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03/11/2022

How AI, control towers and robotics can help combat inflation

Shri Hariharan
Corporate VP of industry strategies, Blue Yonder
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Intelligent technologies can help mitigate the enterprise impact of inflation.

Inflation is a serious concern for U.S. consumers, with prices reaching a new high in January.

With no sign of inflation slowing down, retailers need to be informed on which items will see a price hike, what’s causing this, and how they can use technology and other solutions to reduce the impact of inflation.

Consumer goods will see a price hike
Across the board, goods including everyday staples across CPG, food and beverage, and home and garden are seeing an increase in price. Strains on the semiconductor supply chain are also causing prices across home appliances, consumer electronics, and automobiles to rise, as well.  

There are several factors that contributed to the inflation problem we’re now witnessing. For starters, there was a pent-up demand that built up over the course of the COVID-19 pandemic, and once discretionary spending from savings, stimulus checks and tax breaks relieved some of this demand, consumers started spending their funds in alternate areas. The ongoing demand-supply imbalance due to logjams and the workforce shortage is only adding fuel to the fire.  

In light of the current situation in Ukraine, consumers can expect to see a variety of commodities impacted, leading to material shortages and cost increases in grains as well as a variety of raw materials and chemical products.

One chemical product that holds significance is neon gas, which is used to make semiconductor chips that are already facing shortages, Russia supplies a giant share of neon gas, and this could now be at risk without stable and predictable alternate supply sources.

Technology enables retailers to get ahead of inflation
The good news is there are innovative technologies available that can help supply chains apply data-driven techniques to anticipate, plan and orchestrate operations to overcome the disruptive effects such as the current global inflationary conditions.

Pent-up demand is one of the fundamental forces driving inflation. With artificial intelligence (AI) and machine learning (ML)-enabled demand planning solutions, retailers and manufacturers can better predict where there will be demand, as well as where inventory should be placed to streamline their supply chains.

Through predictive and prescriptive analysis powered by demand and supply sensing, companies can learn from what happened in the past and determine the root causes of demand planning challenges, setting themselves up for success in the future.

Real-time visibility across the supply chain can also be applied to tame the cost-to-serve and cash-to-serve operational levers. To stay ahead of supply chain complexities, businesses need to be able to manage what they don’t see, plan for what they don’t know, and quickly prioritize resolutions based on data patterns and outcomes.

Technologies such as control towers that have an AI/ML backbone to power end-to-end visibility into supply chain allow businesses to understand, act, and learn on real-time information, such as shipping delays, inventory production capacity and sales. 

Furthermore, there are proven lighterweight, micro-service-based capabilities in order orchestration that can drive the most optimal available-to-promise, order commits and sourcing processes. This allows companies to maximize revenue and profits by applying segmentation into order promising and allocation functions.

Not stopping there, retailers can connect these decisions to logistics and fulfillment operations, providing customers the “WISMO” (Where is my Order) visibility through fulfillment. These micro-services are deployable in a matter of weeks. 

Within logistics networks, robotics is allowing retailers to keep up with the more complex processes in warehouses. By augmenting legacy operations with a cognitive tasking engine, as well as inter-operable robotics platforms, leaders can make faster decisions that can help solve process and workforce challenges.

Retailers can also re-prioritize where they are allocating their employees’ time and efforts to the most critical aspects of their processes while allowing for flexibility, training, and continuous improvement.

Technology isn’t the only solution
There are additional options outside of technology that businesses can implement into their operations to combat the effects of inflation. For example, incorporating transparency, collaboration, flexibility, and agility will be key in adapting to the dynamic nature of inflation.  

When re-evaluating processes, organizational leaders can also examine how they are engaging their employees and make necessary changes to improve their learning and development through more consumable training and prioritizing career growth opportunities.

And developing the skills of the workforce and investing in long-term career opportunities will allow the whole organization to operate more effectively, therefore reducing costs and enabling the business to lower prices and combat inflation.

Meanwhile, consumers are increasing their expectations of the sustainability efforts of the businesses they buy from. With improved insights into supply and demand, organizations can also better understand and improve their reverse supply chain while incorporating the “3Rs” (reduce, reuse, and recycle) into their operations. By re-using and re-introducing lightly-used products that more and more consumers are willing to try, demand can be met sooner.

Retailers also have the potential to minimize carbon footprint by reducing the amount of materials used or transported by recycling materials, which is a goal of many organizations.

As inflation continues to rise, it's important for retailers to be aware of which products they can anticipate will see a price hike, and what solutions are available. It’s clear that technology will play a key role, because it allows retailers to predict demand and understand the impact of their decisions faster so they can learn more effectively. Retailers that integrate technology, as well as create operating models based on transparency, collaboration, flexibility, and agility will set themselves up for long-term success.

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