Supply Chain management is an important aspect of every business, be it finance, product-based, any kind of service, or information. It is very important for every business to coordinate the flow of their entities in order to reduce the overall cost of your business, improve customer satisfaction rates, and gain a competitive advantage.
Defining the Complexities and Challenges of Supply Chain
One of the biggest complexities with the supply chain is multiple channels to market the product.
Today’s consumers buy products across multiple channels, through eCommerce websites, traditional retailers, marketplaces, or any other third-parties, where they could get it at the best price and at their need of the hour.
Talking about all these channels, eCommerce websites directly sell to the customers and thus require local logistics and a last-mile delivery system. Traditional retail businesses require large storage locations in major metropolitan areas, along with appropriate inventory control to ensure product availability. While marketplaces need a deep understanding of fulfillment options and close compliance with their terms and conditions.
This is why supply chain planning requires multiple channels to ensure good customer experience, leaving behind how the order and receive products.
Major Challenges of Supply Chain Management
Global Supply Chain
Satisfying customer’s expectations of reduced cost and on-time delivery have become major challenges for companies. In order to reduce the costs, companies have relocated manufacturing to low-cost countries in an effort to minimize direct and indirect costs. This has downsized the manufacturing cost but has greatly increased the delivery time. Customers today are not only want to reduce costs but also require their products on time.
Many times, customer tendency for new, updated products pressure companies to bring in the next big thing even after they have released a product recently. Innovation is becoming important, people cannot stick to the same thing for years they want enhancements and upgraded versions, and the companies that fulfill these criteria win a competitive advantage over their counterparts.
To enhance a product, businesses need to redesign their supply network and meet their market demands in a way that their customers like it, and there is transparency.
For an efficient and effective business, periodic assessment, and redesigning of the operations system is important. These adjustments need to be done in response to the market changes such as global sourcing or outsourcing, new product launches, global branding, fund availability, intellectual property protection, etc. It’s important to identify and quantify if you want to control and direct your efforts towards success.
How AI is Synchronizing the Digital Supply Network to Solve all the Current Challenges?
Synchronizing Planning is a state in which a constant flow of data is established throughout the network, helping businesses to plan the production to match the on-going demand accurately.
To address globalization, businesses need to be more agile and use their extensive data to create better algorithms and business models through artificial intelligence and machine learning. This helps in accurately predicting and streamlining the demands. To achieve breakthrough results organizations, need to aggregate warehouse data from all the locations to develop a more holistic understanding of what is being produced, store, and where it is kept.
Meeting Consumer Expectations
Most of the organizations are utilizing data via artificial intelligence to forecast customer expectations.
The data about your consumer base is widely available, all thanks to social media platforms, connected devices, and other data inputs. With this level of information provided, businesses can achieve the accuracy required to forecast your consumer preferences.
Artificial Intelligence will make use of all the operations and finances data from various locations to know cost fluctuations and their financial position throughout the network. This enables the organization to predict any forthcoming risk and find opportunities to leverage the lower cost options for unexpected market fluctuations where possible.
Additional factors that will be synchronized in the supply chain with Artificial Intelligence
- Planning - Artificial Intelligence will help create a common data model to achieve real-time information exchange.
- Demand Drivers - Optimizing and realizing margins by knowing the controllable demand drivers.
- Optimized Supply - Establishing a dynamic supply model that minimizes the cost while maximizing the return on investment.
- Automated Processes - Leveraging automation to drive efficiencies and improving the overall system effectiveness.
- Syncronized Ecosystem - Streamlining the networks to increase transparency and reduce manual intervention.
Artificial Intelligence Powering Supply Chain Management
Artificial Intelligence enables supply chain system to learn about the patterns, recognize collapsing planning, and executing a suitable model to the system. AI promotes a dynamic model that will effectively predict and forecast demands, knowing customer demand through price incentives or substitutions.
Current Use-cases of AI in Supply Chain Management
Key findings by Gartner show that “Within advanced supply chain companies, defined as those using two or more of the three advanced analytics techniques — predictive analytics, prescriptive analytics, and artificial intelligence — 96% of respondents use predictive analytics, 85% use prescriptive analytics and 64% use AI.”
AI’s predictive analysis can provide supply chain planning and specific design software to establish the planning and visibility of the application. This will help in identifying the hidden patterns in seasonal demands, unexpected risks, or other influences to help businesses identify the ways to cut the overall operations costs and increase the efficiency across their supply chain networks.
With AI and navigation technologies, warehouse management has seen incremental improvement. These technologies have been helping in mapping, localization, automated material handling, and machine vision.
It is made possible by integrating data from the existing warehouse and control system through middle software.
The renewed system will be more efficient and promote clear strategic decisions.
Reduce Operations Costs
When AI is applied in logistics, it is capable of doing a lot of things.
- Robotics - It is an effective way to sort letters, parcels, and palletized parcels accurately and quickly.
- Visual Inspection - It is used in cargo leveraging special cameras to identify damaged, defected, and inappropriate entities.
These can further be used in warehouse management, collaboration, and supply chain management. Currently, AI adoption is not as widespread, only 31% of the supply chain companies use Artificial Intelligence, but within two years, the proportion will rise to 76%.
Keeping Track of Supplies
Synchronized supply chains can help make decisions in real-time by predicting customer demands down the line. Businesses can take advantage of AI to cut excess supplies and became more efficient and flexible.
Also, when inventory levels drop down in the warehouse, AI can track and automatically the supplier to send more stock.
AI is Shaping the Future of Supply Chain Management
The leaders in the supply chain industry need to work towards aggressively adopting Artificial Intelligence. The future needs businesses to plan their production and predictive maintenance to a more reliable degree, and decrease the lead time for faster deliveries to their customers. With predictive analytics, businesses know in advance that the system requires repairs and creates an alternate production schedule to compensate for the errors.
Logistics companies are correctly positioned to leverage the benefit by applying AI in almost all aspects of the supply chain. The industry is a huge heap of data that generates structured and unstructured information daily. One of the most underutilized assets in the industry is the high volume of data that supply chains generate daily. And AI has the capability of will to exploit the data in the correct way.