Embedding Automation into Supply Chains to Tackle Inflation’s Impacts

It’s been decades since inflation has been a dinner table conversation – and a boardroom priority. But it sure is today. For consumers, inflation has rapidly decreased their buying power, so their dollars don’t go as far as they used to. According to the latest release from the U.S. Bureau of Labor Statistics , for the 12-month period ending in September 2022, the inflation rate is a whopping 8.2% across housing, food, healthcare, energy, and more.

?For companies, inflation has huge impacts on their supply chains – and drives the need for new processes and technologies to manage them. First, costs are up end to end, from raw goods and packaging to logistics and transportation. Second, inflation is adding more complexity to decision-making across the enterprise – for example, as the cost of raw goods and supplies goes up, how much of these costs can be passed on to the customer? And what will that impact be?

?Inflation also adds complexity to the supply chain planning function, creating new worries when it comes to margins and availability. Increasingly, I hear from business leaders that demand is down and yet costs are up – which is not what you’d expect in a recessionary environment. Why aren’t prices going down? These are confusing and unprecedented times – and businesses are responding with huge cuts to production to cut down on inventory, which is filling up the additional warehouses companies leased at the height of the pandemic. Some data shows that inventory levels across industries are at a 30-year peak. All this excess inventory is creating more costs – leasing costs chief amongst them.

?So, what’s the best way to move forward? What tactics and strategies can your organization use to navigate through this current environment? We’ve already seen lots of the usual – raising of product prices, better risk identification and management, and even before inflation hit, significant investments in better supply chain visibility.

?There is no doubt that visibility is essential. But in today’s inflationary environment, the focus needs to shift to what you can do with this supply chain visibility and transparency. For example, how can you use it to make your business more resilient and adaptive given the disruptions occurring today? Improve and even differentiate the customer experience? And meet growing customer expectations?

?These are questions that must be answered by more than just supply chain professionals, as they touch cross-departmental business priorities. Supply chain visibility can be used to enable greater inter-functional collaboration that can drive innovation and unlock transformational business change. But it requires two actions: busting down departmental silos to integrate the supply chain organization more deeply into the enterprise – and giving them a seat at the executive table to collaborate on critical topics such as digital transformation, innovation, financial performance, and overall business strategy.

?For example, functional leaders can discuss how to harness automation with a focus on business objectives and outcomes everyone cares about, such as reducing costs, delivering faster and better customer experiences, and creating better work experiences for staff. Focused, targeted, and precise automation solutions can be used within supply chains to address these business objectives.

?One such example might involve a national pharmacy chain tackling the talent gap by leveraging automation to ease the workloads of its pharmacists. Routine prescription fulfillment could be performed by robots so pharmacists can spend more time doing things only humans can do, such as answering complex questions for patients and doctors, managing staff, and reducing risk. In this case, supply chain automation could lighten staff workloads, improve customer satisfaction, help mitigate recruiting challenges, and save the company nearly US$1 billion a year.

?I’ve seen a variety of new technology platforms deployed to take mundane tasks off the plate of supply chain professionals and enable better business outcomes. Sometimes they deliver, and sometimes they don’t. A key driver of success is making new technology choices with their respective supply chain team, rather than for their team. Do it with your people – not to them! What a business leader may think of as “very user-friendly” may not be the case for those who need to use the software every day.

?Equally important is enabling visibility across the enterprise by including all functional departments in planning. Bring your team members together to engage in exercises such as value stream mapping. What's old is new (and powerful) again! This helps you and your team better understand your organization, eliminate blind spots (especially those between functional departments), find the best opportunities for automation, better communication, and drive overall increased organizational performance. These cross-functional dialogues can also help you identify root causes to problems, both old and new, and help you prioritize investments based on the opportunity and risks. ?

Interested in learning more? I’ll be speaking about this topic on a webcast, “Outsmarting Inflation: Best-Practice Supply Chain Strategies” scheduled for today: Wednesday, November 16, at 11:00 a.m. EST. Joining me are:

?? Simon Ellis , Program VP, IDC Manufacturing Insights, 国际数据公司

???? David Vallejo , VP, Digital Supply Chain, SAP

???? Paul Saunders , Chief Evangelist, Cloud ERP for SAP S/4HANA

I hope you can join us! You can register here .?

#supplychain #inflation #manufacturing #leadership #automation #innovation Supply Chain Now Greg White Kevin L. Jackson, CISSP?,CCSP? Karin Bursa Kelly Barner Amanda Luton Clay Phillips Katherine H. Chantel King-Watts Sally Eaves Rachel Miller Gale Daikoku Ursula Ringham Jenny Froome Kim Winter Enrique Alvarez Sofia Rivas Herrera Trisha Cordes Donna Krache Philip Ideson Mary Kate S. Kristi Porter