Supply Chain Enabled

AI-Driven Supply Chain Optimisation: Embrace Efficiency Today

Published: May 31, 2024
Author: Lorcan Sheehan

In today’s rapidly evolving landscape, artificial intelligence (AI) is making significant strides in revolutionising supply chains. AI has been a vital tool for years, enhancing the processing of vast amounts of transactional data. Every time you buy, sell, or move something, a data trail is created. This occurs daily across multiple tiers of supply chains, and AI applications have been developed to improve forecasting, replenishment decisions, logistics routing, and network planning. These applications can facilitate tens of thousands of micro-decisions, aiding supply chain teams in shaping and managing overall business operations.

The Benefits of AI in Supply Chain Management

Daily, supply chains generate immense volumes of data across various tiers. AI applications have been optimised to refine forecasting, replenishment decisions, logistics routing, and network planning. Imagine making tens of thousands of micro-decisions that streamline operations and enhance efficiency. This is not a futuristic dream; it is the current reality.

The Data Explosion in Supply Chains

With the integration of smart technology into more supply chain assets, the volume of data available is increasing significantly. Beyond internal supply chain data, it is possible to incorporate external data sources, including complex regulatory requirements, weather conditions, traffic conditions, and currency fluctuations, all of which impact supply chains. By linking demand to these external factors, businesses can significantly improve upon simple historical run rates and make more informed decisions.

The Role of Generative AI in Supply Chain Management

Generative AI can help process and visualise large data sets, particularly in support of scenario planning. Areas such as risk management, simulation, and sustainability are well-suited for testing the impact of changes in key variables on supply chain performance. As supply chain consultants, we are frequently asked, “What would be the impact of a specific scenario change on our operations?” Currently, this involves mapping complex data sets to provide a model of the operations, often using network modeling and digital twins. Advances in technology suggest a future where these processes can be increasingly supported by AI.

Overcoming Challenges in AI Integration

The journey to developing AI applications for supply chains is not without its challenges. Disparate and disconnected systems, unclean data sets, and the often-unproven return on investment can impede progress. However, there is no shortage of talent, consulting, and technological assistance available to support these transformative efforts. It is crucial to avoid the trap of seeking applications for technology rather than starting with a clearly defined problem.

Real-World Applications of AI in Supply Chain Optimisation

There are genuine applications of AI that have the potential to transform supply chain performance. The richness of data within supply chains and the complexity of interrelated decisions make this an ideal environment for change. Smarter decisions lead to smarter supply chains, presenting an opportunity that we must all embrace in the coming months and years.

Getting Started with AI in Supply Chains

How should businesses begin this AI integration journey? Here are some key steps:

  • Define the Problem: Start with a clear and well-defined issue that needs solving.
  • Keep It Simple: Begin with a focused scope and set milestones to achieve early successes.
  • Build on Success: Expand the scope and ambition gradually, maintaining milestones and guardrails.

By following these guidelines, businesses can harness the power of AI to transform supply chains into more efficient, responsive, and intelligent systems.

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