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The recent dockers strike has threatened to wreak havoc on American retail as the holiday shopping season approaches. This was a projected multibillion-dollar spinoff, according to JPMorgan. estimate the economic loss is between $3.8 billion and $4.5 billion per day. Coming into a key period for retail sales, this strike could have been crushing for the industry if it had not been handled so quickly. As one of the latest “black swan” events to upend global supply chains, it has also reignited the debate on supply chain planning and brought the importance of information back to the forefront in real time.
This is where advancements in AI can be hugely beneficial to businesses across industries and geographies. Intelligent tools, clean data and automation provide the visibility needed to respond to disruptions in real time. Like Deloitte declaredAI is a transformative technology for today’s supply chain managers. This is moving the industry towards a future where companies can work around problems and overcome challenges before it impacts profitability.
Without leveraging AI and the latest technologies, even the best-laid plans are not as resilient as they should be. Companies therefore risk becoming easy targets when – not if – the next unforeseen event occurs. Let’s explore how AI can support supply chains in the face of disruption.
The impact of AI on supply chains
As history has shown us, businesses are vulnerable to natural disasters, geopolitical issues, or unprecedented global events. Even though these events more often affect complex supply chains, that doesn’t mean these situations won’t impact businesses of all sizes. There are some key means businesses today are using AI to support and strengthen supply chains:
Planning and mapping
A robust database powering AI is essential for accurate and impactful decision-making and efficiency, and for the supply chain, it has the power to transform while anticipating, mitigating and reducing challenges and impacts negative. In terms of planning, it’s AI’s ability to quickly process huge amounts of data – both structured and unstructured – that improves forecasting. With more accurate forecasting, functions such as production and inventory management can be optimized to avoid stock-outs and efficiently manage product movements. For businesses with multiple locations, this can become a key competitive advantage.
When mapping supply chains, it is essential to understand the relationships between the entities and functions that make up each infrastructure, as they are essential for resilience. New advances in AI – such as processing unstructured data with structured data while eliminating silos – are making a huge contribution to this. When dealing specifically with global supply chains, for example, records such as freight bookings and customs declarations are often documented in multiple languages and in all types of formats. AI can unlock and digest the relevant data in each of these documents to help businesses operate and communicate effectively and efficiently.
Supply and demand
Where AI really shines is in detecting changes in demand in real time. It can look at things like point-of-sale data as well as unstructured information like social media chatter and gain insight into unusual changes in demand. These changes in demand can come from a number of factors such as product issues, new competition, viral promotions on social media or even other unique situations like panic buying ahead of impending weather events like hurricanes, forest fires or snowstorms. AI is also valuable for its ability to provide real-time data on traffic conditions at different ports and warehouses that are crucial to supply chains. By using AI to help identify the heart of demand issues and current opportunities, organizations can respond faster and more accurately than ever before.
Respond to disruptions with real-time solutions
That’s what it all comes down to, and that’s where businesses rise and fall: in terms of speed and responsiveness to disruption. AI improves resilience to risk. Not only can businesses detect a problem quickly with AI, but it also gives them more options for response strategies by running simulations. For example, AI can use company data, weather conditions and real-time signals on port traffic to advise shippers on alternative means and the costs associated with each choice. This takes a static response plan and makes it truly dynamic by showing businesses the impact and recovery time of each scenario presented, whether it be price adjustments to be made or even a change in course on suppliers.
Building stable supply chains
The recent dockers’ strike is just another reminder that “black swan” events are inevitable. It reminds supply chain operators that adopting AI and the innovative capabilities it offers is a critical strategy for the future and is best embraced. Before the next event will inevitably take place. Continued advancements in AI and new use cases throughout the supply chain hold tremendous promise, particularly amid the uncertainty that continues to prevail in the global economy.