CSCMP's Supply Chain Quarterly
August 15, 2018

Robotic process automation—Demystifying its potential in the supply chain

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Deploying minor RPA initiatives in the back office can create major positive impacts that translate into business value across the business-to-business supply chain.

When supply chain professionals hear the term robotic process automation (RPA), an image of robots working on the factory or warehouse floor may be one of the first things that come to mind. They may also think this fairly new concept is just a buzzword. In fact, it is neither.

RPA is software technology that replaces manual and routine operational tasks. Using machine learning to imitate users' repetitive actions, this technology can consistently carry out high-volume tasks that were previously completed by humans. As part of this process, RPA has the capacity to "learn" and adapt as it goes by extracting and interpreting immense amounts of operational data, readjusting as required to perform new assigned prescribed tasks. In this way, it automates repetitive tasks without the need for human intervention or explicitly programmed instructions. For this reason, RPA is most suitable for business processes that are clearly defined, repeatable, and rules-based, making it ideal for optimizing repetitive back-office workflow activities.

As an example, responses to quotes can be automated using RPA. The quotation request is immediately interpreted, referenced against a product and pricing directory, and sent back as a formal quotation in the format desired by the customer. There does not need to be any human validation or intervention.

But RPA's overall impact will be much wider than simply automating repetitive administrative tasks. As an integral part of today's ongoing digital transformation, the technology has the power to redefine business operations and minimize inefficiencies across the business-to-business (B2B) supply chain.

RPA in action
Suppliers, manufacturers, and distributors with staff members who are performing high-volume and highly transactional functions should consider capitalizing on process automation. For example, sales and customer service teams are inundated with transactional tasks, such as manually keying in data from purchase orders, on a daily basis. With hundreds, and possibly thousands, of documents to process, they are not maximizing their value as revenue-generating sales employees. Automating such redundant and time-consuming operational tasks can not only free them up for other duties but can also boost efficiency and cut costs.

In another example from an order fulfillment perspective, RPA can accelerate the order-to-cash (O2C) cycle because orders are automatically processed with both speed and complete accuracy. The 100-percent accuracy can be achieved because certain document automation solutions do not rely on optical character recognition (OCR) to capture data, which could result in errors. Non-OCR document automation doesn't simply "estimate" the information on the document via image conversion. True document automation processing technology ensures that data is recognized accurately every time through directly translating the data versus making a guess. From a customer service management standpoint, RPA allows staff to step away from administrative duties, and instead focus on strategic work. This includes improving the customer experience by investing time to build relationships with key customers and showcasing deep product knowledge.

Implementing RPA for the back office can be an ideal launching pad for organizations that are seeking a simpler automation initiative before implementing more complex ones. Beyond the sales team, RPA solutions can be applied to many different functions to deliver a spectrum of improvements to back-office workflow. The benefits can then aggregate and transition into opportunities in other areas of the supply chain:

  • Minimization of costs and manual errors: Mistakes that cause late payments or line rejections can be expensive to amend. Automating routine tasks means costs associated with manual errors and inconsistencies are bypassed. Administrative labor costs can also be reduced.
  • Enhanced insights: Data collected from RPA can be analyzed to inform better decision making. For example, regular insights into the volume of items that customers order can help decision makers better manage inventory.
  • Scalability: The "robotic workforce" can be scaled up or down depending on current workload. This eliminates the need for organizations to hire additional staff for busy seasons. Automation can also ensure that even with higher output demands, quality remains consistent.
  • Higher return on investment (ROI): Since repetitive tasks are taken care of by automation, employees have time to find new avenues for growth or for maximizing profits from existing channels. Ultimately, RPA allows for more opportunities to realize significant business value.

One thing that may cause supply chain management organizations to hold back on implementing RPA is the common assumption that investing in automation technology involves committing significant time and money in order to complete comprehensive system upgrades. With this in mind, many decision makers prioritize automation of large, revenue-generating processes that they perceive will deliver the highest immediate return on investment, like warehousing and logistics.

However, the agility and flexibility of RPA means that it can be applied to back-office processes where implementation is simple and requires little time. And, as discussed above, deploying RPA doesn't have to be a significant undertaking in order to produce a long-term ROI across many areas in the supply chain.

Efficiency without compromising service
Before implementing any disruptive technology, it is important to first consider how it could affect (for better or worse) existing operations. Many companies, however, fail to do so. For instance, companies often implement digital transformations such as artificial intelligence (AI) and the Internet of Things (IoT) with the goal of reducing operational costs and increasing efficiency, without understanding the risk that digitizing certain processes may erode customer service quality and thus compromise customer loyalty. Looking into the future, the successful supply chain organization is one that fully understands the impacts of a solution before adoption.

Although many large initiatives exist to boost the bottom line, integrating RPA into back-office workflow can create tangible ROI for supply chain businesses without putting customer service at risk. Ultimately, RPA can dramatically improve many areas of supply chain management, creating more opportunities for businesses to compete in the era of digital transformation.

Earl van As is vice president of Marketing & Product Management of ecmarket, cloud solutions developer of the patent-pending Conexiom sales order and invoice automation for manufacturers and distributors.

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