Artificial Intelligence in Supply Chain Operations

“Human Intelligence” is often considered as the highest intelligence. It is this

intelligence that guided us to live in groups and form civilizations. Intelligence has
also interpreted an ability to work efficiently. With the advent of technology, this
efficiency has further improved making human existence more comfortable on
this earth. The advent of artificial intelligence has further helped to flourish our
civilization provided we keep the technology beneficial.

Traditionally, all businesses relied on personal experiences and business acumen

to manage supply chain issues.

The current development in digitalization has transformed supply chain

management. It has greatly improved the efficiency of many companies. Often
companies operate on tough profit margins, a slight improvement in any area
resulting in saving time bring substantial change in their earnings. The proficient
use of data and information extraction helps to reduce costs, optimize capacity, and
keep downtime minimum.

According to market analysis, in 2017 global Artificial Intelligence in supply chain

market was valued at 545 million and it is estimated to reach the market value of
3-4 billion by 2023 credit goes to the trend of online purchase, increasing market
growth.

Artificial Intelligence in the supply chain can be broadly classified as By

Component(Software, Network, Hardware),By End-Users(Automotive, retail,
Manufacturing), By Technology(Machine Learning or by Natural Language
(Processing)

Artificial Intelligence is the intelligence exhibited by machines i.e. machines

perform the job more or less as humans do. The systems are so developed that
they help the machine to learn by experience as humans do, to think and create,
to speak to judge and make decisions. By early 2000 artificial intelligence in the
supply chain has been used. The series of algorithms are used which take
historical data and turn it into a forecast. The Supply chain consists of all parties
involved in fulfilling customer request or steps involved in the creation and sale of
the product. SCM aims at delivering the right quantity of the right product, in the
right place and the right time.

In the supply chain, most of the activity is focused on Machine Learning. Machine
learning occurs when a machine takes the output, observes the accuracy of the
output, and updates its own model so that better outputs will occur. The machine
should be capable of learning and improving with experience.

Why do we need Artificial Intelligence in the Supply Chain:

 There has been a surge in Customer demands recently. Also, they

expect full transparency and information about where their delivery is at all
times. They want to track their delivery and be assured of their purchases.
 In globalized an economy operating value control is a priority. There is a
price rise in all the spheres be it energy and fuel, or labor .In addition to
that changing regulations make it difficult to scale operations up.
 New products are launched faster, which often require a change in
supply and intellectual property is more difficult to control in the system.
 It is urgent need to match supply and demand in just in time production
settings. Companies cannot afford to have any losses in the inventory.
 Interconnectivity, IOT can be used in logistics optimization, traditional
systems for forecasting and replenishment is not able to process it.

ArtificiaI Intelligence for the supply chain:

 AI is used in the entire value of chain from the supplier of raw material
to the end of the customer.
 AI is used in optimal pricing through BOM(bill of material) optimization
using predictive pricing.
 Predictive maintenance a part of AI helps in preventing equipment
failure using the historical performance and IOT sensor feed. This will
increase uptime, reduce production loss, minimize energy costs.
 AI helps management to take real-time risk management decisions to
consolidate or adding the capacity seeing the production plan.
 AI helps in Visual intelligence through computer vision analyze the raw
images of parts and products and identifies the faulty one.
  Highly accurate demand forecasting can reduce errors with optimized
replenishment strategies.
 AI enables flexible adaptations to the changes in the product mix or
distribution network.
 Accurately predict demand spikes and automatically adjust the routes
and volumes of material flows.
 Final goal of introducing AI aims at creating a fully automated, self-
adjusting decision making a system for supply chain management.
 The number of sales lost due to the products not being available.
 AI companies may reduce the inventories by good percent.
 Superior logistics alone can beat the competition by matching supply
and demand just-in-time production settings.
 Speed is enhanced throughout the supply chain due to much more
efficient supply and demand planning.
 Logistics is improved due to optimized warehouse operations and
distribution.
 Costs are reduced due to savings in reduced inventory and storage
costs, goods being processed more quickly and faster distribution.
 AI can gather information from customers and suppliers through
chatbot interfaces to identify delays, damaged products or other issues
caused by the supply chain.
 Demographic, social, economic and other analysis can identify
consumer trends that will change demand for specific products.
 Retailers can optimize the distribution of products, resulting in happier
consumers.
 Manufacturers can analyze production processes and use AI to make
small changes to optimize further.
 The eventual replacement of drivers with automated trucks will lower
costs in the logistics industry and enable more rapid distribution of
products.

The Challenges in Artificial Intelligence in the Supply Chain:

 Latest data and data accuracy is essential for extracting information

along with actions from any system of AI.
 Such systems should be linked with databases and systems by a crucial
process to analyze, clean, access and act on certain data.
  AI have faith in models and algorithms for actions and insights with the
help of the supply chain.
 Periodic checks should be done by SCM for such actions and models for
assuring that everything is inside the parameters framed.
 AI should not work independently specifically in areas, for example,
supplier management. Irrespective that AI is good for increasing the
efficiency, data understanding and determining actions.
 AI is not substituted for managing a good relationship with the team of
SCM.

Wrapping up:
The companies of the enterprise are looking growth in the supply chain along with
artificial intelligence with:

Reducing cost: The techniques of AI and machine learning make use of difficult
algorithms through which difficult cost and problems of delivery can be solved
which many enterprises are facing today.

Optimizing and improving logistics: Starting from storage to picking to sending

and at last receiving the products, AI goes a long way in supply chain to optimize
every function of logistics management.

Bringing accurate demand forecasting: There are many uncertainties associated

with the supply chain due to the high obscure and unstable side of demand.
Demand forecasting that is enabled with AI has rightly set the things. Good
information and insights for the side of demand help reshape the functions of the
supply chain. Starting from demand forecasting to product development, one can
have faith in the direction for setting the sails to, along with AI in the supply chain
management.

Increasing the relations with the supplier: Suppliers can have insights, for
example, which centers of production are fastest and which are the suppliers that
have the least fraud rate. Providing insights into the weather to the suppliers,
assisting them in enhancing the planning of transportation. This results in an
improvement in the overall relationship with logistics professionals and the
supplier.
Enhancing experience of customer: The team AlfaaUV works on measuring the
impact of emerging technologies on the performance of supply chain believes that
AI in the supply chain has taken the experiences of the customers to a certain
level.
When systems of AI provide smooth and clean operations, rates of customer
satisfaction goes up. Customers will get purified water every time with no
downtime.