7 Ways to Optimize Industrial Automation Supply Chain
Struggling with inefficiencies in your industrial automation supply chain? Here's how you can cut costs, reduce downtime, and improve inventory management using modern, digital solutions.
Key takeaways:
- Digital marketplaces simplify global MRO parts access, cutting inventory costs by 30%.
- Surplus auctions turn unused stock into cash while reducing storage costs.
- Automated BOM tools save 57% of manual effort and prevent unnecessary purchases.
- WatchList and Request Board ensure real-time demand management and faster procurement.
- Market analytics predict price trends and improve supplier negotiations.
- Automated quotes and payments reduce errors and speed up procurement cycles.
- Custom dashboards centralize data for better control and transparency.
Each method directly addresses common challenges like fragmented systems, manual processes, and hidden inventory, helping businesses save money and avoid production delays.
Want to know how these strategies work? Keep reading for detailed insights and real-world examples.
1. Use Digital Marketplaces for Global MRO Parts Access
Traditional procurement often relies on local suppliers, which can limit stock options and visibility. Digital marketplaces change the game by offering access to millions of automation parts from hundreds of distributors worldwide - all through a single platform. When a critical failure strikes, you can search once and instantly view global inventories, avoiding costly emergency fees. This streamlined access not only saves money but also enhances operational performance.
Cost-effectiveness
With digital marketplaces, you can move away from maintaining expensive "just-in-case" inventories. Instead, these platforms provide on-demand access to a global supply network, cutting inventory costs by as much as 30% and improving EBIT. They also eliminate the high emergency procurement fees often incurred during breakdowns.
Take PLC-City as an example. This global automation broker, with a €50 million turnover and over 17,000 parts in stock, uses the Automa.Net B2B platform to simplify its operations. Their team of 30 users connects with more than 400 distributors via a single dashboard. The platform standardised 140 different product condition descriptions into just eight categories, making it far easier to check stock and respond to customer inquiries. Beyond saving money, this approach significantly speeds up procurement during urgent situations.
Operational Efficiency and Downtime Reduction
Digital marketplaces streamline the process of requesting quotes, ensuring quick access to needed parts. This speed is crucial, especially when unplanned downtime costs industries globally around €1.3 trillion every year. By optimising spare parts management, companies can cut MRO carrying costs by 20% while also avoiding downtime altogether.
Platforms like AutomaINSIGHTS offer real-time data on pricing and availability trends across different regions. This helps you plan purchases strategically, rather than scrambling during emergencies. Additionally, AI-powered tools can reduce the time it takes to list or find parts by up to 80%, transforming processes that once took days into tasks completed in minutes.
2. Run Surplus Auctions to Reduce Excess Inventory
Companies often keep spare parts in storage for years without using them - up to 50% of these parts remain untouched for three years. This not only ties up capital but also racks up annual storage costs, which can amount to around 20% of the parts' value . Surplus auctions offer a solution by turning unused inventory into cash while providing buyers with discounted components.
Inventory Optimisation
Streamlining your supply chain starts with tackling idle inventory. AI-driven platforms are particularly effective in identifying "ghost inventory" and duplicate parts across various locations, pinpointing items that are perfect candidates for auction. Businesses that adopt specialised tools for MRO (Maintenance, Repair, and Operations) optimisation report an average stock value reduction of over 10%.
Martin Weber, CEO of SPARETECH, highlights the issue: "Manufacturers keep millions of spare parts in stock in their production networks without realising that up to 50% of these parts have not been used in the last three years. This ties up capital and causes unnecessary storage and procurement costs."
Cost-Effectiveness
Surplus auctions bring benefits to both sellers and buyers. Sellers can recoup value from outdated inventory, freeing up storage space and cutting down carrying costs. Buyers, on the other hand, can purchase new, refurbished, or used components at discounts ranging from 20% to 60% off the manufacturer's suggested retail price. This is especially crucial for items like the Siemens S7-300 series, which are no longer available through standard channels but remain vital for many production systems.
Operational Efficiency
The efficiency of online auction platforms makes the process even smoother. These platforms offer transparent bidding that reflects real-time market prices and often include project management services. For example, they can provide market-aligned appraisals and on-site support for removing machinery. By converting surplus stock into cash, companies can reinvest in more strategic areas, while buyers secure critical parts that help prevent costly production delays.
3. Apply BOM Search Tools to Speed Up Procurement
Manually handling a BOM (Bill of Materials) with around 650 entries can be a daunting task. At an average of 5 minutes per entry, it could take a single person up to two weeks to complete. Automated BOM search tools simplify this process, enabling procurement teams to upload entire parts lists (in formats like Excel or CSV) and instantly check the availability of hundreds of items.
Operational Efficiency
Automated BOM tools can cut manual effort by more than 57%. Instead of tediously searching supplier portals line by line, teams can upload a full list of machine parts and process it in one go. For instance, Bosch’s Blaichach plant maintenance team uses automated BOM checks to handle spare parts lists efficiently, preventing unnecessary purchases.
"With our new automated BOM Check, customers have been able to save over 57% of the manual effort required to process new BOMs, and avoid buying parts that are already in stock."
This streamlined approach not only saves time but also lays the groundwork for better inventory management.
Inventory Optimisation
BOM tools automatically match uploaded parts lists against an organisation’s material master or ERP system, helping identify components already available within the production network. This process often reveals "ghost inventory" caused by data entry mistakes. At MAHLE’s Neustadt a.d.D. plant, Maintenance Expert Robert Muffert noted substantial improvements in inventory management and cost savings through the use of precise and reliable data.
Cost-Effectiveness
With access to over 10,000 global suppliers, these tools allow teams to compare prices and identify opportunities for bundling purchases. On average, companies using advanced BOM and inventory tools can lower inventory levels by 21% and reduce procurement costs by 7% through better supplier visibility. Additionally, AI-powered MRO (Maintenance, Repair, and Operations) optimisation can boost EBIT by up to 3 points and cut carrying costs by 30%. These savings not only improve cost management but also enhance responsiveness during emergencies.
Reduction in Downtime
The benefits of cost savings and improved inventory management extend to faster responses during breakdowns. When emergencies strike, real-time visibility into global supplier stock ensures that critical spare parts can be located in seconds. Automated tools also flag discontinued or obsolete components within a BOM, offering modern alternatives or refurbished options. This proactive approach allows teams to source compatible replacements before equipment fails. Considering unplanned downtime costs the global industry approximately €1.3 trillion annually, quick access to emergency replacements is crucial to minimising production losses.
4. Use WatchList and Request Board for Demand Management
Keeping track of essential components and ensuring seamless communication about supply needs is key to avoiding costly production interruptions. Tools like WatchList and Request Board bring a new level of efficiency to demand management by offering real-time visibility into part availability and automating communication across the supply chain. These tools simplify internal processes and improve global access, making demand management smoother and more effective.
Operational Efficiency
WatchLists use visual alerts and criticality scoring to help maintenance teams focus on crucial components. For example, they can flag essential parts like discontinued Siemens S7-300 controllers, preventing potential production halts before they occur. On the other hand, Request Boards get rid of the delays caused by manual quoting processes. They instantly share urgent maintenance, repair, and operations (MRO) needs with a verified global supplier network. This automation can speed up processes by up to 80% and save teams as much as 100 hours of manual work every month.
These tools don't just save time - they also improve inventory management by syncing real-time demand signals with current inventory levels.
Inventory Optimisation
By integrating real-time demand data with inventory status, companies can create an internal resource exchange. This allows production sites to share spare parts and meet each other's needs, cutting down on the need for emergency external orders. Additionally, real-time visibility eliminates "ghost inventory" caused by outdated or siloed data. Instead of relying on the traditional "just-in-case" overstocking approach, businesses can adopt intelligent buffering based on actual demand. This shift reduces unnecessary safety stocks and releases capital tied up in excess inventory. The result? Companies maintain operational uptime while keeping carrying costs under control.
Cost-Effectiveness
AI-powered MRO strategies supported by tools like WatchList and Request Board can significantly cut inventory carrying costs - by as much as 30% - and eliminate hefty emergency procurement fees. By identifying surplus inventory within the company and coordinating cross-site transfers, businesses can avoid unnecessary external purchases. This approach not only saves money but also ensures operational continuity, delivering measurable financial benefits through cost savings and uninterrupted production.
5. Apply Market Analytics for Better Planning
Leveraging digital tools to refine demand management is just the beginning - market analytics takes procurement to the next level by turning raw data into actionable strategies.
Market analytics transforms procurement from a reactive process into a forward-thinking approach. By examining real-time benchmarks, supplier costs, and pricing histories, procurement teams can anticipate price shifts and verify supplier quotes against actual market trends. This shift is crucial, especially as supply chain disruptions surged by 30% in the first half of 2024, costing organisations an estimated €174 billion annually.
Cost-Effectiveness
Using should-cost analysis, teams can dissect supplier pricing into components like materials, labour, and production costs, exposing any inflated markups. Integrating procurement systems with live price indices allows for quick cost adjustments when raw material or energy prices drop. Take PPG Industries, for instance: in 2019, the company made 95% of its €189 million annual indirect spend transparent through analytics. This led to a 90% reduction in its supplier base and a 10% cost savings. Similarly, Owens Corning saved over €1.9 million in just one year by consolidating suppliers and enforcing stricter contract compliance.
Operational Efficiency
Analytics platforms bring together fragmented data from various ERP and EAM systems, cutting down on manual errors and speeding up negotiation preparation. For example, a global process manufacturer used AI-powered analytics to uncover over 3,000 duplicate materials across its SAP systems, achieving verified savings of €19.8 million. Automating invoice processing can also slash costs per invoice from €11–38 to under €3.80. It's no wonder that 91% of organisations now view AI and predictive analytics as essential for supply chain management .
Inventory Optimisation
Real-time insights into consumption patterns and cross-facility transparency make internal material sharing possible. One global manufacturer reduced outage timelines from over four weeks to just three days by harmonising inventory data and identifying 2,200 at-risk materials in advance. AI-driven demand forecasting, with up to 66% accuracy, enables teams to move beyond static inventory levels to intelligent buffering. This approach can free up 10–20% of working capital while maintaining plant uptime , boosting both operational readiness and financial efficiency in industrial settings.
6. Automate Quotes and Payments for Faster Deals
Building on predictive market insights, automating quotes and payments speeds up procurement cycles and eliminates manual processes that often slow down transactions.
Cost-Effectiveness
Manually processing invoices can cost anywhere from €11 to €38 per document due to labour and error correction costs. By using Robotic Process Automation (RPA), these costs can drop to under €3.80 per invoice. Additionally, manual tasks consume about 60 hours per month, time that automation can instantly reclaim.
Operational Efficiency
Real-time, AI-driven tools give businesses a competitive edge by enabling immediate deal closures. Automated quoting systems use live stock data to generate instant, AI-calculated prices, cutting out manual delays. Procure-to-pay (P2P) automation powered by AI can reduce manual review workloads by 60–80% and shorten process cycle times by 50–70%. Automated three-way matching - verifying that purchase orders, delivery notes, and invoices align - ensures data accuracy, reducing errors from 3–8% to less than 1%. With digitised P2P processes, over 90% of invoices can now be booked automatically, allowing teams to shift their focus to more strategic initiatives.
Reduction in Downtime
Automation cuts procurement cycles from over 14 days to just 3–5 days, ensuring faster delivery of critical replacement parts and minimising machine downtime. Integrating net-term payment options also frees up cash in the supply chain, making it easier to make purchase decisions even during tight cash flow periods. Marcin Krzączkowski, CEO of Automa.net, highlights the importance of this:
"Cash flow is critical at every part of the supply chain and we have to find ways to keep things moving".
Data-driven underwriting uses marketplace member data to proactively extend credit, keeping the flow of orders for essential industrial components steady. This rapid cycle not only reduces downtime but also strengthens the reliability of the entire supply chain.
Inventory Optimisation
Automation supports smarter procurement by relying on real-time inventory data. By eliminating manual data entry and reducing processing errors, companies can avoid stock-outs and surpluses. IoT sensors further enhance inventory accuracy by up to 80%. Automated systems can be configured to auto-approve minor discrepancies, reducing unnecessary manual checks. Additionally, linking quoting software with live stock data ensures that orders reflect actual inventory levels.
7. Set Custom Trade Terms and Dashboards for Better Control
Custom trade terms and centralised dashboards offer a way to turn scattered data into actionable insights while enforcing transaction rules. This setup provides a clearer view of operations, making it easier to manage and optimise processes.
Cost-Effectiveness
Centralised dashboards can significantly cut costs and improve efficiency. They have been shown to reduce operational expenses by up to 30% and minimise lost sales by 75%. By streamlining data consolidation, managers gain time to focus on strategic tasks like renegotiating contracts. As Abby Jenkins, Product Marketing Manager at NetSuite, explains:
"Procurement managers may be able to spend more time analyzing and renegotiating vendor contracts than managing routine purchasing workflows".
Additionally, AI-driven inventory strategies derived from these dashboards can lower carrying costs by 30%. Custom trade terms also prevent emergency procurement fees by ensuring critical parts are acquired under favourable agreements.
Operational Efficiency
Centralised dashboards unify data from various sources - such as ERP systems, cloud platforms, and production databases - into one reliable source. This consolidated approach is vital in industries where speed is a key advantage. Real-time alerts notify teams of low stock levels or supplier delays, enabling quick responses. Dashboards tailored for specific roles provide CFOs with financial KPIs and warehouse leads with real-time stock updates. These insights help prevent production disruptions by enabling proactive decision-making.
Reduction in Downtime
Combining custom trade terms with dashboard visibility is a powerful way to avoid costly delays. For example, a global process manufacturer using the Automa.Net platform unified data across multiple SAP and EAM systems. By standardising their view of 3,000 duplicate materials and implementing consistent stocking policies, they cut outage timelines from over four weeks to just three days. This saved the company €21 million and allowed them to proactively manage 2,200 at-risk materials. Automated approval workflows further streamline procurement, ensuring essential parts arrive before equipment failures occur.
Inventory Optimisation
AI-powered dashboards go beyond providing visibility - they also optimise inventory management. These tools use trend analysis and seasonality data to forecast demand and maintain ideal safety stock levels. Automated reorder points ensure timely restocking, while smart order routing applies predefined rules to fulfil orders from the most efficient location, reducing shipping costs and delivery times. This approach can free up 10–20% of working capital without compromising plant uptime.
Conclusion
The seven strategies discussed here mark a major shift in how industrial automation companies handle their MRO supply chains. By transitioning from reactive purchasing to proactive orchestration with the help of digital tools, businesses can directly link asset uptime to cash flow and supplier reliability. These approaches not only simplify workflows but also cut costs and minimise downtime.
The financial impact is clear: AI-driven MRO digitisation can boost EBIT by up to 3 percentage points while unlocking billions in working capital. Automation can slash carrying costs by 20–30% and free up 10–20% of working capital - all without compromising plant uptime. These tangible results directly strengthen the bottom line.
Beyond financial gains, there are operational advantages. Real-time data updates break down silos and reduce unpredictable lead times. Meanwhile, AI-powered analytics highlight slow-moving inventory and shared materials across facilities, helping to optimise reorder volumes. As Verusen aptly puts it:
"Procurement transformation isn't a one-time cleanse. It's an ongoing process of maintaining accuracy, learning from transactions, and improving forecasts".
The secret lies in treating data as a dynamic asset that evolves to support better decision-making. This highlights the urgency of adopting a data-driven strategy now.
Begin by assessing your current situation: map out the number of ERPs, suppliers, and material records to establish a baseline. From there, consolidate data into a unified system and prioritise high-impact categories - those with high volume, cost variability, or redundancy - to achieve quick returns. Finally, ensure cross-functional teams stay aligned, maintaining consistent stocking policies and minimising operational risks.
FAQs
Which KPIs should I track first to prove MRO supply chain savings?
The key metrics to monitor include production rate, downtime reduction, and MRO cost savings. These indicators offer a clear picture of operational efficiency and cost management. Focusing on these areas helps pinpoint optimisation opportunities and showcases tangible improvements in supply chain performance.
How can I spot and remove duplicate or “ghost” inventory across multiple sites?
AI-powered data cleansing tools are great at spotting duplicate or "ghost" inventory by analyzing data from various ERP or plant systems. These systems often house inconsistent or siloed information, leading to errors. For example, the same part might be listed under different SKUs or descriptions, artificially inflating inventory numbers. By unifying master data, businesses can cut out these redundancies, boost inventory accuracy, and minimize excess stock in multiple locations.
What’s the fastest way to reduce downtime when a critical spare part is obsolete?
To reduce downtime caused by an outdated spare part, consider using a trusted digital platform that provides real-time inventory searches and verified supplier options. These tools make it easier to locate compatible alternatives quickly, helping you minimise delays and get operations back on track without unnecessary hassle.