Artificial Intelligence (AI) has swiftly been gaining popularity and relevance within supply chain in recent years. The current pandemic and its impact on the supply chain industry has made the conversation around AI even more interesting and relevant. For an in depth introduction to AI, see our previous blog post covering artificial intelligence and its applications in supply chain. In a time where companies are forced to be more flexible and resilient than ever before, AI is showing increased promise as an up-and-coming technology solution to help predict change; however, the increased interest in AI has outpaced its adoption. According to the latest MHI annual industry report based on a survey conducted at the end of 2019, only 12% of respondents reported current use of artificial intelligence within their companies and 60% predicted adoption within the next 5 years. When including predictive analytics, which can be considered to fall under the umbrella of AI, these rates rise to 28% and 82% respectively.
However, with the changes of the past year, more companies have ventured into AI with the hopes that it can help address the unique challenges that a pandemic economy brings, such as:
- Disruption in supply (especially for the many companies with a presence in China)
- Irregular demand patterns due to lockdowns, panic buying, and financial hardship of consumers
- Changes in the workforce due to layoffs, departures, and increased need for flexible work practices
Not all has been smooth sailing, though. In a more recent survey from Secondmind and Censuswide, 82% of respondents from a pool of supply chain decision-makers reported experiencing frustrations tied to AI-powered decisions during the course of the pandemic. These pain points include:
- Rigid internal processes not suited for the flexibility of AI
- Poor or insufficient data
- Poor understanding from leadership
Given the rush by many to adopt more AI into their decision-making practices, these struggles hardly come as a surprise. Without the proper preparation of ensuring that data is sufficient and reliable and that the organization and its leaders are flexible enough to accommodate for AI, poor implementation of these tools can create more issues than solutions. These issues include increased manual analysis, slow response to changing markets, and reduced forecast accuracy, which can all contribute to expensive mistakes in forecasts and planning.
Supply chain leaders, despite their struggles with current adoption of AI, remain optimistic about its future within the industry. In the same survey from Secondmind, 90% of supply chain leaders believe that by 2025, AI solutions will improve their decisions and transform supply chains for the better. Even though adoption has proved challenging thus far, the industry maintains the belief that AI can produce faster, more accurate, and less biased recommendations that leverage more data than humans are capable of, revolutionizing the industry. Proper application of AI will free up valuable time that was spent on more computational tasks, so supply chain leaders can focus on more critical tasks that require the sensitivity and subjectivity that only humans can provide. These tasks include proactive planning for key high demand events, risk assessment, and applying their domain knowledge and experience to more in-depth analysis. Between now and then, companies will have to learn how to make the most of their data and develop a more flexible internal framework if they want to survive and remain competitive in unpredictable times.
AI remains a powerful tool that will revolutionize the supply chain industry, and it promises great rewards to those who can leverage it wisely. Our team of consultants bring the expertise to analyze, implement and optimize your supply chain to compete in today’s market. Interested in learning how to effectively leverage AI in your organization? Reach out to one of our subject matter experts at firstname.lastname@example.org and start developing strategies that support AI-powered solutions for the road ahead.
Contributors: Elta Clarke, Supply Chain Consultant at Bricz