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Building towards an AI-enabled supply chain

Building towards an AI-enabled supply chain

Long a figment of science fiction, artificial intelligence (AI) is here, and it is beginning to touch every industry and walk of life. Self-driving cars are navigating Pittsburgh’s streets. Robots are performing many tasks within Amazon’s warehouses. Personalization and machine learning capabilities are shaping customers’ experience. A common denominator among these changes is the supply chain.

Artificial intelligence is the latest in a long line of emerging technologies that have been both disruptors and differentiators for supply chains. A recent Gartner study found that supply chain organizations expect the level of machine automation in their processes to double in the next five years. Increasingly sophisticated machine learning tools may eventually make better decisions than even the best supply chain managers. Predictive analytic capabilities will allow machines to automatically place orders based on a customer’s order pattern, minimizing delivery time. Next-day delivery will become “too slow” for some customers. In short, the growth of AI in supply chain operations is inevitable.

Today’s leaders offer a glimpse of the future of AI in supply chain

Today’s computing capacity and big data sets enable smarter and faster decisions. Leaders in the technology and supply chain space already are showing us the possibilities of leveraging AI in supply chain planning and operations:

  • Salesforce: At Dreamforce, Salesforce revealed details about Einstein, its newest AI service. Einstein collects and processes data from customers’ e-mail, social media accounts, calendars, and devices, providing a wealth of information to enhance Salesforce’s machine learning algorithms. Einstein has the potential to shake up supply chain management by boosting Salesforce’s power-player status into the predictive-demand market.

  • Oracle: Oracle’s Adaptive Intelligent Applications use insights generated from its Data Cloud to learn from more than 5 billion business and consumer profiles. Its enterprise applications can automatically find the best options to distribute goods across specific geographic locations, bringing down costs for shippers and buyers.

  • Amazon: Already a leader in supply-chain sophistication, the e-commerce giant has a large team working on artificial intelligence. Moreover, it is bringing AI to the masses through two new offerings that change the lines of communication between consumers and suppliers—Amazon Machine Learning and Amazon Echo. Amazon collects data that enables it to sense individual shoppers’ demand with great precision.

  • General Electric: GE Predix also is becoming a power player in the AI supply chain market as it brings industrial automation to the cloud. As of July 2015, GE had nearly 12,000 developers working on Predix. The company acquired ShipXpress in August 2016 and plans to combine its cloud-based collaboration and rail-shipment reporting software with Predix’s data analytics capabilities to effectively monitor industrial assets. The new software—which will link supply chain, distribution, manufacturing, and engineering services into a single intelligent system—will have significant impacts on rail, truck, and intermodal shipping industries.


AI applications in supply chains

Retailers and their consumers will be the biggest beneficiaries of AI technologies, as this industry has the most to gain from demand data for supply chain management. Consumers expect and rely on AI technology when interacting with retailers—for example, when asking for directions or performing simple Google searches. Increasingly, organizations are using predictive analytics to:

  • Identify qualified prospective customers
  • Cross-sell and up-sell customers

  • Direct customers to the “next best action”

Aside from retail, AI could affect virtually any manufacturing and distribution business. In the supply chain, predictive analytics provide the ideal optimization and efficiency tool for predicting demand and for propagation across the chain. 

Over the next decade, supply chain AI will transform healthcare and finance and will eventually trickle to most industries over time. 

Notably, artificial intelligence is not accessible only to large organizations. Technology advances have simplified execution, enabling companies of all sizes to use sophisticated algorithms to predict future outcomes in their businesses.

Start implementing AI in your supply chain management now

Although the tools continue to evolve and advance in sophistication, taking advantage of them today is easy, relatively speaking. Start by looking for ways to leverage AI technology throughout your supply chain, even if on a small scale, to optimize demand algorithms, product design, transportation fleet, manufacturing floor, and/or warehouse operations. 

If your business is like most, you are collecting more data than ever. You should be using that information to become more efficient, drive sales, and target a path to success. It is possible to gain a significant amount of insight in a short period of time with little effort.

While it might be difficult to predict exactly where AI will take supply chains in the future, for now it is prudent to be looking at ways it can improve your current operations. If you aren’t, you can be certain your competitors are.

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