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Artificial intelligence (AI) has become increasingly popular over the last several years for its streamlined ability to automate processes and analyze data more efficiently than with traditional methods. In fact, AI has already found its way into supply chain management (SCM) strategies in order to organize and systematize a complex network of supply partners.
But how does artificial intelligence impact the supply chain? Furthermore, how can your business prep for AI implementation in SCM?
Artificial intelligence refers to the computing techniques of machines that intake data, process that data, and evolve through learning. It’s called artificial “intelligence” because it builds its own intelligence based on the data it finds.
These machines aren’t programmed to do a single process; they’re programmed to think on their own. AI literally simulates human intelligence. In fact, AI is quickly becoming more intelligent than even the creators themselves. This is because AI can find and track data in an instant. It can then use that data to calculate, analyze, and predict future processes. AI is able to recognize patterns and correlational relationships at a greater rate than humans are capable of doing, or doing consistently.
But AI does not make the human brain futile.
Rather, the goal of artificial intelligence is to augment our lives, primarily through automation.
Today’s supply chain is a complex network of moving parts. From production and processing to warehousing and inventory to shipment and tracking, the supply chain requires a number of players and partners working simultaneously.
Artificial intelligence hasn’t yet become mainstream in supply chain management (SCM). This is likely because it would require a number of partners along the chain to agree to pay the expensive costs to implement this sort of technology. The supply chain is so intricate that everyone has to get on board to share data in order to prove success.
However, the beginnings of supply chain artificial intelligence have been in full swing mode for a while.
For example, blockchain technology is streamlining the way that vendors, warehouses, and shippers interact with one another along the chain. Even transport trucks are beginning to incorporate artificial intelligence to increase safety and minimize costs on trucks and transport vehicles.
But these technologies are only just the beginning. It’s likely that machine automation involved in supply chain processes will double over the next few years, especially with threats of future pandemics. We’re headed towards near-total automation throughout the supply chain.
This shouldn’t scare you. It doesn’t necessarily mean a loss of jobs to the “machine.” It simply means a change in how supply chain jobs will work.
Removing the “human touch” from certain areas of the supply chain could improve safety, heighten efficiency, and cut costs. Supply chain AI would not only be able to track and move data through the chain, but it would also be able to recognize patterns and see predictive data that can continuously improve the process. This can lead to more eco-friendly processes, safer methods, and expedited developments.
Humans would then no longer be required to focus on the analytic or paperwork portions of the job. Instead, employees will be there to support and troubleshoot machines, add a personal touch, and innovate new ideas.
This has been proven in the Siemens’ factory. They have implemented a number of AI systems and still host nearly 1,150 employees to support those programs.
AI isn’t taking jobs. It is simply making jobs more exciting, challenging, and innovative.
Artificial intelligence still isn’t widespread in supply chain management. It’s quickly on its way, though. So what can you do to ensure that a potential implementation of AI will work well with your supply chain model?
How should you implement artificial intelligence to see the strongest return on your investment?
Chatbots are one of the simplest forms of artificial intelligence to implement, and they can be used virtually anywhere along the supply chain. These machines are able to analyze all of the data in your files to respond to questions from vendors, partners, and clients.
This creates a more efficient form of B2B service. Chatbots reduce costs by minimizing salaries and improving analytic processes.
If you’re interested in implementing AI in your business, chatbots are a good first start.
The best way to ensure a return on your investment is by dedicating AI to a specific goal. What problem do you want AI to solve? What metrics do you want automation to improve?
Pain points of the supply chain generally deal with friction along the vendor line or a necessary improvement in customer satisfaction.
Too often, companies will start investing in technology simply because “newness” is seen as a competitive advantage. But throwing your business into AI can actually damage your company with extensive costs, high-level change, and massive job uncertainty—which all contribute to lowered productivity and engagement.
You could have hundreds of tasks you want AI to automate. At some point, you can potentially have machines working on all of those tasks.
But start by targeting one or two specific areas to slowly introduce new processes and experiments to your organization.
This gives your workers time to adjust while you learn what does and doesn’t work for AI in your business.
Artificial intelligence is intelligent—but it’s still a machine. That means there can be compatibility issues or even an overload of data that ends up bogging it down.
For example, AI machines will read every file that you give it. You’ll likely hand over years’ worth of data sets with deep granularity, meaning that there will be specific details as well as big data that you give your AI machine. If you don’t provide all of the data in the same system or form, the AI won’t be as effective or predictive as it could be as it must shift back and forth between algorithms it uses to understand specific sets of data... and that's not to mention that then it must implement
Before implementing an AI system, you might want to consider consolidating data. You should also consider hiring or expanding a computer science team to handle all AI needs.
Acknowledge that AI can be frightening for employees, especially those who have an “automatable” job. On the supply chain, there are thousands of employees both in-house and with your partners who will be affected by the introduction of artificial intelligence.
You want to provide your employees with as much job security as possible. Be clear about the goals and processes of AI. Outline how these new operations will impact the employees’ day-to-day lives.
Your top leaders should create a unified vision behind the AI.
The success of your technology will depend on the type and purpose of the AI machine as well as the company that offers it. AI is still a new innovation, so you want to make sure you choose not only a smart company but also an evolving one.
Don’t purchase the software solely based on the software. Purchase the software with consideration given to the company from which you are purchasing it from. What services do they offer? How will they evolve your system over time? What are their limitations? How are they innovating towards the future of AI?
The partner you choose will have a direct impact on the future of your business’ technology.
Supply chain artificial intelligence is still relatively in its early stages, but it’s growing at a rapid pace. AI is going to become a competitive differentiator for supply chains within the next year.
Be ahead of the pack and start implementing new systems and processes before your competitors. Starting early means greater evolution, so you’ll always be ahead of the pack.
Partner with Redwood Logistics to learn how supply chain AI can improve and develop your logistics operations for the better.