How to combine artificial intelligence with business network technology for optimal results.
Many companies pursuing artificial intelligence (AI) initiatives, are doing so as an add-ons to their existing technology. While I applaud the initiative of these companies, I suspect many of these projects will not produce the value expected.
The supply chain is awash in data, but unfortunately, due to the nature of the systems involved, much of it is siloed or stale, and nowhere near real-time. Which means AI is functioning semi-blind, hampered by missing and conflicting data. The results are thus compromised, falling far short of the real value of AI.
Don’t let that be you.
The New AI-Friendly, Business Network Model
The old way wasn’t working. The supply chain is inherently multi-party and multi-echelon. It requires coordination across departments and functions, and across tiers of trading partners. The current enterprise-centric software is not architected to handle today’s network business environments, so you end up with point-to-point connections, hub-and-spoke portals, and a complex mix of patchwork systems.Silos in the supply chain take the intelligence out of artificial intelligence. Algorithms and intelligent agents cannot fully optimize the supply chain based on stale and incomplete data. - Nigel Duckworth @onenetwork #AI #supplychain Click To Tweet
Trying to optimize the supply chain is virtually impossible with legacy technologies. You have siloed data and disconnected algorithms and optimization engines. The best you can get is optimization within siloes, but that’s a far cry from planning and optimizing the whole network, based on real-time data that takes into account all orders, inventory, shipments, logistics, as well as constraints. You end up over-staffed and under-optimized.
It’s taken a while, but now industry analysts from Gartner, IDC, Nucleus Research and ChainLink Research, have recognized the value of business network technologies and their unique ability to solve supply chain problems simply and efficiently.
The key is the network. It can unlock the full potential value that is trapped in your supply chain. Until now, with stale data we’ve been doing weekly planning with daily adjustments. Without timely data, we can’t react to hourly, or even daily, issues that arise and solve them. So, we load up our inventory buffers and expedite far more than is necessary.
When you combine the new business network model with artificial intelligence, everything changes. We have all the relevant data we need to fully optimize the supply chain. The new technologies can handle large volumes of data, sift, analyze, create alerts, and even address issues, in real time. Inventory buffers come down, expedites virtually disappear, customer service goes way up. The value is incredible.
How much value?
McKinsey considered the potential of merging machine learning and AI with network operations to manage the supply chain. In their report on Supply Chain 4.0, they estimated that moving from ERP or hub-and-spoke type of system, to a network model powered by AI, companies have the potential to reduce operational costs by 30%, reduce lost sales by 75%, and reduce inventories by 75%.
These numbers are not unrealistic, though I don’t think we’re there yet. At One Network Enterprises, we see our customers go from middle of the pack supply chain metrics to figures that are unheard of in their industries.
One Network’s Joe Bellini will be talking about this more in the webinar, AI in the Supply Chain. A network foundation is just one of the eight prerequisites of getting value from AI in your supply chain that will be covered in the webinar. The webinar will provide you all the essentials you need to know to understand how AI fits into the supply chain, and how to get maximum value from it. It will cover the technology and data, and give you an overview of key types of algorithms that can be used to optimize the supply chain; how to avoid “black box” algorithms; the power of intelligent agents; and much more. We hope this webinar becomes the most valuable 45 minutes of your week — and look forward to seeing you there.
Latest posts by Nigel Duckworth (see all)
- Unlocking the Value in Your Supply Chain Network with Artificial Intelligence - August 29, 2019
- Ten Pillars of an Effective Network Platform - May 8, 2019
- Enabling the Autonomous Supply Chain - April 25, 2019