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Artificial Intelligence in Supply Chain

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32 views2 pages

Artificial Intelligence in Supply Chain

Uploaded by

a.makhnova
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Artificial intelligence in supply chain

When you think of the effects of artificial intelligence (AI), what comes to mind? You may think of
the amazing innovation and progress it offers, but you may also think about the potential for job
displacement and security risks. Regardless of what the world thinks about AI, it’s playing an
increasingly significant and positive role in transforming supply chain management.

To be clear, AI refers to the development of computer systems and technology that are capable
of performing tasks that typically require human intelligence, such as learning, reasoning,
problem-solving, and decision-making. In the context of supply chain, AI technologies and
techniques are being applied to enhance various aspects of operations. Let’s review some of
those aspects now and see how you might be involved as a supply chain analyst.

Demand forecasting: The use of AI and machine learning (ML) can help supply chain analysts
analyze historical sales data, market trends, weather patterns, and other relevant factors to gain
a better understanding of what customers want and create more accurate demand forecasts.
This helps organizations improve production planning while at the same time enhancing
customer service.

Inventory management: AI-powered inventory management systems can instantly adjust


suggested inventory levels based on real-time demand signals, supply constraints, and lead
times. This helps analysts fine tune inventory replenishment strategies to avoid having too much
or too little inventory. Supply planning and optimization: AI algorithms can be used to consider
multiple variables, constraints, and objectives simultaneously and then generate optimized
production plans, distribution schedules, and supply allocation strategies. These algorithms
consider factors like transportation costs, customer service levels, and capacity utilization (how
well a production facility is producing goods. AI systems can adjust these factors in real time and
create scenarios that analysts can use for further investigation and decision-making.

Warehouse operations: AI technologies such as computer vision, robotics, and machine learning
enable automation and optimization of warehouse operations. For example, AI-powered systems
can perform tasks like picking, packing, sorting, and inventory management, which makes
warehouses operate better and faster—and with fewer mistakes.

Transportation and route optimization: Logistics factors like transportation routes and vehicle
allocation are based on factors such as distance, traffic, delivery times, and customer
preferences. AI systems can analyze vast amounts of data related to these factors, such as
traffic patterns, weather conditions, and delivery schedules in real time and identify the most
efficient routes to take. This helps the supply chain analyst reduce travel time, fuel consumption,
and operational costs while ensuring products get to their final destinations on time.

Supplier management: AI can assist an analyst with supplier selection, evaluation, and
performance management. AI-powered systems can analyze supplier data, track supplier
performance, identify potential risks, and provide recommendations for supplier relationship
management based on defined metrics and rule-based engines designed and constantly
monitored by the analyst.

Risk management: AI-based risk management systems can analyze data from various sources,
such as news feeds, social media, and weather reports to identify potential supply chain
disruptions and proactively develop mitigation strategies. This helps analysts improve supply
chain resilience and respond effectively to unforeseen events. However, the structure to execute
this rapid response needs to be in place, tested, and validated by the organization in advance.

Customer service and experience: AI-powered chatbots and virtual assistants can provide order
status updates, quick responses to customer inquiries, and personalized recommendations.
Natural language processing and machine learning algorithms help these systems understand
and interact with customers effectively using real, human language. Then, the supply chain
analyst can use AI-generated insights from these customer interactions to fine-tune inventory
management strategies, predict demand fluctuations, and optimize supply chain processes,
which contributes even more to a positive customer experience and satisfaction.

Sustainability and green initiatives: AI can support sustainability initiatives in the supply chain by
a) analyzing real-time data and dynamically optimizing transportation routes to reduce carbon
emissions and b) identifying energy-saving opportunities. AI can also offer insights that help
promote circular economy practices, which means designing, managing, and reusing resources
in a way that minimizes waste and promotes recycling. The supply chain analyst plays an
important role in interpreting the AI-generated data to make informed decisions that align with the
organization’s sustainability goals. For example, they can identify eco-friendly suppliers,
implement greener packaging solutions, and manage supply chain processes that minimize
environmental impact while maintaining operational efficiency.

Continuous improvement: AI technologies contribute to continuous improvement of supply


chain processes by analyzing vast amounts of data, identifying patterns, and
recommending process enhancements. Machine learning algorithms can detect
anomalies, root causes

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