Distributors and Wholesalers – Don’t fear the RPA!

Back in 1976 Blue Oyster Cult told us Don’t fear the Reaper –

Now I know I’m indulging in a little musical licence here, but today - 43 years on - there are plenty of manufacturers, distributors and wholesalers who fear the RPA.

For those of you with acronym fatigue, RPA stands for Robotic Process Automation and is a form of process automation using A.I. software or machine learning. RPA takes over tedious, repeatable tasks that businesses previously employed a human to handle in large volumes.

As the big end of town increasingly reap (see what I did there?) the benefits of RPA, small and medium enterprise are asking:

• Do we need to get on the bandwagon?
• Where do we start?
• Is it worth it? What sort of return can we expect?

In a recent paper on Supply Chain Automation, I asserted that now is the time to act:

One of the challenges for SMEs today is the mindset that automation is not relevant to them– that it’s too hard, too costly, and really only feasible for the big players. Procrastination is a common course of (in)action. But waiting a few years ‘until costs come down’ or ‘because everyone else is doing it, too’ presents its own problems (mainly the risk of being left behind). There’s nowhere to hide in the information age. The opportunity is here today and the competitive threat is too big to ignore.

As competitive pressures intensify, medium-sized business - especially those focussed on distribution and wholesale - will be compelled to consider Robotic Process Automation if they want to drive efficiency without compromising service.

So I challenge you – don’t fear the RPA! – you can’t afford to if you want to compete today and in the years to come. Pick any business newspaper and you’ll read about Financial Services, Resources, Mining, and other sectors preparing to reduce their headcount, or redeploy thousands of staff as they automate more of their processes.

So once you’ve decided to embark on the journey, your next question is probably “what’s my first step”? In my supply chain automation paper, I offered the following approach:

1. Look at processes that have potential constraints
2. Baseline the current cost of the process (best calculated at unit cost level)
3. Determine what the cost of the process would be post automation

Assuming your strategic advantage is cost driven (think efficiency), in today’s environment you will be ultimately looking to automate all across the internal value chain. From procurement ➞ inventory control ➞ sales ➞ distribution, your aim will be to drive cost out of all your processes.

Begin with the process you estimate to have the highest potential value and lowest cost/effort to change. Once this process is identified, it is critical to baseline the current cost of the process (best if you can look at it from a unit cost) and work with your financial and supply chain teams to identify the constraints. Then calculate: if these constraints were removed, what would the new unit cost be?

Alternatively, if your strategic advantage is responsiveness, you’ll look to automate those elements of your value chain which won’t compromise on responsiveness.

With this approach you can start to build your automation business case, including projected ROI.

Obviously the process will vary depending on whether you’re looking at all areas of the business or just focussing on the low hanging fruit. There will be other elements to consider for an RPA project, but these are some easy first steps to take in order to identify good potential targets for automation.   

30 years ago your business may have been focussing on Business Process Re-engineering (BPR) as part of an ERP project. Today the end goal remains the same, but with Robotic Process Automation the tools have become exponentially more sophisticated.   

Don’t be afraid to harness the power of automation for your own business; I can assure you that many of your competitors don’t fear the RPA.