The benefits and challenges of RPA in logistics

From the September-October 2024 edition of Supply Chain Management Review.

September-October 2024

Back in late 2023, in response to global panic about the state of the supply chain, President Joe Biden announced the formation of the White House Council on Supply Chain Resilience. “We’re doubling down on our…

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Each year, supply chain leaders identify areas to target for investment and development. A survey conducted by APQC of supply chain professionals revealed that for 2024, 82% of organizations have logistics as a priority. More specifically, a majority of organizations consider inventory management to be a top focus area for the year and are looking for ways to optimize their performance in this area. Inventory management is an area in which organizations are likely to have multiple processes that could benefit from automation.

One option is the adoption of robotic process automation (RPA), which combines high-volume processes with set business rules to complete tasks autonomously. APQC recently conducted a poll of supply chain professionals to identify the current and planned adoption of RPA within logistics and other supply chain functions. The results reveal that nearly a quarter of companies have already implemented RPA in logistics—more than in any other area of supply chain. Moreover, nearly an additional two-thirds of organizations are very or extremely likely to implement RPA in this area.

RPA offers potential efficiencies in shipment scheduling and tracking, data management, inventory management, and order fulfillment. Organizations that have already adopted RPA for logistics are already seeing benefits in the quality of work. Yet there are challenges to implementation, and organizations must ensure that they engage in careful planning before widespread deployment of the technology.

RPA adoption

APQC research finds that organizations vary in their current level of adoption of RPA in logistics. We see the greatest variances among industries.

Adoption by industry. Although 24% of organizations across all industries have adopted RPA in logistics, there is a wide percentage range of adoption when looking by industry (Figure 1). The industry with the largest adoption rate is consumer products/packaged goods, which has 42% of organizations using RPA in logistics. On the other end of the scale is the petroleum/chemical industry, in which only 7% of organizations use RPA in logistics.

APQC’s research also examined whether organizations are likely to implement RPA in logistics if they haven’t already. The results for this inquiry are also wide ranging (Figure 2). Overall, 66% of organizations across all industries are very or extremely likely to adopt RPA in logistics. Although it has the lowest rate of current adoption, the petroleum/chemical industry has the highest rate of planned adoption, with 83% of organizations considering it very or extremely likely that they will start using RPA in logistics.

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RPA benefits and barriers

This year, most supply chain organizations have logistics as a top priority. Many are looking for ways to optimize their inventory management. Robotic process automation (RPA) offers the potential for improved quality of logistics and inventory tasks and reduced employee time spent on these tasks. To realize the full benefits of RPA, organizations must ensure they carefully plan how they will implement this technology.

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While a significant majority of organizations have either adopted RPA or are very or extremely likely to adopt RPA in logistics, there remains a few that are not convinced to implement RPA. For example, from a cross-industry perspective, 10% of organizations are either somewhat or not at all likely to implement RPA in logistics. This explains why the charts in Figures 1 and 2 come close to but do not sum to exactly 100% for each industry.

 

 

Adoption by region and size. APQC’s research shows smaller variances in RPA adoption when comparing across organizations’ geographic regions and revenue/size (Figure 3). There is a smaller percentage of organizations in Europe, the Middle East, and Africa that have already implemented RPA in logistics. However, looking to the future, similar percentages of organizations in different regions are very or extremely likely to implement RPA.

There is also little difference when looking at organization revenue or size (Figure 3). Comparing smaller to larger organizations, there is only a three percentage point difference in the number of organizations that have already implemented RPA in logistics and a two percentage point difference in those that are very or extremely likely to implement it.

 

Based on these results, an organization’s industry appears to have more influence on RPA adoption in logistics than geographic region or size. It is especially interesting that a similar number of organizations have prioritized investment in RPA regardless of their revenue size. This speaks to the benefits that organizations aim to obtain through RPA implementation.

Benefits of RPA adoption

Organizations that have implemented RPA in logistics identified several benefits they have experienced as a result. Nearly 70% name improved quality as a benefit, indicating that they have reduced the number of errors in their logistics operations and the need for rework (Figure 4).

 

Just over half of research participants name saving time on repetitive tasks and reducing risk as benefits of RPA deployment in logistics. Quality is a key theme in the benefits of RPA, with it representing two of the top three benefits identified. Not only does RPA reduce errors in work, but it also reduces the risk that accompanies those errors. This in turn helps organizations maintain compliance with industry regulations and other requirements.

Obstacles to RPA adoption

Organizations that have adopted RPA in logistics also recognize that there are barriers to widespread adoption of this technology. Implementation cost is the top barrier, with more than half of the survey respondents naming it an obstacle (Figure 5).

 

The second and third obstacles address the planning necessary for RPA implementation. Respondents name the need to streamline or transform processes as the second top obstacle and technology limitations as the third top obstacle. These results indicate that although technology has the potential to benefit logistics functions, it is not a quick fix. Organizations must invest in process improvement and build a solid, integrated technology foundation before adopting RPA.

Lay a strong foundation

The use of RPA in logistics can lead to efficiencies in high volume activities within shipment tracking, inventory management, and order fulfillment. APQC’s survey indicates that a number of organizations have already adopted this technology, and even more intend to do so soon. Most organizations that have implemented RPA in logistics have found it beneficial to their operations.

As with any significant change in how it operates, an organization wanting to implement RPA must lay the groundwork for an effective transition. Simply deciding to implement the technology is not sufficient.

First, the organization must evaluate the processes it intends to automate to ensure that they are as efficient as possible. A weak link in the process or underlying data will transfer to the automated version and reduce the benefits of the technology. Once the organization has identified areas for improvement, it must implement updates and ensure that they effectively address any process issues.

Another factor an organization must consider is RPA governance. Although the front-end work will ensure that the organization automates efficient processes, the organization must identify a team or teams responsible for developing automation performance standards and then ensuring that the automation performs as it should. The team should consist of individuals responsible for both the technical side of RPA as well as the business side. The team’s skills should be related to creating process maps, managing the adoption project, managing change, defining the RPA solution architecture, and providing support.

Implementing RPA for logistics requires careful planning and the allocation of resources both for technology and process improvement. However, the resulting efficiencies and improvements in work quality make RPA an attractive technology that is worth the investment.

Data in this content was accurate at the time of publication. For the most current data, visit apqc.org.

About APQC

APQC (American Productivity & Quality Center) is the world’s foremost authority in benchmarking, best practices, process and performance improvement, and knowledge management (KM). With more than 1,000 member organizations worldwide, APQC provides the information, data, and insights organizations need to support  decision-making and develop internal skills. Learn more at apqc.org/about.

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