Supply chain management can be defined as managing the flow of products and services, starting with the origin of the products and ending with the consumption of the product. It also includes the movement and storage of raw materials, inventory, and finished goods in progress.
The chaos in the ports continues without end. A troubling realization sinks into the mind: The effects of the “Great Supply Chain Distortion” are already being felt across the country. For example, 30% of baby formula brands may be out of stock soon. This can lead retailers to limit the number of containers they can sell, leaving parents concerned that their children are not getting enough food. This issue covers all industries and affects automotive, healthcare IT, hospitality, manufacturing, apparel, and other areas.
What’s wrong? Commonly cited reasons include inadequate infrastructure and a shortage of truck drivers. The US trucking sector could experience an unprecedented shortage of 80,000 drivers by 2021. Understandably, a significant amount of US goods are transported by truck. But it is not the only factor in supply chain problems.
Supply Chain challenges
The real world is built on dynamic lead times, while current inventory and planning systems are based on fixed lead times and demand forecasts. The congestion at the port is attributed to poor planning and decision-making by finance and procurement officers. Managers should manage their goods rather than prepare them.
There are long queues when changing the mode of transport for shipping products. Supply Chain Management This makes the problem worse.
While it may be reasonable to believe that new modes of transport can reduce congestion, this is not a practical approach.
Choke points cannot be expanded without a huge investment. Port restrictions are therefore discussed from an infrastructure perspective. Retailers need support to make adjustments to their shipping schedules and priorities.
Planning shipments more accurately
In order to plan more accurately, retailers need real-time inventory visibility across all of their businesses. Supply Chain Management If possible, inventory planning information should be shared with third-party logistics companies exiting the gate as a value stream. This improves efficiency and speeds up the first-in/first-out process.
AI is able to quickly detect changes in transport or routes to ensure critical goods are delivered on time
Although AI implementation is still new in supply chain management, many early adopters are finding success. McKinsey & Company found that AI-enabled supply chain management helped companies reduce logistics costs by up to 15% and inventory levels by up to 35%. More companies are taking an interest as AI technology improves. Infoholic Research predicts that artificial intelligence will continue to grow at a compound annual rate of 42.9% through 2023 in the logistics and supply chain markets.
AI uses cases to overcome supply chain disruptions
There is hope that AI adoption can help reduce supply chain problems. Here are some examples of important AI use cases
- Expect absolute decline, timely
Customers have become accustomed to receiving their goods within a few days. Data from the World Economic Forum indicates that US and European delivery times are set to reach record levels by the end of 2021. Based on the current environment, these extended delivery times are likely to continue.
Buyers expect the companies they buy from to have backup plans in place to ensure prompt delivery even in unforeseen circumstances such as natural disasters or bad weather conditions.
AI can also help companies use historical data to determine how salespeople fulfill orders. Companies can set deadlines for switching modes of transportation to ensure that customers with the highest profit margins are served. AI also provides complete visibility across the entire value chain, enabling bottlenecks to be quickly identified and eliminated.
- Not suitable and prioritize customers who are high cost
Certain business relationships may not be appropriate. Gartner predicts that 75% of companies will lose customers who don’t fit in by 2025.
While some companies may not be ready to break up with expensive customers, these loss-making leaders should not be at the top of their priority list.
It can be difficult for companies to identify these customers. AI can identify bad customers and eliminate valuable potential using sorting algorithms. AI also identifies new opportunities for improvement and shows how they will impact your bottom line.
- The profit margin will be increased
Companies that lack a clear understanding of consumer demand risk pushing products that don’t sell. This can result in millions of dollars in losses for businesses.
AI-powered forecasting is a way for companies to detect changes in demand early and optimize products to maximize profit margins.
AI-enhanced supply chain management can reduce lost sales due to out-of-stock products by up to 65%, McKinsey claims sales teams can use AI to identify cross-sell and upsell opportunities for key accounts. Companies often don’t know who to sell more to. Sales teams are constantly collecting data because most of the sales work is done online. This information can be used by AI to improve the efficiency of the sales teams.
- Send quickly
Conway’s survey found that 28.6% said they would order from companies that would deliver within a week of purchase. This is a very short time frame, so companies need to ship products quickly if they want consumers to make shopping with them.
AI can detect shippers that slow down the supply chain. Companies can identify shippers that slow down the supply chain and remove them to make room for something more efficient. Suppliers can also use artificial intelligence to simulate bottlenecks or outages.
When AI detects that a certain part of the supply chain has become a bottleneck, it can predict when companies will experience shortages. This is based on stock levels and extended lead times.
Overcoming the “major supply chain disruption” will take more than just time. Companies need to change their plans if they want to distribute products effectively. Companies will have the opportunity to use AI technology to improve their supply chain management.