Rethinking Supply Chain Automation: Balance Strategy and ROI in Retail
Supply chain management is crucial in the retail industry to ensure smooth operations and build stronger customer relationships over time. It involves overseeing the inbound and outbound logistics for every product a retailer sells. Every process in the retail supply chain, from demand planning, sourcing materials, and coordinating with suppliers to tracking inventory and delivering products, must be managed effectively for optimal supply chain performance.
The benefits of a well-managed supply chain are twofold. First, a streamlined supply chain enables retailers to optimize their supply-side functions to cut costs and work with more agility. Second, an efficient supply chain allows businesses to deliver goods to customers more quickly, which gives a competitive advantage and helps build stronger customer relationships.
Supply Chain Management in The Automation Era
In 2025 and beyond, if you don’t automate tedious and regular processes, you will be out of the race for many reasons. Automation has become a must-have strategy rather than a need-to-have strategy.Â
Automation software and tools can help businesses complete supply chain-related tasks more efficiently and with more precision. For instance, warehouse automation can track and manage retail inventory. Automation allows retailers to track and record inventory movement, relieving employees from manual data entry and removing the associated human errors.
Learn more about Walmart’s SCM success story.Â
Are you ready to automate everything? Wait.
Just because you can automate something doesn’t mean you should automate everything.
Top Challenges In Automating Everything
A successful supply chain is dynamic and involves processes that require human intuition, judgment, and adaptability. Automating everything eliminates humans’ critical role in managing exceptions, resolving conflicts, and driving strategic decision-making. Instead, retailers must focus on strategic automation and high-impact areas while maintaining human oversight in areas that demand flexibility and creativity. Here are some challenges one might face:
1. Complexity Overload
Automating every process in the supply chain can create systems that are difficult to manage and scale. Complex automated workflows can lead to communication breakdowns between systems, increasing the risk of errors and inefficiencies.
2.High Costs Without ROI Justification
Full automation involves significant investments in technology, infrastructure, and training. Without a clear strategy, these costs may outweigh the benefits, particularly for small and medium-sized retailers.
3. Lack of Flexibility
Fully automated systems often operate on predefined rules and algorithms. They struggle to adapt to unexpected changes, such as supplier delays, surges in demand, or disruptions like natural disasters.
4. Data Dependency and Quality Issues
Automation relies heavily on data accuracy. Poor-quality data, incomplete records, or outdated information can compromise the efficiency of automated processes, leading to incorrect decisions.
5. Cybersecurity Risks
Automated supply chain systems often involve interconnected digital networks, increasing exposure to cybersecurity threats. A single breach can compromise sensitive data and disrupt operations.
1. Strategic Automation Points in SCM
The Importance of Strategic Automation
Although automation brings undeniable efficiency to supply chain management, human expertise is still essential. Humans possess critical thinking skills necessary to assess and adapt to unexpected disruptions, such as natural disasters or political instability, in ways that even the most advanced algorithms cannot. Â
Furthermore, human intuition, experience, and judgment are invaluable for strategic decision-making, including developing long-term strategies, evaluating risks, and navigating complex supplier relationships. Finally, as automation becomes more prevalent, humans play a vital role in ensuring ethical considerations are addressed, such as responsible AI use and fair labor practices.
Key Areas for Automation
Inventory Management
Automation streamlines inventory tracking, reducing errors and ensuring stock availability.
Order Processing
Automated systems can handle repetitive tasks like order validation, allocation, and tracking, ensuring quicker delivery times.
Demand Forecasting
AI-driven predictive analytics can anticipate demand surges, enabling retailers to optimize inventory levels.
Solution:
App Modernization:
Legacy applications are the biggest hindrance to supply chain management efficiency. App modernization can enhance performance, integrate with modern technologies, and ensure seamless execution of automated tasks. Retailers can modernize applications to improve real-time inventory tracking and predictive analytics capabilities.ERP Systems:
Provide a centralized platform for real-time data collection and analysis, helping identify areas where automation can deliver the most value.2. Human-AI Collaboration: Striking the Right Balance
Why Human Expertise Matters
Automation offers immense potential for cost savings, productivity, and accuracy, but not every process is suitable for automation. Retailers must assess their supply chains and prioritize areas where automation can deliver the greatest impact without disrupting workflows or unnecessary costs.How AI Augments Human Efforts
Enhanced Decision-Making
AI analyzes trends and generates actionable insights, while humans use these insights to make strategic decisions.
Proactive Problem-Solving
AI identifies potential disruptions before they occur, enabling humans to address issues proactively.
Customized Workflow Tools
AI-driven dashboards and reporting tools empower employees to interact effectively with automated systems.
Solution:
Low-Code Development Platforms:
Enable the rapid creation of applications that allow employees to customize workflows and collaborate with AI systems.Custom App Development:
Custom applications are crucial for fostering seamless collaboration between humans and AI. These apps provide tailored interfaces that allow human operators to interact with AI systems, access real-time insights, and override decisions when necessary. For example, custom dashboards can help warehouse managers monitor AI-driven forecasts while adjusting stock orders as needed.3. ROI Measurement in Supply Chain Automation
The Importance of ROI Evaluation
Supply chain automation requires significant investment. Measuring Return on Investment (ROI) ensures that resources are allocated effectively and helps businesses understand the impact of automation on efficiency and profitability.Key Metrics to Measure ROI
Enhanced Decision-Making
AI analyzes trends and generates actionable insights, while humans use these insights to make strategic decisions.
Process Efficiency
Measure improvements in order fulfillment times and inventory turnover.
Customer Satisfaction
Track changes in Net Promoter Score (NPS) and repeat purchase rates.
Solution:
Low-Code App Development
Low-code platforms enable rapid development of ROI tracking tools. Retailers can use these platforms to create apps that integrate seamlessly with ERP systems and automation tools, providing real-time data on KPIs. For instance, a low-code app can generate visual reports on cost savings achieved through inventory automation.4. Integrating ERP Systems
Enterprise Resource Planning (ERP) systems are fundamental to modern supply chain management, acting as a central hub for data and operations. By integrating information from all aspects of the supply chain—procurement, production, inventory, sales, and more—ERPs provide a comprehensive and unified view of the entire process.Â
Benefits of ERP Integration
Real-Time Visibility
ERP ensures that all stakeholders have access to up-to-date information on inventory, orders, and shipments.
Streamlined Processes
Centralized systems reduce redundancies and improve coordination between departments.
Scalable Growth
ERP systems adapt to growing business needs, accommodating increased transaction volumes without compromising performance.
Solution:
AI-powered Cloud ERP Implementation
Cloud ERP systems take automation and efficiency to the next level. By leveraging the scalability and flexibility of the cloud, businesses can implement and integrate ERP solutions more rapidly and cost-effectively. Real-time data synchronization and accessibility become even more seamless, allowing greater agility and responsiveness to market changes. For instance, consider a global retail chain with numerous stores and warehouses. A cloud-based ERP system can provide a centralized platform for managing inventory across all locations. When a product sells out in one store, the system automatically checks inventory levels across all locations and triggers a transfer or replenishment order.  AI-powered cloud ERP systems provide a centralized platform for managing and analyzing supply chain data. This integration enables real-time visibility to every aspect of the supply chain, from procurement and production to distribution and delivery. AI-powered analytics tools can sift through massive datasets, uncovering insights that help businesses make informed decisions.Think Beyond Automation
Supply chain automation in retail is not about automating everything; it’s about automating the right things. By focusing on high-impact areas, fostering collaboration between humans and AI, and tracking ROI, retailers can build a strategic, balanced approach that maximizes efficiency and enhances customer satisfaction.
With solutions like app modernization, custom app development, low-code platforms, and ERP systems, businesses can navigate the complexities of automation while ensuring sustainable growth and operational success.
Are you ready to transform your supply chain and lead the retail revolution? Contact us today to discover how our solutions can help you build a smarter, more efficient operation.
Check out our case study to learn more about how our F&B client achieved supply chain transparency with customized NetSuite ERP solutions.
Authors:
Technology leader with 20+ years of expertise in generative AI, SaaS, and product management, he drives innovation in AI, low-code platforms, and enterprise digital transformation.
