engagement IP, can help to automate the knowledge work in your supply chain operation in just six to 12 months.

Are you ready to automate your lean, push, pull, or e-supply chain business? Learn more: Book your screen-sharing demo with the friendly experts from The Lab. Simply call (201) 526-1200 or email info@thelabconsulting.com today.