Supply chains are complex and difficult to manage. When something goes wrong, such as a container ship being delayed or a force majeure situation arising at a supplier’s factory, it can disrupt the entire supply chain. AI-enabled supply chain planning tools allow managers to quickly assess the impact of unplanned disruptions, find solutions and develop alternative plans.
The primary benefit of generative AI in supply chain planning, together with machine learning and predictive analytics, is the ability to analyse complex supply chain data. AI-powered supply chain tools excel in finding the most effective solutions based on sales, manufacturing or logistics requirements.
AI-powered tools can handle complex, large and diverse supply chains. Working alongside conventional supply chain software, AI improves resiliency, helps forecasting and reduces costs. Integrating generative AI into your supply chain operations is simpler than you might imagine.
Transforming Operations with Generative AI
Generative AI (GenAI) is based on large language models (LLMs) trained on massive amounts of data. Unlike conventional AI, it doesn’t require explicit programming to analyse data. You can feed a data set into a GenAI program and analyse it using natural language prompts.
GenAI can also analyse unstructured data, such as emails, reports and images, to figure out what people are saying. For example, you can use GenAI to examine customer reviews and identify desired enhancements.
Benefits of Generative AI in Supply Chain Management
Generative AI doesn’t need specific training, and it can analyse data from user prompts. However, GenAI needs guidance, or it may hallucinate or provide incorrect answers. In practice, developers use an LLM such as ChatGPT as the basis for a GenAI tool specifically focused on solving specific supply chain problems. It’s faster, less expensive and retains the ease of use of standard generative AI.
Some ways generative AI transforms supply chain operations include:
- Automation. Generative AI can automate routine tasks and processes, eliminating tedious work and freeing employees to focus on more productive tasks.
- Speed. It can analyse and identify trends in complex data to help supply chain managers make informed decisions faster.
- Transparency. Generative AI can analyse data much faster than a person. You can use GenAI to create customisable reporting dashboards that provide insight into day-to-day operations.
- Data cleansing. It can clean data sets by quickly identifying erroneous, implausible or missing data. This includes the removal of duplicates, standardising customer names and correcting address errors.
- Identify outliers. Generative AI can detect anomalies or outliers found in all datasets. These outliers may represent errors or be significant information.
- Utilise external data. It can use external data from any source to enrich the analysis. Examples include economic trends, commodity prices and inflation.
Strategic Benefits of AI Integration
As companies seek better ways to cope with the effects of unplanned change and disruption, AI tools can help predict the impact of these changes and identify ways to adapt. The benefits of leveraging AI in your supply chain include:
- Cost reduction. AI tools help reduce costs by revealing inefficiencies and bottlenecks in the supply chain and help determine optimal inventory levels based on forecasts.
- Improved forecasting accuracy. Using predictive analytics, operations managers can predict sales demand more accurately. These tools can also guide strategic decision-making through the ability to evaluate various scenarios.
- Supply chain resilience. With generative AI, supply chain managers can monitor supply chain resilience and receive automated alerts of external events that may cause disruption, such as inclement weather, natural disasters or labour disputes.
- Sustainability. AI helps improve sustainability and resource utilisation in real time by monitoring and optimising energy usage in factories, transportation and warehousing.
- Waste reduction. AI manufacturing and monitoring systems reduce waste by identifying product variations and defects in a timely manner.
- Scenario planning. GenAI and predictive analytics help planners evaluate scenarios quickly and accurately to determine the best options.
Leveraging Existing Technology with Bolt-Ons
A bolt-on solution is an artificial intelligence package specifically designed to enhance legacy warehouse management, supply chain planning, inventory management and transportation management systems. At enVista, we specialise in integrating AI solutions through our AI bolt-on technology, providing a straightforward and efficient path to modernise your operations.
Benefits of Bolt-On Solutions
Benefits of choosing a bolt-on AI solution include:
- Customisation. A bolt-on solution lets you effectively customise legacy ERP or supply chain software to suit future business requirements. You can also customise the bolt-on package to suit the way the organisation works.
- Scalability. Bolt-ons are inherently scalable to suit business growth and change. Although cloud-based, they’re fully compatible with on-premises legacy planning solutions.
- Cost-effectiveness. The total cost of adding a bolt-on package is significantly lower than rewriting the software or replacing it with a newer version with AI features. It’s unlikely that new software would incorporate the same AI features as the bolt-on.
- Speed to ROI. A bolt-on solution doesn’t require significant modification to your systems. Although it’s still necessary to configure the bolt-on package and apply a degree of customisation to suit the host software, installation takes a fraction of the time of a major software revamp, and you start getting a return on investment sooner.
- Compatibility with host ERP systems. Bolt-on solutions are fully compatible with ERP solutions from most major vendors.
- Interoperability. Bolt-on solutions work with most third-party vendor software. Built using a microservice architecture, bolt-on solutions are cross-domain compatible.
How AI Powers Key Supply Chain Functions
AI drives several critical supply chain functions, including:
- Demand forecasting: AI can combine unconventional data sources to create a more comprehensive and accurate demand forecast. Apart from traditional sales data, AI demand forecasting can incorporate market trends, shifts in consumer preferences, demographics and social media trends.
- Inventory optimisation: AI-powered inventory optimisation tools surpass many traditional inventory systems to better predict seasonal changes, shipping lead times and actual sales trends. In manufacturing, AI forecasting tools can predict potential stockouts earlier than is possible with manual inventory solutions.
- Predictive maintenance: With the help of IoT sensors, predictive maintenance uses machine performance data, such as running hours, scrap rates, operating temperature and system pressures, to determine when the machine needs maintenance and provide early warning of impending failure.
- Dynamic pricing and procurement: AI-driven dynamic pricing can determine the expected demand at any time and adjust competitive pricing to maximise sales.
- Order fulfilment: AI algorithms can ensure adequate stock is in the right place at the right time, whether it’s in a retail store or an online warehouse.
Challenges of Implementing AI in Supply Chain Planning
Some of the challenges of implementing system-wide AI include data silos, implementation costs, resistance to change and a talent gap.
Data Silos
Many legacy supply chain systems are fragmented with separate software packages for each supply chain function, making it difficult to obtain a complete, real-time overview of the supply chain.
AI can create a functional model of the organisation, pulling information from various data stacks in the organisation to create a single source of truth.
Cost of AI Implementation
The cost of implementing AI is often high, especially when using traditional modelling methods, which require significant development and verification processes. Using bolt-ons reduces these costs because much of the hard work has already been done.
When evaluating the financial viability of AI in your supply chain, consider that ROI often far exceeds initial implementation costs.
Change Management
Avoid resistance to the new technology by bringing your team on board early, showing how AI can improve performance and reveal hidden opportunities. A comprehensive change management program helps ensure buy-in and improve adoption rates.
Talent Gap
Many companies lack adequate in-house AI talent, and the shortage of AI skills is expected to worsen before it gets better. enVista delivers AI solutions that can accelerate results for your organisation.
Preparing Your Supply Chain for AI Adoption
Before implementing AI in your supply chain, review your current systems, focusing on their strengths and weaknesses. Identify how systems are linked and how your supply chain data flows, especially those requiring manual inputs.
1. Conduct a Data Audit
Review the quality of your data. If it contains multiple errors, duplications or missing data, you may need to perform a data cleanup. This check should be exhaustive, as you’ll only benefit from AI if you have high-quality data. You may need help cleansing data.
2. Identify High-Impact Use Cases
Identify one or, at most, two use cases with high ROI. These should be instances where you know you have the data, but you don’t have the right tools to leverage it.
3. Choose Agile Pilot Programs
Look for existing solutions that can be adapted to your organisation, as these will provide faster results and require less changes to the organisation.
4. Evaluate AI Solution Providers
Only consider solution providers who have a strong track record implementing AI bolt-on type programs. Verify that the provider has experience integrating AI solutions into your existing supply chain software.
Implementing AI With enVista
At enVista, we’re committed to enhancing operational efficiency through AI-driven solutions. Our expertise in integrating AI bolt-on enhancements ensures your business processes are optimised with minimal disruption. By partnering with enVista, you can leverage the full potential of generative AI to transform your supply chain operations.
Discover how enVista can tailor AI solutions to meet your specific operational needs. Contact enVista today for more information on our AI solutions and integration services. We’ll help you unlock the full potential of your supply chain with advanced AI technology.
