As unpredictable world events highlight supply chain weaknesses, retailers and suppliers can leverage artificial intelligence (AI) technology to effectively respond.
Chain Store Age recently spoke with Jonathan Wright, IBM managing partner & global VP for supply chain consulting, about how retailers and their supplier partners can take advantage of leading-edge AI and machine learning (ML) solutions to obtain the deep insight needed to tackle the growing prevalence of supply chain disruptions spurred by COVID-19, the Suez Canal accident, and security breaches.
What supply chain vulnerabilities have COVID-19 and the Suez blockage exposed?
The key vulnerabilities were around control and being able to sense and respond at pace. Both of these unforeseen crises highlighted the need to address structural issues in supply chains. These issues are currently being amplified, as industry leaders now face a new paradigm where consumer demands and expectations are soaring, while suppliers are still challenged by the ripple effect of COVID-19 on things like labor shortages, raw material availability restrictions, and the impact of unbalanced global supply flows. The end result of these issues amounts to escalating costs and product shortages.
To have control and to be able to sense and respond, we must build more intelligence into our now complex multi-faceted supply chains. We have historically lacked visibility and relationships across multiple tiers and across the partner networks. We lacked real-time information around orders and shipments and we lacked the predictive modeling capability that is readily available on both the supply and demand side of the supply chain.
In addition, we are now seeing the security vulnerabilities with increasing threat of cyberattacks. Security professionals have acknowledged the critical nature of global supply chains, and the dangers associated with remaining open to ransomware attacks on critical suppliers and infrastructure providers.
That said, I am excited about the future. We now have a seat at the executive decision-making table. The world is interested in supply chains and I see significant momentum across markets and growing consumer demand is contributing to the urgency to facilitate the digital reinvention of supply chains – moving to what I call “intelligent workflows.” In other words, the need to use artificial intelligence (AI) and machine learning (ML) to predict supply and demand while automating workflows.
What advantages do AI/ML technologies offer retailers and their suppliers?
The biggest advantage of AI/ML is to bring out the best in our already pressured workforce. We can leverage this technology to inform, engage and empower individuals. We can bring the virtual assistance from home into the workplace and have Watson (IBM’s AI platform) be able to analyze vast amounts of data from multiple sources in microseconds. With emerging technologies like AI, ML and automation, companies can bring together the best skills, capabilities and insights from the business and their IT sectors.
We can leverage core ERP data, internal data and external ecosystems – and create intelligent workflows that drive insights and business value. Agile technologies, including edge, Internet of Things (IoT), and blockchain), can address immediate needs including optimizing container shipping, reducing inbound supplier calls, increasing collaboration and improving demand forecasting. They can also accelerate organizations’ forward-looking focus on their journey toward strengthening resiliency.
Intelligent workflows are built on a clear data strategy, combining AI, ML, and automation before integrating into current and future IT architecture to facilitate horizontal integration across functions, necessary adjustments and 360-degree visibility of supply chains and potential disruptions. Transforming supply chain processes into intelligent workflows will enable enterprises to reach new levels of transparency, flexibility and responsiveness by innovating to meet clients’ evolving needs.
How should a company go about launching or upgrading an AI program in their supply chain?
This really depends client-by-client and where they are in their journey to modernize their supply chain and their technology landscape. It is critical to adopt an agile mindset and to drive quick wins and immediate business value, whilst heading to a clear, cloud-based North Star. I am also a huge fan of leveraging process mining to uncover the facts around existing processes, transactions, and quantifying and showing the true process inefficiency in the supply chain.
What should a retailer look for in an AI technology solution or service?
In a nutshell, business value. A recent study, the Global AI Adoption Index 2021, conducted by Morning Consult on behalf of IBM, revealed that AI is already changing the way businesses operate today, from how they communicate with their customers via virtual assistants, to automating key workflows, and even managing network security.
Some noteworthy highlights from the “Global AI Adoption Index 2021” that I think reveals what our customers are saying include that almost one-third of companies reported using AI in their business. One-third of global IT professionals report their company plans to invest in both skills and AI solutions over the next 12 months.
In addition, 80% of companies are already using automation software or plan to use this technology in the next 12 months, and for more than one-in-three organizations, the pandemic influenced their decision to use automation to bolster the productivity of employees, while others found new applications of this technology to make themselves more resilient, such as helping to automate the resolution of IT incidents.
It is also worth mentioning that almost half of businesses today are now using applications powered by natural language processing (NLP), and one in four businesses plan to begin using NLP technology over the next 12 months. Customer service is the top NLP use case, with 52% of respondents reporting that their company is using or considering using NLP solutions to improve customer experience.