The role of Artificial Intelligence in improving Supply Chain planning
By Lalit Das, Founder & CEO, 3SC Analytics.
Artificial intelligence and data analytics are invaluable to most business processes and domains. While a majority of sectors are still struggling to deal with the repercussions of the pandemic, some have already begun implementing them to drive increased efficiency and business revenue. Supply chain planning is one of them. According to recent research, using AI in the supply chain has dramatically improved industrial efficiency, dynamic logistical systems, and real-time delivery controls, thereby boosting production.
What is supply chain planning?
Supply chain planning involves managing resources, improving service delivery, and balancing supply and demand. It evaluates the optimum approach to manufacturing products and increases sales volume to fulfill client demand. Since the process has today become significantly more digitalized, sustainability has increased. This has caused every company to ponder whether digital transformation on this scale can help their particular supply chain business.
Analytical procedures and qualitative data are always used in supply chain planning. While
digital supply networks (DSNs), supported by cutting-edge technology and related systems, are part of linear supply chains, and the supply chain planning process may change considerably as a result.
Synchronized supply chain planning
The network’s success depends on synchronized planning when discussing supply chain
planning. Organizations have often utilized historical data to forecast future demand, but when such data wasn’t available, planning somehow rested on presumptions that couldn’t account for demand variations. The interconnected and constantly changing nature of digital supply networks may result in more complex planning requirements, and what businesses consider to be supply chain planning may change fundamentally. To drive the planned initiatives, various business tasks should be fully integrated with a networked system of customers, suppliers, inventory, and production. The following are essential for this to be successful:
Production Fragmentation – Planning should consider the available inputs and the
demand for inventories at various places as global manufacturing becomes increasingly
integrated. Organizations must combine and connect production facilities and
warehouses to other facilities to meet demand. To do this, they must thoroughly grasp
what is produced, what is stored, and where it is stored.
Fresh Data and Technology – Modern technology and a plethora of data from
interconnected systems and external sources enable organizations to enhance customer
service and promote expansion. As new technologies emerge, organizations now have
more chances to integrate data from various digital supply networks together and
analyze the data and the planning capabilities.
The synchronized planning process can derive a host of benefits by making use of the following technologies:
Artificial Intelligence – Supply chain monitoring systems may use AI to make most
choices in digital supply networks, including tactical planning, compound patterns, and execution. By efficiently predicting reorders and forecasting demand, this shifts away
from history-based forecasting. Organizations no longer use the supply chain bullwhip;
instead, they may order the good goods in advance while influencing client demands by
utilizing product replacements, pricing incentives, and the like.
Internet of Things (IoT) – IoT may give organizations improved network visibility by
integrating systems and processes throughout the digital supply network. An accurate
physical world representation provides data at the base product level, network visibility,
and continuous end-to-end inventory flow. Instead of forecasting, planning may help
anticipate the end-to-end flow of information throughout the network.
Blockchain architecture – Blockchain is a decentralized digital ledger that is safe and
secure and uses IoT to record transactions. Orders can be automatically arranged with
vendors based on established criteria using cutting-edge technology. The Internet of
Things (IoT) can offer timely availability and the capacity to conduct the monetary
exchange concurrently once the commodities are in transit. The requirement for approvals and reconciliation is removed entirely by adopting blockchain architecture.
The advantages highlight the ever-expanding potential of AI and analytics in supply chain
planning. However, before investing in AI-based supply chain analytics solutions, one must
always conduct an extensive analysis of the applications and ROIs in the organization to
understand its specific needs better.
The way ahead
Supply chain experts can now evaluate and improve their supply chains on a real-time basis
thanks to AI, which eliminates the need for weeks or months of work in the past. AI can
modernize planning and optimization processes from annual to daily (or even hourly)
occurrences amid times of shortage, inflation, and geopolitical upheavals. Today, about 50% of corporate executives utilize AI to improve operations and make choices about the supply chain. And in the upcoming months and years, the number of people embracing this technology will only rise.