AI Algorithms Supply Chain
Paul Trudgian Ltd | Supply Chain & Logistics Consultancy No Comments

In today’s supply chains there is so much data that is generated. This data needs to be capitalised on by businesses to ensure that it is understood and used to make powerful and informed decisions that drive a company forward. Using data efficaciously means that businesses are able to move away from a traditional supply chain into a digital supply chain. Digital supply chains are leading-edge, completely integrated and are fully transparent to all involved – from the raw material suppliers, parts supplier and transporters right through to the customer whose demand is being fulfilled.

However, to succeed and manage a digital supply chain, sophisticated artificial intelligence (AI) and machine learning (ML) techniques are required to take advantage of the vast array of data that the supply chain generates.

In this article, we highlight what you need to do once you have implemented AI and ML within your company to fully exploit these learning tools.

Implement the 80/20 rule

Firstly, the Pareto principle or as it is commonly known, the 80/20 rule should be applied.

When collecting data from the supply chain you need to consider what is the optimum mix for collecting, cleaning and storage in relation to how the data is going to be analysed and then executed. It is felt that companies should spend the majority of their time (80%) analysing the data and making informed decisions on how to use it and the remaining time (20%) on collecting, cleaning and storing the data correctly. Remember, to become smart in your supply chain you need to make data-driven decisions and these decisions will come from the analysis of the data.

Always work on improving the algorithms

Secondly, your company will gain a competitive advantage it can accurately increase and manage demand. This is possible if real-time demand can be analysed and shaped. It is therefore important for a company to always look ahead and look at ways to capture new data and develop improved algorithms that can all be used to make decisions in real time. It is important to ensure that you enthuse and motivate your employees enough to want to drive-forward success in this area and have a desire to make things happen for the company.

Remember, your analysis of data will only be as good as the algorithms that you have in place. It is therefore important to ensure that algorithms are constantly reviewed and improved. It is vital to ensure that your algorithms have the ability to learn and improve so that they can start to identify real hidden patterns in the large volumes of data that will be processed. By unlocking any predictive power in the information it will mean that a supply chain can be improved competitively, ensuring it satisfies customer’s needs, wants and demands. There are many companies that use sophisticated algorithm patterns such as Amazon – and just look at their success.

Look to enhance the supply chain’s visibility

Remember, supply chains are prone to disruption from many factors and it is therefore important to reduce the amount risk present in the supply chain. This is where supply chain visibility comes in. Visibility is essential in supply chains. With the implementation of tracking and analytics it will mean that transparency in the supply chain can be gained and true end-to-end supply chain visibility can be seen. With the developments in Blockchain it will mean that more companies can see the trust and visibility within their supply chain.

Harvest existing and attract new talent management to your company

To implement AI and ML within your company it is important that you have the right talent to push the development of this area forward. Make sure that you can attract and recruit individuals with data scientist skills as well as analytical skills. You can also look to train individuals within the company to make data-based decision making. Remember, once you have the right skillset in your company you need to ensure that you don’t lose their talent, so develop a plan to retain the right individuals with the experiences you require.

It would be worthwhile looking to create cross-functional teams who can work on creating algorithms that drive data collection and analysis, along with a variety of other critical business decision making factors. The team should include individuals from across the company including Sales and Marketing, Supply Chain, Information Systems, Human Resources, Finance etc. The aim of the team will be to ensure that algorithms are developed to address the right issues and make the right decisions.

Look at new business models, new products and new wins

AI and ML will provide you with vast amounts of data and once all this data has been analysed, you will be able to identify new ways to add value to the marketplace that were previously undiscovered.

All these data discoveries can be added to the supply chain process to drive growth. The data will also help gather customer insights and information. This will allow you to see what the demand could be for new products as well as the supply chain’s ability to produce and deliver the new product.

Make sure you review dynamic pricing strategies and procedures

The beauty of AI and ML is that it gives you the opportunity to adjust pricing as the market conditions change which therefore allows you to manage and drive profitability. This level of predictive analysis of analytics can be used to set and amend prices for all products and services. AI will ensure that customer buying behaviour can be fully understood based on past history and trends.

For those who are looking to capitalise on AI and ML the advantages are clear to see – AI has the undoubted ability to streamline many supply chain and logistics functions while delivering a competitive advantage.  Other advantages include cost reductions, risk mitigation, improved forecasting, quicker deliveries and improved customer service.

AI and ML are spreading through the supply chain and are the future of digital supply chains. For those companies who are adopting the technology early they are already reaping the benefits.  Taking that initial step into the AI and ML journey can be daunting but the possibilities have highlighted that they are one of the most exciting innovations to happen to the supply chain. AI can make a big difference to companies and should be started sooner rather than later.

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