for your future. The role of IT departments within logistics companies is going through a fundamental shift as codeless and plug‐and‐play software‐as‐a‐service (SaaS) solutions and technologies become more prevalent in the workplace. The idea of heavyweight IT, which is defined as a knowledge domain driven by IT professionals, who used digital technology, and made possible by software engineering, is giving way to lightweight IT, which is a socio‐technical knowledge domain that is enabled by solution‐driven user demand, mass adoption of digital technology, and innovative processes (Bygstad 2016). Traditional IT experts tend to gravitate back to heavyweight IT back‐end system integration using electronic data interchange (EDI) or application programming interface (API) integrations, whereas lightweight IT looks to graphical user interface (GUI) automation like API (Bygstad 2016; Lacity and Willcocks 2016). Heavyweight IT automation is reliant on little variation in systems architecture, while lightweight IT automation is more reliant on interfaces having little change (Penttinen et al. 2018). If looking to enable non‐IT professionals to be able to automate more processes, lightweight IT automation like RPA is worth exploring (Bygstad 2016). Regardless of where your organization is today, it is important to audit your internal capabilities in terms of skills and perhaps more important to think about where customer demand is going to take you with respect to the talent needed to provide that.
Achieving Operational Excellence
Process Improvement on the Rise
Information technology offers businesses a few different paths for improving their processes through automation (Penttinen et al. 2018). The classic business strategy dilemma is to either be led by external forces such as customers who push requests and demand from the “outside” and affect those processes “in” an organization. This is called the outside‐in approach. The alternative is to enhance “inside” capabilities and resources to be more efficient. Over the past several decades, we have seen the growth and decline of straight‐through processing (STP) (van der Aalst and van Hee 2002; ter Hofstede et al. 2010) as a type of workflow management (WFM) that evolved into business process management (BPM). BPM can be explained as process automation or used to refer to the daily exaction of processes managed through software (van der Aalst 2014; Harmon 2010). BPM became expensive as it took the outside‐in approach where new systems had to be developed from scratch and extensive integration with outside systems was needed (van der Aalst et al. 2018). Modern trends point toward a need for an increased amount of connectivity, which leads us to believe that BPM and heavyweight IT are going to continue to increase in cost and complexity (Sommerville et al. 2010). BPM use cases have been unclear and sparse through the past decade (Le Clair 2017), and RPA presents an opportunity to enable the “outside‐in” strategy where the core legacy systems can remain and the human labor is augmented or replaced by “virtual agents” (van der Aalst et al. 2018).
It is important to note that BPM can be interpreted dramatically different between companies; however, in general, it is referring to the strategy of a cross‐functional attempt to increase productivity through systematic governance and management of processes. BPM does not look at isolated processes in a vacuum but ideally takes a more holistic strategic look from an organization level to highlight, reengineer, and ideally automate processes and services (Jeston 2014). There are plenty of companies where the BPM team has the bandwidth and internal power to be able to implement an RPA solution.
Outsourcing Versus Automation
Improving operational excellence to drive down internal costs takes a concerted effort and has typically fallen behind increasing revenue in the logistics industry. Attempting to lower costs through tightening operational expenses by looking to leverage technology to promote efficiency is nothing new and there is a lot of room for improvement left as many companies still have inefficient processes (Penttinen et al. 2018). Since the First Industrial Revolution, companies have been streamlining processes and segmenting work. However, the definition of work itself is changing as it did during that period of time when workers moved from the farm to the factory. The role and creation of a logistics service provider is an area where manufacturers and trading companies have been increasingly outsourcing their logistics department since the 1990s (Sohail and Sohal 2003). The obvious value that an automated solution would offer is that robots are not affected by the mental, physical, and environmental constraints of a human worker (Adams 2002). Robots are a sustainable solution if properly funded and implemented.
Funding is an area in which automation has been falling short in the past as many companies did not have the scale to outlay large capital expenditures and later recoup this investment. Things may be changing though as the cost to automate is consistently decreasing and technologies like RPA are becoming more available. A 2016 research report by Deloitte states that the cost of running a bot was most often cheaper than offshoring (Frank 2015). Slaby (2012) echoes this sentiment stating that RPA is a threat to BPO companies who have a singular value proposition of providing a lower cost labor force. If this statement holds up, there would be much higher utilization of RPA bots to perform tasks that are currently executed by numerous human labor in outsourcing locations. Defining processes and creating the proper documentation to hand over a task are very similar whether dealing with a human or a bot. Whoever will be doing the task in a new scenario, there is a need to create extensive contingency plans that requires a large amount of time to ensure that all scenarios have been carefully thought out. This is where tasks that have very little variability are preferred in outsourcing or automating as the number of scenarios would be less. Once again, the decision to step back from the daily activities of troubleshooting and temporarily putting stakeholder demands aside to dedicate resources to process mapping becomes a formidable challenge for logistics executives to address.
Center of Excellence as a Leader of RPA
As operations in developing countries like China, India, the Philippines, or Malaysia grew for many manufacturing companies and the governments of these countries started favorable IT investment incentives, logistics companies also began to set up outsourcing centers. These centers are heavily reliant on labor cost arbitrage as the key decreased input would be manpower. Considering that the abovementioned countries become more competitive in terms of available skills, while labor costs are increasing, automation and specifically RPA are opening up the argument that BPO itself could become redundant (Casale 2014). To do that, RPA must mitigate not only the cost component but also technical complexities that may not be apparently ready. Economies of scale are a consideration in evaluating RPA as well as BPO practices as the initial cost of developing or training a bot can be more than training a human to the same task. BPO providers who have the skillset of process mining, mapping, and relocating might be the perfect leaders of implementing RPA, especially for their existing clients (Hallikainen et al. 2018). When considering a project team to look at RPA, involving your BPO team may be a path to consider.
RPA: Hype or Realistic Solution
The Facts
As with many of the Fourth Industrial Revolution technologies mentioned in this book, RPA has become a trending topic in the world of supply chain and logistics, and there are many speculations about wide adoption in the following years. The Chartered Institute of Procurement and Supply predicted that by 2019, there would be 72% of all companies using RPA to reduce costs and transaction times and increase levels of productivity and compliance (Deckard 2018). However, just as with other discussed technologies both present and past like Blockchain and RFID, companies are finding it much more difficult to implement it than originally expected. Gartner reports that RPA tools sit at the “peak of inflated expectations” in its hype cycle (Kerremans 2018). Fersht and Snowdan (2017) report that the RPA software market and RPA services expanded by 42% from 2017 to 2018 and are predicted to grow by 94% by 2021. Growth in RPA is not necessarily a question of when but more a question of how fast we will see it come to fruition.
The hype surrounding RPA has been around for the past five years though, and it warrants looking at past predictions to see where we are now. Transparency Market Research (2015) claimed that the IT RPA market would