AI technology has gained popularity over the last few years and there’s a looming fear across industries about AI taking over jobs. Click-bait headlines, predictions of a dark future, also seem to have contributed to the fear-mongering surrounding AI technology. No doubt AI has the potential to automate several tasks within seconds and with a greater degree of precision, it is important to understand that AI is not the absolute, perfect replacement for human workers. Instead, AI can serve as an effective tool to improve and streamline human productivity!

Harnessing the Power of AI

By definition, AI technology allows machines to carry out tasks that would otherwise need human intelligence. Pattern recognition, decision-making and learning from experience are all time-consuming activities that an AI machine can perform in seconds. Within a supply chain management ecosystem, AI can prove invaluable on multiple fronts:

  • Demand Prediction: Forecasting demands remains one of the most challenging aspects for any supply chain manager. AI tools can analyse historical data across sales, seasonal patterns and social media trends to draw a more accurate picture of the demand. This insight helps to manage inventory and production schedules accordingly, lowering the risk of overproduction and wastage.
  • Inventory Management: AI can prove extremely useful in managing inventory by analysing sales data, production timelines among other relevant factors. AI algorithms can then predict optimal inventory levels for different products, which will ensure there is adequate product availability without holding excess inventory.  
  • System Optimisation: AI can be used to optimise multiple touchpoints along the supply chain management system. Transportation routes can be optimised to reduce time and cost involved in moving goods, similarly for production schedules, ensuring products are created in the most efficient way.
  • Supplier Rating: AI algorithms can enable rating of supplier efficiency by tracking various deliverables as agreed with them. This includes quality, delivery timelines, repair timelines, ESG efficiency etc. AI systems can also constantly perform comparison between suppliers to assess better performance in the same segment.

Pros and Cons of AI

Improved accuracy, better efficiency and cost savings are some of the most obvious benefits of using AI in the supply chain. Supply chain managers can easily automate routine tasks and collect real-time data with the help of AI and make faster, better-informed decisions. All this ties together to improve customer demands and adapt to the needs of the changing market.
The high task accuracy also means that integrating AI into the supply chain management system can help streamline demand forecasting and inventory management.  

While AI can serve as a powerful tool, it has its limitations – high quality data. All AI algorithms require large data sets to make accurate predictions, map patterns and make decisions. If this data is incomplete or not recorded properly, the results can be faulty or unreliable. To work around this, businesses will need to invest heavily in data collection and quality management so that AI systems can work efficiently. The cost is another factor when it comes to integrating and implementing AI systems. There is also the additional cost of hiring experts and training employees to use AI effectively.

It is undeniable that AI is ushering in a whole new era of strategising and planning across industries but it can also open multiple avenues when used well. AI is not something to be feared, but something to be embraced. Businesses need to assess the health of their supply chain management systems and consider the possible impact on their workforce and offer adequate training for AI integration to be a success. AI technology integration can go a long way to improve human efficiency and free up precious man-hours spent in tedious tasks.