Supply chain automation: The race to build resilient supply chains

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  Quantumrun Foresight
• January 13, 2023

Supply chain technologies that enable automation and digitalization are not only becoming more widespread but also more affordable. In particular, supply chain managers are reporting that modern industry-specific artificial intelligence (AI) systems are providing more accurate transport estimates and increasing logistics efficiencies that reduce disruptions overall.

Supply chain automation context

Investment is pouring into supply chain automation globally. Data company PitchBook reported that startups in this field raised pre-money valuations of USD $30 million and late-stage valuations of USD $120 million in 2021. These valuations are further supported by companies worldwide hoping to become more resilient to market shocks by injecting AI and machine learning into their supply chains.

Unfortunately, roadblocks are commonplace when implementing automation in the logistics sector. Traditionally, instead of having a centralized system to handle supply chain management, many firms have isolated platforms that each take care of a specific shipment function. For example, over the last 20 years, there have been separate platforms for customer service relationships, warehouse and fulfillment center management, labor management, and port management.

Another difficulty to investing in automation is the high cost of integrating these various systems. Newer supply chain software usually has high recurring fees and often necessitates the recruitment of increasingly in-demand knowledge workers to operate. And yet, if supply chain firms fail to keep up with these operational changes, their existing management solutions may become outdated within five years, putting their operations at financial risk.

The fear of robots taking over human jobs is another hindrance. Many companies are concerned about the backlash that automation can have over their respective workforces, including potential strikes and lawsuits. However, several studies have shown that collaborative robots (cobots) and other machines can be programmed to handle repetitive and dangerous tasks instead of just taking over specific roles.

Disruptive impact

In December 2021, Tyson Foods announced that it would spend USD $1.3 billion by 2024 to overcome staffing struggles, primarily by automating its production lines. Since 2020, meat processors have had difficulty recruiting workers due to the competitive labor market and health concerns during the COVID-19 pandemic. In response, Tyson plans to invest over USD $500 million in fiscal 2022 alone and expects a return of USD $450 million in saved costs by 2024. Additionally, these investments will create labor savings that equal more than 2,000 jobs, according to the company.

Other firms have similar strategies. In 2022, freight and logistics business ArcBest invested in Phantom Auto forklifts that are software-enabled for remote operations. Nike added over 1,000 cobots to sort, pack, and manage inventories. The fitness company also invested in demand-sensing AI to predict, plan, and shape individual consumer demand. 

Meanwhile, large retailers have also been streamlining their processes through automation. In 2022, Grocery chain Grocer Kroger opened its third automated fulfillment center to expand its e-commerce programs. Walmart announced that it had installed automated material handling systems in all 42 distribution centers. 

Retail operator Fast Retailing opened an automated warehouse in China in 2022, which reduced its workforce by 90 percent. This move comes after the company automated one of its Japanese facilities in 2018. According to the country's five-year plan, China aims to have at least 500 digitized manufacturing hubs by 2025 to better adapt to an aging population. 

Implications of supply chain automation

Wider implications of supply chain automation may include: 

• More startups focusing on supply chain automation solutions, including customizing them for different sectors.


• Companies allotting larger tech budgets to fast-track supply chain automation initiatives that improve market resiliency and lower labor costs.  


• Increased investments in the manufacturing robotics industry, particularly cobots and autonomous mobile robots (AMRs).


• Larger-scale infrastructure investments (that include government funding) to automate shipping ports, rail lines, and even dedicated highway lanes for autonomous trucks.  


• More Internet of Things (IoT) devices being installed in factories and warehouses, leading to increased adoption of private 5G networks.


• Human workers increasingly being reassigned to monitor processes and troubleshoot machine operations.

Questions to comment on

• If you work in the supply chain sector, how is your company automating?


• How has automation improved/challenged your workflow?