In April, Walmart unveiled plans to service around two-thirds of its stores through an automated supply chain by the end of 2026. The transition is part of the company’s strategy to reimagine its supply chain, using data, intelligent software and automation to create a smart and connected multichannel network.

The boom in e-commerce that was touched off by the COVID-19 pandemic saw consumers move toward online shopping, and retailers had to expand their grocery delivery and pickup services accordingly. That meant greater investment in advanced technology to improve online ordering and streamline the fulfillment process. Now, customer expectations are higher than ever, and with supply chain disruptions still impacting inventory levels, we can expect many other companies to follow in Walmart’s footsteps.

Automation enables greater visibility throughout the supply chain, and can help supply chain managers identify early-warning signs and take action before a disruption occurs. Retailers, meanwhile, can avoid product waste, mitigate service-level agreement (SLA) fines and keep pace with customer demands. Following are some of the major benefits that can be realized by implementing supply chain automation.

Predicting shipment delays. Since the start of the pandemic, it seems as though there’s been one supply chain issue after another. Whether it’s a product shortage or port closure, shipment delays have become common. Automation provides comprehensive visibility across the supply chain, equipping retailers with the means to identify bottlenecks and the root cause of shipment delays, anticipate disruptions, and proactively address issues to prevent them from occurring again in the future. Data-mining tools drawing on artificial intelligence can extract patterns in vast datasets, acting as an early warning system. The technology also investigates which shipments have been historically delayed, and pinpoints any commonalities among them. 

Say, for example, that every time a retailer orders a shipment of more than 30 boxes of staplers, it experiences a shipment delay. Data mining can derive patterns from each transaction by looking at various elements that might contribute to the delays. Maybe it’s because the quantity is too large, or the supplier has a history of being unreliable. Once the cause is identified, supply chain teams can add it to their software to monitor any new purchases that might have a pattern match. If there’s a significant delay, they can flag the transaction as likely to be delayed, then follow up with the supplier, pivot to another, or decrease the quantity of the order.

Spend optimization. Under the ideal procurement scenario, procurement officers lock in the best possible price for a specific item with a single vendor. This ensures that they will spend the same amount of money when purchasing the item despite any cost fluctuations. However, in larger organizations with vendors across many territories, it’s often difficult to lock in prices, as this would be a highly complicated process, involving numerous contracts with various vendors. Many companies therefore find themselves buying the same item from different vendors at different rates on an as-needed basis.

With AI-based spend intelligence, organizations can regularly analyze and track their procurement activities against third-party data to proactively find ways to save money. The technology looks at all historical purchases, particularly those made outside of contracts where there was no locked rate involved, and identifies the prices at which the organization procured an item over a specified timeframe. The tool can then identify both instant and long-term savings opportunities by regularly monitoring and analyzing spend for sub-optimal supplier arrangements, purchase price fluctuations and non-compliant requisitions. It can provide recommendations for vendors to purchase from, and at what price. Procurement executives can also set watch lists to show the price point options for a certain item, so they can switch vendors, if needed, to pay the optimal price.

Enhanced inventory management and efficiency. With real-time visibility into inventory levels, locations and movements, retailers can optimize their holdings, prevent out-of-stocks, and reduce overstocking. Supply chain automation also eliminates many time-consuming manual tasks, enabling faster and more accurate order processing, inventory management and product replenishment. Automated systems can handle large volumes of data and transactions while reducing errors and delays. All of this translates into faster order fulfillment, reduced lead times and improved customer satisfaction.

Adaptability, scalability and cost reduction. When retailers expand operations or introduce new channels, automation can accommodate the changes readily, without significant disruptions or the need for manual intervention. Automated systems enable faster order processing, streamlined logistics and improved coordination with suppliers. This agility allows retailers to respond better to market demands, introduce new products more rapidly and capitalize on emerging trends.

Supply chains will always have a level of volatility and unpredictability, but deploying the right technologies can help retailers and their logistics teams stay one step ahead by mitigating risks, optimizing spend and delivering operational improvements. With retail giants like Walmart already prioritizing supply chain automation, companies that invest in technology that accelerates digital transformation will have a competitive edge.

Shouvik Banerjee is product owner at Digitate.