AI for Supply Chain Optimization

The most essential part of the organization is the supply chain. It can make or break a business, potentially affecting a company’s customer experience and product quality. Hence, optimizing a supply chain is essential to beat any business failure.  

What is supply chain optimization?

Supply chain optimization is the procedure of boosting the efficiency and cost-effectiveness of a supply chain. The goal is to provide customers with products at a lower cost while maintaining profit. 

Traditionally, this process involves planning, inventory management, and other complex tasks that require proper data analytics knowledge. However, AI for supply chain optimization has made the complete process easy. 

Today, we are going to explore the basics of AI for supply chain optimization. Plus, we will explore the benefits and challenges of using AI technology in your supply chain optimization. On top of that, we will discuss how you should prepare your supply chain for AI technology. 

What is AI in the supply chain?

As a business owner, you can manage and optimize supply chain activities with artificial intelligence (AI), like monitoring product quality, knowing fuel-efficient routes, and more. AI technology can improve supply chain decision-making and operational efficiency by processing data, predicting trends, and performing complex tasks in real-time. 

Artificial Intelligence (AI) serves as a general term used for applications that simulate human intelligence and perform complicated tasks. Machine Learning (ML) is among the subset of AI technology that learns from consuming enormous data. 

AI can beat traditional software when it comes to the supply chain in many functions, like predicting future market behavior, making decisions in difficult situations, and more due to its learning ability. 

These kinds of abilities prove very helpful in managing and optimizing workflow across every stage in the supply chain. 

How AI works in supply chain management?

As we mentioned before, artificial intelligence (AI) has the ability to perform a wide variety of tasks in the supply chain field of any organization. 

If you rely on your partners to ship your products promptly and organized, you may find your supply chain complicated. You may leverage artificial intelligence to keep all parts of your supply chain balanced with its capability to see patterns and relationships. Artificial intelligence has the ability to streamline logistics networks from the warehouse to the distribution center. 

To prevent unwanted disruptions, modern AI in supply chains  are vast and require close supervision. AI technology can offer help in forecasting, like demand planning or predicting production and warehouse capacity. 

Some people are using AI technology to gain data from broader data collected from IoT devices deployed across the supply chain. You can also analyze factors like weather conditions and traffic using this technology to know alternative shipping routes to avoid delays.  

AI technology can also track inventory levels and market trends in supply chain operations. It can enhance supply chain visibility in inventory management. Plus, you can use ai technology to automate documentation for physical products and smartly include data whenever items change hands. 

It can help with transparency for the manufacturer and give valuable insight to all stakeholders in the supply chain. The enhancement of artificial intelligence in supply chain transparency gives unmatched time and affordability. Your company can meet ethical and sustainability standards using AI technology that was traditionally expensive and time-consuming. 

What are the benefits of AI in supply chain management?

Apart from performing several tasks, Artificial intelligence can provide businesses with countless benefits in the supply chain. Let us take a look at the top advantages of using AI in the supply chain:

1. Accurate AI in supply chain management 

You can ensure the right flow of products in and out of the warehouse with accurate inventory management. It can help you prevent overstocking within your warehouse. 

The inventory management process involves many inventory management variables that can make the complete procedure time-consuming and highly prone to errors. Here is where AI processes and tools come with the potential to become highly effective in this process. 

These systems can analyze and interpret significant datasets. Some of these systems are so advanced that may even predict and discover new customer habits & forecast seasonal demand. 

AI is also pivotal in providing end-to-end visibility for customers trends and reducing the expenses linked to excess inventory. 

2. Improved warehouse efficiency 

This model can also help you make the warehouse more efficient by organizing racking and designing its layout. 

ML models can recommend a floor layout that boosts access to and travel time to inventory by evaluating the quantities of your items transferred via the warehouse aisle. AI technology may plan optimal routes for robots and workers to go to inventory faster. This ability further improves fulfillment rates. 

These systems help manufacturers maintain inventory against carrying costs by analyzing the demand signals. 

3. Reduce errors

AI’s capability to find patterns and behavior is among the top benefits of AI technology. You can leverage this ability by training these systems to find flaws like errors and product defects before they turn into significant mistakes. 

The best part about AI technology is that it can be directly embedded within your ERP. Furthermore, it can streamline the ERP framework used to manage financial transactions as a good flow through the supply chain. 

4. Enhanced safety

You can also use AI to boost the safety of your materials and workers within your warehouse. 

AI technology may analyze the workplace’s safety data and inform you about any possible risks. It has the capability to store stocking parameters and update data by utilizing a feedback loop and proactive maintenance. 

AI in supply chains can deliver the powerful optimization capabilities that will help you react swiftly to keep your warehouse secure and compliant with the safety standards. 

5. Optimized operation 

As a supply chain manager, you always want to better understand your operations. With AI-powered simulation, you can gain valuable insight and learn & get ways to improve. It can also visualize supply chain disruptions and 2D visual model external procedures that might develop unwanted downtime. 

Challenges of AI for Supply Chain Optimization

While the AI technology can simplify the process and give countless benefits, it can often make several significant mistakes. The following are the top challenges that you might face when embracing AI technology within your supply chain:

1. System complexities

AI systems are usually cloud-based and need bandwidth. Sometimes, you additionally need specialized hardware to access the capabilities of these systems. For many supply chain partners, the cost of this model’s hardware can also become expensive. 

2. Training cost

As mentioned before, you need to train these systems to make them efficient. Similarly, it is necessary to train people who will interact with this system before implementing and integrating it within your production environment.    

You must schedule some downtime for training your employees and overcoming their resistance to change, which comes at a cost. Before this downtime, partners throughout the supply chain should work with their AI vendors to build affordable and constructive training programs. 

3. Complex systems

Implementing the system within your warehouse is not enough to keep getting from AI technology. You need a supply chain planner to determine how the tool is performing and fine-tune it whenever needed because the scaling of these tools is complex. 

Top use cases of AI for Supply chain optimization 

As we discussed many times before, artificial intelligence can perform a wide range of tasks in supply chain optimization. Hence, let us look at the top cases of this system for the supply chain:

1. Automate warehousing 

The artificial intelligence has the ability to automate most warehousing tasks. It allows you to identify damaged goods that ensure quality control under warehouse operation. 

You can also regulate the size and types of damage using AI technology, which will help you take necessary action. 

Predictive maintenance is another feature of this system. It can predict data within the factory by processing real-time data gathered from the IoT sensors. 

2. Streamlining the supply chain 

This system gives accurate inventory management procedures while predicting demand. You can utilize this data to avoid shortage. It can also determine whether transportation service levels are being met and identify the potential root cause. 

3. Mapping the supply chain 

The essential step towards boosting its resilience is mapping the supply chain. You can also use the AI tools to get substantial assistance in this manner. These tools can gather records, like custom declaration, freight booking, and product orders that are often represented in various forms and languages. 

 You can use this tool to extract data from structured and unstructured documents with large precision. The tool has the ability to compile and synthesize raw data, enabling you to chart the various tiers of your supply chain. 

4. Reduce friction 

You can monitor internal and external data in real data using the NLP technology of AI. These tools can also decrease friction caused by language barriers because they can be trained to collect and analyze data in different languages. 

5. Robotics and process automation

Artificial intelligence lets robots learn from each other in real-time. When a robot learns a new skill, another bot will automatically acquire the same skill. They can automate supply chain operations that boost accuracy and efficiency. 

Conclusion 

AI is a powerful technology that streamlines and simplifies the supply chain process. It can perform various tasks like automating warehousing, reducing friction, and more. In addition, you can acquire many benefits from this tool. However, you may encounter many difficulties while using AI within the supply chain.