3 Things to Consider When Optimizing Supply Chain with AI
A supply chain encompasses the entire journey of a product or service, starting from the acquisition of materials or components and extending to the final delivery to the consumer. One minor roadblock in the supply chain means the risk of manufacturing, distribution, or delivery errors greatly increases,making the importance of supply chain management vital to organizational success.
Despite the importance of supply chain management, innovations are few and far between.Because there are so many moving parts, managing a supply chain is incredibly complex. From planning and forecasting to sourcing and procurement, inventory management and transportation, and everything in-between, there is no shortage of components that must be maintained in order to optimize the flow of goods,services, and information.
Luckily,artificial intelligence has expanded in recent years, growing into a transformative tool for supply chain management. By integrating AI technologies and algorithms into your supply chain management strategy, you can optimize operations, reduce costs, make data-driven decisions, and improve overall supply chain management.
How to get your supply chain ready for AI
1. Set realistic expectations
The first step to preparing your supply chain for AI is setting realistic expectations. During this stage, it's important to gather key stakeholders to quantify your short term and long-term goals as they relate to the use of AI. Take this time to brainstorm and learn from experts; you should leave this stage with a clear understanding of how AI can be used to optimize your supply chain. To get clear on your expectations, it's important to set KPIs that can be used to measure the effectiveness of your new technology.
KPIs should be related to your organization's long-term goals while accounting for how every action will impact your organization's operations in the short-term. It's important to account for how your digital transformation will impact everything from your employees to your operations.Your digital transformation will not happen overnight and will instead accumulate over time.
2. Understand how your organization leverages technology
After you’ve met with stakeholders to set clear expectations and measurable objectives, you can begin to assess your organization's readiness. Determining your organizations readiness will largely rely on assessing your current use of technology while taking several factors into consideration including your employees, their skill sets, and your current tools. To get started, consider meeting with your HR team to determine if your employees have the capacity to work with new or unfamiliar technology. If not,introduce training programs or hire specialized personnel that have the experience necessary to transform your organization.
Additionally, it's important to meet with leadership to determine how your present tech stack can be used with the technologies in question. To get started, work on understanding your interoperability. Doing so will give you a sense of how your various technologies are presently working together so you can better equip your organization for future success.
Efficiency is at the core of supply chain optimization. The reality of operating within the supply chain ecosystem is that there will be inconsistencies or inefficiencies. When compared to humans and computer-based systems, AI boasts an impressive efficiency advantage, identifying errors or areas of improvement and proposing solutions at lightning speed.
3. Analyze your data
The key to successfully optimizing your supply chain with AI is data. To get the most out of your AI algorithms, you must have a large data sample to feed your AI. Without quality, diversified data, your AI will not be able to learn and make decisions. It is through the training process that your AI algorithms will learn to acquire knowledge, recognize patterns and relationships, and make relevant predictions. Data will be used to inform your AI algorithms while providing them with the information they need to fine-tune their output. Without a large data sample, you increase the risk of perpetuating biases, and producing inaccurate predictions.
Organizations often refrain from investing in AI because they believe they don’t have enough data to make the investment worthwhile;however, this is often a misconception. What many professionals fail to recognize is that an abundance of data is often being generated, stored, and forgotten. In this scenario the challenge isn’t collecting data and efforts should instead be redirected to consolidating and analyzing existing data.
Supply chains produce large amounts of data and watching this data carefully to identify trends or potential issues is the key to supply chain optimization. As your AI combs through vast amounts of data, deep learning will begin and your AI will be better equipped to identify inconsistencies, and patterns that help pinpoint potential problems.
Are you prepared to revolutionize supply chain management?
AI is already being used by tens of thousands of organizations to increase operational and supply chain efficiencies and decrease costs where repetitive tasks can be automated. If your organization has yet to begin your digital transformation, this is your sign to get started. While some may argue that AI advancements are still in their infancy, it's important to note that your competitors are already harnessing the power of AI to shape their future.Failing to transform means falling behind. If you aren’t ready to jump on the bandwagon, start slowly by developing an action plan.
