In a time of global crisis, how to reduce costs in the Supply Chain

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No matter where we turn, costs are going up. From supermarkets to fuel stations, to our personal and business energy bills, no one has been unaffected from this steady, and sometimes devastating, increase in prices.

According to a report by Accenture, the supply chain is particularly struggling; in the aftermath of the pandemic, the war in Ukraine is only exacerbating a shortage of raw materials, a breakdown in logistics, energy and inflation, and a shortage of talent. Depending on the length and severity of the war, the cost of the disruption to the supply chain could cost €242 billion – or in a protracted war scenario, €920 billion.

As the impact of this continues to be felt, Accenture predicts that consumers will start to cut back on some non-essential items, while businesses will focus on improving operating efficiency.

However, the report sets out the argument for reinventing the supply chain. It sets out the case for optimising the supply chain for value and resilience, rather than just for cost. The three key ideas within this re-design are resilience, relevance and sustainability – three areas in which Yale can deliver.

Build a resilient operation with robotics

Warehouses are increasingly using robotic lift trucks to improve productivity. Seasoned managers might be inclined to assume that such significant efficiency gains must come at a steep price, but the truth is that robotics lift trucks actually help lower operating costs.

While investing in automation can seem like a large expense upfront, a combination of labour, maintenance and equipment savings means that robotic lift trucks can cut operating expenses – making them a sound investment. Because an operation can begin by deploying just a single truck as proof of concept before making a larger investment, robotic lift trucks can be trialled before industry leaders commit further investment.

Today’s environment is driving operations to carefully evaluate how they utilise labour, allocating workers only for responsibilities that make the most productive use of their time and considering alternatives for lower-value, repetitive tasks. In addition to rising wages, the constant cycle of hiring and retraining workers can further swell operating costs. 

Against this backdrop, improving employee satisfaction and retention can help lower operating costs. Academic research shows that organisations augmented by automation technologies are 33% more likely to be “human friendly” workplaces, in which employees are 31% more productive. That’s because robotics can relieve workers of the monotony of repetitive tasks that are abundant in supply chain environments, and instead focus on more rewarding, higher responsibility work.

By reducing operating costs and improving productivity, robotic lift trucks can deliver efficiencies, but the timeline naturally varies by operation. Several variables, such as the number of manual trucks replaced, robotic units purchased, operating hours and burdened labour rate, will greatly influence the calculation of and speed with which an operation can reasonably expect to achieve ROI.