From Zero to Hero in Two Years: Artificial Intelligence to be One of Biggest Digital Disruptors in Supply Chain

Today’s artificial intelligence is already mature enough to support four practical applications in supply chain management.

Pierfrancesco Manenti
Pierfrancesco Manenti

Artificial intelligence (AI) has been a part of popular culture for decades, from wreaking havoc in The Terminator movie in the ‘80s to saving the world in Iron Man 3. While Hollywood loves to highlight the more extreme consequences of AI, the real-life business implications are far more tangible, with the supply chain industry standing front and center as one of the big winners from this game-changing technology.

The role of AI within supply chain grew so quickly that in our Future of Supply Chain survey in 2014, we didn’t even ask SCM World’s community of senior supply chain professionals about its importance. If we jump forward two years to 2016, however, the numbers indicate that people are very much aware of the technology’s ability to deliver tangible value within the supply chain industry. In fact, 47 percent of the almost 1,500 respondents to our most recent survey said that AI was both disruptive and important in respect to supply chain strategies. This is on top of a 2016 Accenture report that suggests 85 percent of organizations adopted or will adopt AI technology into their supply chain within one year.

Considering that supply chain is one of the key drivers behind creating competitive advantage, it is crucial that those of us working in the profession understand the implications of this latest and greatest technology. Indeed, today’s AI is already mature enough to support four practical applications in supply chain management.

1. End-to-End Visibility

There are already examples of applications that improve supply chain visibility. For example, tech giant IBM launched Watson Supply Chain, which focuses on end-to-end visibility and proactively looks for supply risk insights. It uses its cognitive technology—which is famous for winning the television quiz show Jeopardy against humans—to predict supply chain disruptions based on data from social media, newsfeeds and weather forecasts.

The machine-learning technology of TransVoyant also helps with visibility; its product can collect and analyze 1 trillion events each day from sensors, satellites, radar, video cameras and smartphones. Its algorithm can also track the real-time movement of shipments and calculate their estimated time of arrival, factoring the impact of weather conditions, port congestion and natural disasters.

2. Supply Chain Planning

ToolsGroup’s supply chain optimization software is rooted in AI. It aims to help companies bring products to market more efficiently. The software creates a baseline forecast for the new product by using an algorithm that learns from early levels of consumer demand, combined with realistic product output numbers, to accurately forecast upcoming needs. Companies can use this to optimize inventory and replenishment plans.

3. Smart Manufacturing

Siemens’ Amberg factory in Germany is a smart manufacturing monument. This facility is not only highly automated, but is also intelligent and self-sufficient. Computers handle 75 percent of the value chain autonomously. Using the Internet of Things, parts in the production process can feed back to the machines and tell them the specific production requirements, what components they need and which steps need to be taken next. Siemens is taking AI very seriously across all its divisions, investing more than $1 billion into startups that focus on the technology.

4. Logistics and Self-Driving Trucks

AI is at the core of self-driving trucks, with many tech giants and automotive manufacturers investing heavily in this technology. These are already having an impact within supply chain with Uber’s self-driving truck making its first delivery of 50,000 cans of Budweiser beers last autumn. Earlier last year, a fleet of self-driving trucks from firms including Daimler, Volvo and Scania were tested on the roads of Europe during the European Truck Platooning Challenge, and their introduction is predicted to significantly reduce road accidents.

Welcome to the Future

Further development in AI will help businesses not only make fact-based, risk-adverse decisions, but also make the decisions faster than previously seen in supply chain management. The ability to have such comprehensive understanding across this complex supply chain environment is something that goes far beyond the typical skills and capabilities of your everyday worker. And this is where the true value of AI lies.