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5 Ways AI Can Boost Your Supply Chain Management. And 5 Ways It Can’t.

Technology helps us achieve new heights of efficiency in supply chain management—but there are limits. Learn why there is no substitute for human ingenuity.

We are approaching the peak of the  Hype Cycle for chat-based artificial intelligence (AI) and headed down the rollercoaster tracks toward the trough of disillusionment. Looking at current headlines, you could be forgiven for thinking that  ChatGPT will pick and pack your orders, drive your trucks, calm that angry customer and clean the dirty dishes in your department’s sink at the office. 

Yet, both unrestrained enthusiasm and skepticism fail to capture how AI works in concert with human intelligence in supply chain management. 

The Powers and Limits of Artificial Intelligence

Here are five ways in which the new technology can improve efficiency in supply chain management—and an equal number of ways it can’t.

  1. Time-Saving Automation
    AI can manage and optimize processes that rely on patterns. Remember the  Pareto Principle from business school? That’s the famous curve that illustrates how 80 percent of consequences come from 20 percent of causes. We see that writ large in logistics, where most orders proceed from parts to assemblies and finished goods, shipping and delivery to the customer. 

    Ah, but that other 20 percent can be a bear. Automation helps identify, monitor and manage the 80 percent, so you can spend more time on the unique issues. Without this filter, a staff can be so busy paying attention to everything that they can’t excel at managing anything

    A good, end-to-end visibility strategy, including AI algorithms and exceptions notifications, makes all the difference. Sorry, but it’s still going to be better for you to talk in person with that client in Toledo whose box got smashed on the dock.

  2. Revealing Real-Time Analytics
    Machines are orders of magnitude better than people at sifting through patterns and identifying variations. When processes vary in predictable or logical ways, predictive analytics can alert your team much earlier to potential deviations from the norm. Maybe you can even automate flows for some of those variances, but it’s up to you to help the machine learning (ML) learn its limits and skills.

  3. Fair-Weather Supply Chain Management
    All those patterns help AI extend your team’s ability to forecast demand, manage inventory and optimize routing. This is a particular emerging skill for software as more data becomes digitized for weather forecasts, political instability, economic projections, natural disasters, real-time traffic and other potential sources of disruption.

    Ask yourself, though: How would AI have done at managing your supply chain through the COVID crisis or the Ukraine war? These kinds of  black swan events are unprecedented by definition. When they happen, it’s possible that any response based on prior patterns is going to be wrong or inadequate. 

    Of course, we feed learning from new experiences into our software platforms but, sooner or later, there’s a lavender, chartreuse, or heliotrope swan swimming toward us. For those, there’s no substitute for human expertise.

  4. Strengthening Forged Connections
    AI can enhance relationships, but it can’t build them. Maybe if you’re in the stuffed Teddy bear business, you don’t worry so much about your connection to suppliers, partners and customers. Inventory is cheap, so the penalty for getting it wrong is small. Customers buy on price, not unique features or trusted relationships. 

    For the rest of us, good relationships across the supply chain are vital. Better analytics and communication—both of which can be amplified by AI—can fuel cooperation, efficiency and trust. There’s still a place for people, though, who listen to customers, understand their concerns and respond.

  5. Improving Systems Built With Human Experience
    Computers are great at honing the wheel, less so at reinventing it. Our own practice thrives on new and creative approaches to optimization. Instead of finding suppliers who charge a few pennies less or deliver incrementally faster, how about changing a whole transportation strategy? 

Custom-Tailored Supply Chain Management

Although we’ve been at the forefront of technology—winning awards from  Fortune 100 clients and  leading industry publications for our innovation—we have yet to find a software solution that can custom tailor a transportation supply chain all by itself as expertly as our global team of supply chain management consultants and engineers.

If you’re ready to apply some new intelligence to your supply chain—either the artificial or the human kind—we’d love to learn more about your goals and challenges. Just  reach out to us for a no-obligation review.

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