The AI Trends in Supply Chain Management

Martin Večeřa

The Death of Supply Chain Management

The supply chain is the heart of a company’s operations. To make the best decisions, managers need access to real-time data about their supply chain, but the limitations of legacy technologies can thwart the goal of end-to-end transparency. However, those days may soon be behind us. New digital technologies are disrupting traditional ways of working. Within 5-10 years, the supply chain function may be obsolete, replaced by a smoothly running, self-regulating utility that optimally manages end-to-end work flows and requires very little human intervention. [HBR]

Cognitive Supply Chain

Cognitive supply chains that are able to predict and adapt in times of uncertainty are set to revolutionise trade, and will be a key competitive advantage in the coming years.

As complex algorithms, machine-learning and artificial intelligence become mainstream, it seems inevitable that they’ll disrupt global supply chains. Companies need distribution and inventory management systems that are self-learning, predictive, adaptive and intelligent; so-called cognitive supply chains.

The typical supply chain in 2018 accessed 50 times more data than just five years earlier. There’s an increasing focus on supply chains to reduce costs. Unfortunately, less than a quarter of this data is being analysed in real time. However, the concept that everyone calls for is a “digital control tower”. [Raconteur]

Digital Control Tower

A key concept that many of these companies are exploring is the “digital control tower” — a virtual decision center that provides real-time, end-to-end visibility into global supply chains. For a small number of leading retail companies’ control towers have become the nerve center of their operations.

Visual alerts warn of inventory shortfalls or process bottlenecks before they happen, so that teams on the front line can quickly correct the course before potential problems become actual ones. Real-time data, unquestioned accuracy, relentless customer focus, process excellence, and analytical leadership underline the control tower operations of these retail operations. [HBR]

The outcome can be better, personalised, customer service with lower inventories and a better utilisation of factory hours. Just-in-time supply chains prevalent in automotive, food and healthcare, which look to cut costs by reducing the materials a company holds in stock, are eyeing up these innovative solutions.

A cognitive supply chain can help companies mitigate risks, improve insights and performance, as well increase transparency. Having one is crucial as the global trade wars wage on.

Companies can no longer use a historical statistical approach for demand streams to make sense of what the future will look like. Cognitive supply chains are able to sense in real time, understand implications and trade-offs. [Raconteur]

One Step at a Time

Building cognition into supply chains and inventory management systems doesn’t have to be a multi-million-pound.

Companies should start with simple use cases as part of an overall roadmap. Starting with cost-savings targeting near-term return on investment to prove that its value can help spark change. The emergence of a new role, the supply chain architect, can also help drive change,” says Kevin Doran, managing director at Accenture Strategy. [Raconteur]

Other Supporting Functions

In addition to primary functions, there are also secondary supporting technologies. In order to speed up the track delivery, there are for example standards to avoid delays in mandatory weight station. A small device installed behind the wind screen can indicate the driver to safely bypass the station and save precious time.

Emerging Job Roles

The trend is clear: Technology is replacing people in supply chain management — and doing a better job. So what’s left for supply chain professionals? In the short term, supply chain executives will need to shift their focus from managing people doing mostly repetitive and transactional tasks, to designing and managing information and material flows with a limited set of highly specialized workers. In the near term, supply chain analysts who can analyze data, structure and validate data sets, use digital tools and algorithms, and forecast effectively will be in high demand. Looking further out, a handful of specialists will be needed to design a technology-driven supply chain engine that seamlessly supports the ever-changing strategy, requirements, and priorities of the business. [HBR]

Clearly, the death of supply chain management as we know it is on the horizon. The managers and companies working to update their skills and processes today are the ones who will come out on top.

You can take the first step even today with taking a firm grip of your data with Lumeer Supply Chain Management template for free.