Business disruptions brought on by the coronavirus pandemic — from empty shelves in grocery stores to long delays in e-commerce deliveries — have shined light on supply-chain weaknesses, and a growing opportunity for artificial intelligence.
Part of the problem has been the switch to just-in-time manufacturing (JIT), which has created lean supply chains that hold lower levels of inventory in order to remove the risk associated with overproduction and surplus. This strategy, borrowed from the automotive industry, has enabled suppliers to lower their costs through low inventory levels and reduced production costs. Yet, when something like a pandemic or a natural disaster occurs that creates a surge in demand, it’s difficult to ramp up production, or tap surplus supplies to fill the pipeline — especially when entire plants are shut down because of infection. What’s required today instead is a new model that enables real-time demand manufacturing over JIT.
AI-Driven Tool Kit
More suppliers are turning to various forms of AI to better address the challenges of supply-chain disruption now and into the future. Consider the following five applications:
In addition to automation, what will become a hallmark of future supply chains is warehousing and storage located closer to customers. Even from the likes of Amazon or Walmart, big warehouses will be replaced with many smaller ones — serving a customer base within two miles of it. Instead of having a few large warehouses, companies can have many to decentralize the distribution process, get goods to retailers and consumers faster and even boost sustainability practices, with less air and highway emissions.
In fact, the supply chain of the future will very well be comprised of fewer human workers; greater AI-driven automation for managing and predicting inventory needs, processing data and handling back-office tasks and warehouse operations; and new delivery channels, including drones, for safer, contact-free home deliveries.
The supply chain of the future will need to get over key hurdles to become a reality. Interoperable, integrated systems will need to share data across the supply chain to be effective. But companies will need to be open to this interoperability to succeed. Another challenge is the fear of job loss that automation will bring. Companies must dispel these fears by opening up opportunities for workers to take on new, more strategic roles, offering training and continuing education support; and reinforcing the benefits of AI, without losing sight of the unwavering edge humans will always have over AI.
COVID-19 has shone a spotlight on the frailties of the supply chain, but through its lessons we are beginning to reimagine the supply chain of the future, which will be driven by AI and empowered by human ingenuity.
Carlos Melendez is chief operating officer of Wovenware.
Timely, incisive articles delivered directly to your inbox.