One of the most significant trends in manufacturing over the last few years has been an increase in automation. Although much attention has been focused on advances in machine automation, transactional automation is equally (if not more) important for manufacturing companies. It's increasingly critical for manufacturers to plan and implement process automation strategies, and the benefits are significant: a thorough automation strategy can help identify processes that take a significant amount of time or effort but add little value. Once these processes have been identified, they can be targeted for automation, which increases efficiency and lowers costs.
A recent challenge for manufacturers has been shortening product life cycles: the need to accelerate time-to-market for new products has made it even more imperative for companies to automate processes in order to keep up. By increasing efficiency and reducing labor costs, process automation has helped make U.S. manufacturers more competitive with overseas suppliers — now, many products formerly manufactured overseas can be made cheaper and faster in America, thanks to automation.
Of course, that's not to say that any one trend or development in automation will put offshore suppliers out of business anytime soon; on the contrary, more automated information management actually makes it easier for American manufacturers to work with partner companies overseas. This is particularly true in the case of concurrent engineering, the process by which products are designed from components made both in the U.S. and abroad. Concurrent engineering often requires coordination between dozens or even hundreds of suppliers all around the world; by automating the information management processes required for that coordination, inefficiencies can be reduced and delays eliminated — which benefits everyone’s bottom line.
And the benefits of process automation don’t stop there. For accounts payable (AP) departments in manufacturing companies, thousands of invoices have to be handled by employees; this is a laborious and time intensive task. But AP processes can be automated with invoice platforms that input and address invoices with limited human intervention (in the case of exceptions). By eliminating the need for employees to enter invoice data into their systems manually, additional time and resources can be allocated to more important tasks — not to mention human error is considerably reduced. This is particularly relevant for three-way matching, where employees must match multiple records manually, significantly slowing down the process. AP process automation also accelerates approval processes for non-inventory spending, empowering manufacturing companies to take advantage of early payment discount opportunities (when available). In addition, freight, duty and other landed costs must be applied to a receipt or AP invoice which can require a lot of manual matching of disparate paper records. A robust automation strategy can also help manufacturers tackle a daunting transition: migrating records from paper to digital copies.
Nick Wong, one of our partners and a solutions consultant with Concur Technologies — which provides expense and invoice automation software — said: "Very often we see resistance in terms of getting rid of paper. Companies want to do it, but they're scared to! Even though Concur stores invoices digitally, some companies still want to keep paper copies, and they pay to ship and store it themselves. But part of the reason why so many companies are automating is to get rid of that necessary cost." The right automation strategy can help support manufacturers through what can be a difficult transition, identifying concrete advantages and quantifying the financial benefits. A thorough automation strategy should also outline the metrics necessary to make a business case for investing in an automated digital platform.
Until recently, having an automation strategy was useful for manufacturers, but today, it's increasingly necessary in order to remain competitive in a crowded market. As the amount of data produced by manufacturers skyrockets, it has become challenging to handle that data reliably and efficiently without slowing down internal processes. More and more manufacturers are implementing transactional automation strategies and reaping the benefits of trying to stay out in front.