Revolutionizing the Supply Chain: Making Informed Decisions with AI

?What does a future powered by AI look like to you? Many would picture a supply chain that anticipates your needs before they arise, optimizes every movement, and minimizes waste. And they would be exactly right, except it would be the future; it's already happening!

In this new era, AI is transforming how tasks are performed, data is managed, and customer service is delivered. It is no wonder that in the poll I conducted on the most significant impact of tech in the warehouse, many of you chose to?emphasize data-driven decisions with AI.?

Let's face it: Relying solely on intuition for decision-making just doesn't cut it anymore. Human judgment is susceptible to cognitive biases and can lead to errors, sometimes egregiously. Thankfully, connected devices capture vast amounts of data, offering a goldmine of insights. However, traditional data analysis often involves human processing of summarized reports—a process that overlooks crucial relationships and patterns hidden within the raw data. This "data-light" approach hinders optimal decision-making.

This is where AI has stepped in as the game-changer. By processing vast datasets, AI can identify hidden trends and patterns humans might miss. Unlike you or me, AI is less prone to cognitive bias and can analyze complex, non-linear relationships within the data. Businesses can leverage this superpower to make more accurate and informed decisions, optimizing their supply chains for the future. Even the?World Economic Forum?agrees!

Kait Peterson (Locus Robotics), who was featured in my previous article on automation in warehouses, also underscores AI's detail-oriented nature. She highlights how AI addresses critical industry challenges like increasing labor costs and shortages, increased customer demands, and higher variability by optimizing and augmenting human operational capabilities.? For example, using AI-empowered warehouse automation robotics, operators can rely on the AI to do the complex computational requirements of pick path navigation, order fulfillment optimization, predictive work completion, and prescriptive labor management.

Optimizing Every Step!

AI frees human workers for more strategic tasks and enhances their skill sets through exposure to advanced technology. The result? Lower long-term costs, a more productive workforce, and a supply chain optimized at every level.?

Here are a few tangible applications of AI in supply chain decision-making:

• Smarter Routing:?AI factors in weather patterns, traffic flow, and delivery times to dynamically adjust routes, leading to a more responsive and adaptable operation.?This Microsoft report tells us how, in Australia, intelligent routing saves both time and fuel.
• Optimized Inventories:?By predicting demand patterns and streamlining warehouse layouts, AI ensures the right products are positioned for immediate access. No more stockouts, no more scrambling – just inventory equilibrium.
• Automated Efficiency:?AI also automates order picking, packing, and inventory management. These intelligent systems consider size, weight, and fragility to create optimal packing configurations, minimizing wasted space and ensuring products arrive damage-free.

A 2023 KPMG report emphasizes that GenAI can reduce costs and improve risk management for adopters by processing massive datasets and analyzing complex variables. The report also predicts a surge in AI adoption, with 50% of supply chain organizations expected to invest in AI-powered applications and advanced analytics by the end of 2024.

The Human Touch Endures

While AI automates manual processes and streamlines workflows, human oversight remains paramount. There's vital information beyond structured data, like company strategy and market nuances, that AI cannot access.?

The future lies in collaboration — humans leveraging AI's processing power alongside their own expertise to make the most informed decisions. Humans can utilize AI-generated insights, alongside their own experiences and judgment, to make optimal choices that consider efficiency and sustainability goals.

Powering Decisions in Real Time

Decision-makers often struggle to make informed decisions due to limited time and information overload. AI presents a new solution through automation tools that move beyond mere visibility and analytics. My colleague Suresh Mamunuru, SVP (Supply Chain and Logistics), shared his experience with the impact of AI in supply chain decision-making, "The window of opportunity to make decisions in supply chains is often tiny. It may take hours or even days for teams to analyze the necessary data, align on a plan of action, and execute it—assuming they have the visibility and bandwidth to recognize the opportunity. ?AI-powered?decision intelligence can bridge this gap for good."

?AI is what makes supply chain decision intelligence "real-time," "fast," and "accurate." With AI, businesses can make sense of large volumes of data faster and in real-time, minimize risk with greater accuracy in decisions, and identify and leverage opportunities—at scale every day.

The potential growth opportunities that result from an AI-powered supply chain intelligence engine can be game-changers for any business – driving greater profits by prioritizing customers and SKUs (stock-keeping units) with excellent value and demand, aligning with more reliable suppliers to enable better OTIF (on-time in-full) performance, or sensing demand in real-time to streamline upstream activities – leading to continuously incremental improvements on the bottom line.

Regarding continuous improvement, Suresh thinks, "AI opens doors for advanced simulations and scenario planning. As the machine learning algorithms mature by processing more data or encountering new situations, it refines their recommendations and decisions, leading to continuous improvement in efficiency, cost reduction, and overall supply chain performance."

And, of course, removing humans from workflows that only process structured data doesn't mean humans are obsolete. According to Kait, "Ultimately, it's about building a future where intelligent systems augment human ingenuity, creating a supply chain that's not just efficient, but truly sustainable and responsible."

Many business decisions depend on more than just structured data that AI can parse. Vision statements, company strategies, corporate values, and market dynamics are all examples of information available in our minds and transmitted through culture and other forms of non-digital communication. This is beyond the scope of AI.

Towards Sustainability Through Continuous Learning and Improvement

Beyond just optimizing efficiency, AI solutions are being developed to drive sustainability:

Real-time Feedback Loops:?AI systems can analyze real-time data on energy consumption, fuel use, and packaging materials. This continuous feedback allows for adjustments to optimize routes, warehouse layouts, and packaging configurations, minimizing the environmental impact.

Predictive Maintenance:?AI can analyze sensor data from equipment to predict maintenance needs. This proactive approach prevents breakdowns, reduces downtime, and extends equipment life, minimizing waste and associated costs.?

Sustainable Material Selection:?It can decipher vast datasets on material properties and environmental impact to recommend sustainable alternatives for packaging and other supply chain components.

A Future of Innovation and Collaboration

The future of supply chains lies in innovation and collaboration between humans and AI. By leveraging AI's data processing power and human expertise in strategy and judgment, businesses can build a more efficient, sustainable, and intelligent supply chain for the future.?

However, it is important to remember that AI is not a replacement for human intelligence in supply chain management but rather a powerful tool that empowers businesses to make smarter decisions, optimize operations, and build a more sustainable future.

#AIinSupplyChain #ArtificialIntelligence #DataDrivenDecisions #FutureOfWork #Industry40 #DecisionIntelligence #SupplyChainOptimization #locusrobotics #RoboticsRevolution #RaaS #SupplyChainTransformation #WarehouseAutomation #SmartWarehousing #robotics #amrs #warehouserobotics

As a veteran in the IT industry, I've witnessed firsthand the need for timely adoption of new technologies. The competitive edge is undeniable. However, the true potential lies in balancing disruptions and human expertise! I am available for a consultation to explore how your organization can embrace AI and unlock a new era of efficiency, sustainability, and growth for your business.

David Houser (EVP?—?Cybage | Pro-to-Know & Supply Chain Expert)

linkedin.com/in/david-s-houser?or @davidhouser

Also, discover what our experts think about the exciting future of Supply Chain in the era of AI:

Kait Peterson (Senior Director, Product Marketing — Locus Robotics)

https://www.dhirubhai.net/in/kaitvinson/?or @supplychainkait

Suresh Mamunuru (SVP, Supply Chain & Logistics — Cybage)

https://www.dhirubhai.net/in/sureshmamunuru/ ?