FEATURE Supply chain, packaging & logistics
AI in supply chain management
Colin Koh, Senior Business Development Manager at LKH Precicon, explains how AI is changing management of the supply chain in Asian countries
A
rtificial intelligence (AI) creates new opportunities and challenges in supply chain management
(SCM). In Asian countries it is used to streamline processes, reduce costs and improve decision making. However, there are also concerns about data security and the impact of AI on jobs.
Opportunities
One of the biggest opportunities that AI brings to SCM is the ability to automate tasks. For example, automated machine learning can identify patterns in data set, which are then used to predict demand, plan production schedules and optimise processes. Automation can also improve communication between different parts of the supply chain. For example, AI-embedded robotic process automation streamlines and automates documents and other processes, with chatbots providing customer service or tracking shipments.
Another opportunity that AI brings to SCM is the ability to make better decisions. AI can quickly analyse
20 October 2023 | Automation
vast volumes of data and identify trends that people might miss. So, for example, AI can be used to predict consumer behaviour, assess supplier risk or forecast demand. This information can then be used to decide pricing, inventory levels or which suppliers to use that transit from “push” to “pull” supply chain strategy, yielding cost savings and reactions in real time.
Challenges
One of the challenges of using AI in SCM is data security, however. SCM relies on sharing data between different parts of the supply chain. If this data falls into the wrong hands, it could be used for malicious purposes such as fraud or theft.
Another challenge is that AI is still a
relatively new technology, and skilled workers need help to develop and maintain AI systems. Also, there’s a skill shortage at present globally, which could lead to higher costs as businesses compete for scarce resources. Another challenge related to using AI in SCM is its impact on jobs. This
is because AI can automate tasks traditionally done by people. This could lead to job losses in the short term as businesses seek to cut costs by using more machines instead of human workers. However, new jobs will likely be created as companies adopt more AI that replaces repetitive work with higher cognitive activities.
Based on all these challenges, small- to medium-sized businesses may find adopting AI daunting – but, it’s not impossible.
Overall, the benefits of using AI in SCM outweigh the challenges. Still, businesses must carefully consider how they implement AI into their operations to reap all the rewards by considering the benefits versus the return on investment in the long run. Doing it right will allow Asian busininesses to level its capability and move up the global value chain in the coming decades.
CONTACT:
LKH Precicon
www.precicon.com.sg
automationmagazine.co.uk
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