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From buzzword to strategic advantage – How Artificial Intelligence is making the supply chain smarter

From buzzword to strategic advantage – How Artificial Intelligence is making the supply chain smarter


By Mark Morley, Strategic Product Marketing Director, Business Network at OpenText

A constantly changing competitive landscape and evolving customer demands require business leaders to find newer ways to achieve operational efficiencies and innovate at speed. For many leaders, 2018 has been the year that the promise of AI and automation can be practically realized. Research from The Economist Intelligence Unit’s 2017 report ‘Artificial Intelligence in the Real World’ suggests that 75 per cent of business executives plan to actively implement AI in their organisations by 2020.

One area where AI is making a significant impact is in supply chain and logistics; where it brings an abundance of benefits, most notably in increasing productivity and reducing costs.

This is an area ripe for transformation. A recent study from IDC and OpenText found that 67 percent of manufacturing organizations were using digital transformation to change how their supply chain operates. The same study highlighted that over the next three years, AI and Machine learning would see the fastest adoption when compared to other disruptive technologies such as IoT and wearable devices.

We are already seeing AI being applied to manage inventory, track supply and demand and automatically adjust inventories, to streamline operations, adjust pricing data, plot the most efficient routes to physically move inventory and streamline customer service.

Supply chain operations are at the nexus of some of the most challenging questions for global businesses. With political instability, shifting trade barriers as well as expanded demands for transparency, safety, and traceability, businesses are all putting pressure on global supply chains.

For many organizations, digitally transforming their supply chain is a strategic business objective. According to research from IDC and OpenText titled ‘Digital transformation drives the manufacturing supply chain imperative’, over 35 per cent of manufacturing companies are considering an evolutionary strategy to improve the things that they do in the supply chain. This demonstrates that many organizations are well-aware of the positive impact that digital technologies can bring to improving their existing operations.

The question remains, how do businesses maximise the use and value of AI within their supply chains?

Laying the digital foundation for AI is critical, ensuring that trading partners are exchanging electronic rather than paper-based business transactions will allow an AI platform to be fed with the digital insights it needs to optimize supply chain processes. Without the right digital building blocks and processes in place, organizations will be unable to effectively seize opportunities that new technologies bring, and any new technology advantage will be lost.

Cognitive systems – like AI – develop and learn better, the more information and data they have access to. Which in turn allows the platform to predict, for example, where and when a spike in consumer demand may occur. By providing AI systems with a constant flow of structured and unstructured supply chain information – including logistics data, sensor information and news feeds – the technology can make intelligent decisions and process changes to mitigate any disruption that occurs across a supply chain.

With this level of insight, an organisation can prepare so that its response or delivery time is not negatively affected by increased demand (or customers can be warned if they are likely to be), ultimately leading to greater customer satisfaction.

With a strong AI-enabled digital supply chain in place, businesses can leverage other digital technologies in tandem to reap the most benefits. The road to supply chain autonomation is made possible with the convergence of three key digital technologies – AI, IoT and blockchain.

While AI allows for process intelligence – learning the system and improving holistic recommendations – instrumented components provide data via IoT platforms to enrich monitoring capabilities and provide analytics for predictive maintenance. Similarly, blockchain allows for a distributed, autonomous execution of business logic, transparent auditability across partners, and thus a richer, more confident 360-degree view of the supply chain.

This is a powerful vision for the strategic role that the autonomous supply chain can play for global business. For example, companies could reduce the time they spend on mundane administrative tasks. This could be in the form of better predictions about delivery dates – by analysing past variability in production lead times and logistics provider performance. Predicting service disruption due to weather or automating customs compliance would bring significant value.

We are on the cusp of an AI and automation revolution. Businesses looking to seize this opportunity would be well-advised to look at their supply chains for in possible areas ripe for transformation. Turning AI from a buzzword into a strategic asset can start with with the supply chain.

When combined with IoT and blockchain, businesses can be promised a smarter and truly autonomous supply chain operation.