Top 12 AI Use Cases for Supply Chain Optimization in 2023

ai for supply chain optimization

As COVID-19 drove customers to purchase more essential products such as toilet paper and hand sanitizer, supply chain managers had to ensure sufficient inventory and efficient delivery. The same managers would have to adjust inventory levels to match decreasing customer demand in a different situation. When trained properly, AI can plug these information gaps by combining information from multiple sources and databases to build an accurate situation report that can then be translated into a supply chain strategy. In addition to improving demand forecasting, machine learning can also enhance inventory control by optimizing inventory allocation across distribution networks. Dynamic allocation of inventory based on customer demand patterns means that machine learning algorithms can minimize stockouts and overstocks, leading to a more efficient and responsive supply chain. By using AI to improve demand forecasting, companies can optimize inventory levels, reduce waste, and improve customer satisfaction.

ai for supply chain optimization

On the other hand, this represents an opportunity for new companies and start-ups to build systems from the ground up with AI in mind. It is no secret that many people fear that AI will “take their job.” And this fear is not unfounded. McKinsey predicts that automation could displace between 400 and 800 million jobs by the end of the decade. As more tasks are automated, less human labor is required, and that means companies interested in maximizing revenue will likely reduce headcount.However, it is important to remember that this is not the first time we’ve seen this. Between the 18th and 19th centuries, we saw massive numbers of workers displaced by new machines and ways of doing things. Although it was a painful transition, society recovered quickly as new jobs appeared around these changes.We can expect the same from an AI-tech revolution.

DataOps with Dataiku

Although further adoption of AI and machine learning (ML) is essential to manage the increasing complexity in supply chains, its inevitable byproduct is a loss in human domain knowledge. These algorithms can analyze data on traffic patterns, weather conditions, and other pertinent aspects to discover the most efficient routes for delivery vans. This way, companies can lower fuel expenses, maximize delivery speed, and boost efficiency. It’s difficult but rewarding to launch an AI-powered supply chain optimization startup.

  • Epicor utilizes Microsoft Azure, an AI-based cloud platform, to enhance its business solutions for manufacturers and distributors.
  • “If the data is imprecise or incomplete, the tool will not be able to produce useful results, following the well-known garbage-in garbage-out principle,” Rigonat warns.
  • With AI-powered analytics, organizations can quickly identify trends, anticipate demand fluctuations, and respond promptly to changes in customer preferences.
  • Challenged with the task of improving large-scale procurement processes, the company reached out to us, turning to applied analytics to better manage drug stocking and distribution across an extensive network of US hospitals.
  • Oftentimes, companies waste significant resources in this process because they don’t incorporate the end user feedback and end up having to backtrack to address unanticipated problems.
  • Therefore, we anticipate RL will offer effective solutions to increasingly intricate supply chain problems, providing a new perspective and approach to maximizing the value from businesses’ supply chains.

For example, FANUC has factories where autonomous robots perform complex assemblies, testing, and other continuous operations. LivePerson’s AI-driven conversational platform facilitates customer support by measuring consumer intent and sentiment while determining where a conversation should go next. The platform also juggles every conversation simultaneously, whether it’s being held by a human, bot, third-party tech or a combination of all three. Cybersecurity is a necessary part of handling data and is now vital for any supply chain company.

OMG Network

AI will continue automating demand forecasting, route optimization, and inventory management tasks, allowing companies to operate more efficiently. Predictive analytics is another area where AI will become increasingly sophisticated. It will be able to predict demand and identify patterns, allowing companies to make better-informed decisions. AI is expected to become more widely adopted in supply chain management as organizations recognize its potential to improve efficiency and reduce costs.

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Like many other industries, organizations in logistics, transport, and supply chain management are using artificial intelligence tools to transform the way they do business. By examining data from various sources, ML algorithms can find trends and anomalies that may detect quality issues. This can aid companies in detecting and resolving quality concerns promptly, thereby decreasing waste and enhancing customer experience.

Leverage Continuous Intelligence Capabilities

It is also worth pointing out, that based on this definition, not all forms of machine learning are particularly complicated. Planning applications don’t work well if the master data they rely on is not accurate; this is known as the “garbage in, garbage out” problem. Having an agent detect how long it takes to ship from a supplier site to a manufacturing facility, and then doing a running calculation on how the average lead time is changing, is trivial math. Relying on humans to update this data has not worked at all well; people just don’t want to do it. With the help of warehousing and AI-driven inventory optimization, businesses can now conduct predictive analysis using historical data to anticipate buying patterns, past transactions, and fluctuating demand for products.

The analysis of the report conducted by the organization will be taken into consideration during the decision-making process of the organization. The purchasing operation, logistics, resource management, and information workflow would also be a part of the quantitative literature evaluation as described by Rostami et al. (2022) . Open AI’s phenomenal ChatGPT program and similar generative AI models, such as AutoGPT and other AI Agents, can be used in logistics with the most impactful use cases around automating workflows and customer experience. In the future, these systems will be further developed and will likely be able to resolve some of the data access and data rights concerns that exist today. The capabilities of these systems are developing exponentially, with increasingly accurate practical use cases that could facilitate problem solving and improve overall customer experience. ML-enhanced tools learn to predict issues that may disrupt manufacturing and logistics.

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Using these techniques helps companies identify factors that impact demand and make accurate predictions about future demand levels, allowing them to optimize their supply chain as a result. The insights and demand forecasts provided by machine learning enable your organization to align its supply chain with projected patterns, reducing the risk of excess inventory or stockouts. Thus, most supply chains have manual quality inspections to find damage during transit. This is where computer vision technology, one of machine learning in supply chain use cases, comes in handy. As an example, Facebook uses computer vision to find existing users on photos and tag them.

  • The platform can also handle multiple conversations simultaneously, whether it’s conducted by a human agent, bot, external technology, or a combination of all of them.
  • Empower your team to leverage insights from AI solutions and make data-driven decisions to improve performance across the supply chain.
  • This has caused the industry to invest in new technologies like AI to meet their demands.
  • The IoT tech allows companies to monitor and record the conditions of the goods within containers.
  • In order to make the adoption process go as smoothly as possible, make sure you follow the essentials for successful digital transformation.
  • AI-driven supply chain optimization allows organizations to scale their operations more effectively, adapting to fluctuations in demand and external factors.

Trusted, multi enterprise cloud-based business network to streamline, automate and fully digitize B2B transitions, augmenting the power of EDI with API capabilities. Clients receive 24/7 access to proven management and technology research, expert advice, benchmarks, diagnostics and more. Download the report to learn three strategies for solving common challenges with AI in supply chain.

Real-World Examples of AI for the Supply Chain

By facilitating better communication, improving decision-making, and optimizing operations, ChatGPT systems are enabling businesses to stay ahead of the competition. As such, it is no surprise that more and more companies are exploring the potential of ChatGPT in their supply chain management systems. Toorajipour et al. (2021) reported several subfields of supply chain management that have been improved by using AI.

ai for supply chain optimization

Leaning on AI and a cloud platform, can forecast demands and returns, detect faulty machines and anticipate when maintenance will be needed. The company also supports logistics organizations with driverless AI vehicles to meet inventory and production requirements. Logistics Wizard aims to simulate an environment running an ERP system and augments this ERP system with applications to improve the visibility and agility of supply chain managers. In this case, the ERP system is a simulator implementing a very small subset of the functionalities of a real ERP system. Logistics Wizard exhibits hybrid cloud, micro-services, and big data analytics concepts that can be reused when building enterprise-level applications on Bluemix.

Data Migration Trends

Risky orders can be subjected to further analysis (e.g., using other algorithms that indicate a potential reason for the delay). Take control of your supply chain by automating, streamlining, and simplifying complex inventory optimization processes to drive 99+% availability with less stock. The transportation of goods with over 13% is one of the biggest contributors to global GHG emissions. The Internet of Things is applied to find better planning routes and ship stocks directly where there’s a market for them, which in turn leads to a significant drop in gasoline and diesel consumption.

How can machine learning improve supply chain?

Machine learning in the supply chain industry provides more accurate inventory management that helps predict demand. Machine learning is used in warehouse optimization to detect excesses and shortages of assets in your store on time.

With all of this in mind, let’s take a look at how AI is already assisting supply chain management and logistics. Needless to say, supply chains and logistics are the very lifeblood of business, if not civilization as we know it. In this article, we will explore how AI is revolutionizing supply chain management, and discuss some examples of companies that are successfully leveraging this technology. However, this is only the beginning of the story, as AI sensors aren’t just adept at tracking location. They can also provide accurate, comprehensive, and relevant data on environmental conditions across the entire supply chain, including warehousing, storage, and transport containers. This is a challenging process, one that can have significant ramifications for the supply chain, as effective inventory management prevents clogging the supply line with rush shipments or with superfluous transports.

McDonald’s Is Using AI and Data to Optimize Its Supply Chain

But the inventory management process involves multiple inventory related variables (order processing, picking and packing) that can make the process both, time consuming and highly prone to errors. The use of Artificial Intelligence in the supply chain is here to stay and will make huge waves in the years to come. To learn more about how AI and other technologies can help improve supply chain sustainability, check out this quick read. You can also check our comprehensive article on 5 ways to reduce corporate carbon footprint.

ai for supply chain optimization

Supply chains come with various costs, including storage, transportation, server management, and work hours. Improperly managed supply chains lead to more hours spent picking products, longer travel times between the product and its destination, and more server space to store erroneous data. Poor supply chain management can also hamper quality control efforts, leading to more returns and dissatisfied customers. In this stage, the supply chain data analytics software development experts would help you to choose the AI tools and methods compatible with your goals and available data. This could involve identifying the right AI technologies like robotic process automation, computer vision, natural language processing, machine learning, or predictive analytics.

ai for supply chain optimization

How AI can optimize supply chain?

AI can be used to manage large amounts of supply chain data and to analyze it, identifying trends and making predictions about future concerns. AI systems are fast, efficient, and tireless, making it possible to improve efficiency in a supply chain, reduce the need for human work, improve safety, and cut costs.