30 March 2021

WHEN DOES AI MAKE SENSE IN SUPPLY CHAIN?

Yojee_SaaS Collaborative Supply Chain Network

Author: Ed Clarke, Co-founder & Managing Director, Yojee

 

Supply chain is really complex. I have so much respect for the people who get up every day and make these huge operations run well. This is why I try to be really clear on when the impact of AI implementations in the sector is significant when speaking with customers.

The utilisation of AI systems offers a range of benefits spanning productivity boosts, improved order tracking, streamlined warehouse processes, and improved customer service. We need to aim for that without the need to make a single phone call or email.

Let’s take a look at exactly why AI is so powerful for the supply chain and look at the top 3 benefit areas that AI can unlock for your organisation.

 

Why AI matters

AI systems are already delivering tangible results for supply chain managers, this is very clear. This is the finding of McKinsey research that shows not only is AI now being widely adopted in the industry, it is already delivering results. My experiences with our partners have been excellent, which gives me a lot of confidence in writing this post.

More than 60 percent of the surveyed supply chain executives responded that AI implementations have already resulted in reduced costs.

And more than half reported increased revenues as a direct result of introducing AI into their supply chains. In more than a third of cases, these revenue boosts were in excess of 5 percent.

The reason AI is so powerful for a business is in its ability to scale and be able to provide improved levels of service without cost growing inline with that scaling or new service level. It also has very strong capabilities to improve visibility and accuracy across the whole business. 

 

Where to look to start: Faster, smarter, more productive

The following are three key areas where AI can make an immediate and significant impact on your supply chain operations:


Scaling 

As an example of just how AI can help, consider the example of one of our clients who were previously completely reliant on a spreadsheet-based system. They also used a mobile app for their deliveries. It was far from ideal but also not the worst operating model we have seen!

Our client’s customers wanted them to do more and more jobs but because their planning process was so inefficient, they had to hire a new person for every increase in X thousand jobs. This meant their margins would unlikely improve and at some points in time, such as when they’d just taken on a new hire, their margins were actually worse.

This results in a situation where it becomes incredibly difficult or painful to scale.

When you run in such a way, decisions in the boardroom can be unnecessarily conservative in taking on new work, you may have a key person risk issue, and worst of all no matter how many more jobs you get it may not look any better on the bottom line. 

 


Reacting to real-time information

In supply chains, you have the need to both plan and continually replan.

There is constant change, from the weather conditions, to vehicles breaking down and to the traffic. So what you’ll find is that good implementation have good planning abilities, but great implementations also have the ability to react to real-time information.

This responsiveness results in agility improvements at both the internal planning level as well as on the customer experience. Having the ability to react to real-time information vastly improves your customer side planning – knowing if things are going to be late, and being able to predict those so they can adjust what they’re doing in their warehouse or re-plan the manufacturing priorities. Nothing is worse for a carrier than having a customer with a bunch of people waiting at an unloading bay for a load of goods that aren’t coming anytime soon – it’s so expensive!

 


Improving visibility

Integrating AI and IoT systems are all about gaining greater control at the specific item level. So a good implementation of IoT is having a mobile device with every driver. But you can’t necessarily gain any control using a driver’s mobile device when you need to find a pallet or container that is lost somewhere in the warehouse. Or if you’re not the one controlling the movement.

By implementing Ai powered tracking solutions, if you’re the shipper and not the carrier, then you can have your own layer of visibility across the entire network, regardless of the carrier being used. So it provides you with a greater level of choice while maintaining visibility. If you’re the carrier, it’s likely you are providing an unparalleled level of service and you will win a lot more tenders. It can be done cost-effectively these days too. 

 

Taking over the heavy lifting

Effective use of AI in the supply chain is all about creating data. And creating control over that data.

It helps to digitise information and value as well as vastly increase the visibility you have over your networks. It gives you the ability to essentially choose your own adventure when it comes to visibility and tracking as opposed to often ‘surprised’ after issues happen and it’s too late.  AI is the ticket to allowing you to know where things are in real-time, as well as if they’re moving outside of the thresholds of your expected timelines, journeys, or paths.

So if you’d like to learn more about how you can make use of AI to boost your productivity and visibility over your operations today, just request time to speak with us at Yojee here

 

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