FORKLIFT TRUCKS
SUPPLY CHAIN SOLUTIONS
SAVING THE SUPPLY CHAIN THE IMPACT OF ARTIFICIAL INTELLIGENCE A
s manufacturing output falls to its lowest rate since the height of the pandemic, the industry is once again feeling the impact of global economic shortages. Currently, one of the largest contributors to this problem is the unpredictability of the supply chain. Since the war in Ukraine began to sever key supply lines for essential resources, global shipping costs have continued to rise alongside skyrocketing fuel prices – all of this on top of the supply implications of post-Brexit red tape. With such limited data on consumer demand to guide manufacturers’ next steps amidst these disruptions, it is essential that global businesses make investments that increase visibility and reduce uncertainties in years to come.
ARTIFICIAL INTELLIGENCE AS A SUPPLY CHAIN SOLUTION From the factory floor to the front door of the delivery location, the reason that artificial intelligence (AI) has a significant impact on the supply chain is due to its ability to simulate the entire chain from beginning to endpoint. This ability has led supply chain organisations to expect the level of machine automation in their supply chain processes to double in the next five years. Likewise, Gartner predicts that between 2018 and 2024, global spending on Industrial Internet of Things (IIoT) platforms will achieve a 40% compound annual growth rate. Given that recent research also found that 61% of executives have experienced decreased costs after introducing AI into their supply chains, and more than 50% report increased revenues, this is not a surprising projection.
HOW DOES IT WORK? There are several applications for AI software at different stages of the manufacturing supply chain. Let’s uncover how this technology leads to increased business agility, reduced shipping costs, and reduced manual work.
AI IDENTIFIES THE WEAK LINKS IN SUPPLY CHAINS
One of the fundamental issues in the current global supply chain crisis is weak supplier relationship management (SRM). During the pandemic, many of the supply stoppages experienced, such as those in the food and automotive industries, were caused by severe disruptions due to inadequate communication with suppliers.
However, AI-backed SRM software can be used Colin Crow
Managing Director Nexer UK
to source suppliers based on influential factors, including supplier performance, collaboration and rankings, historical purchase history, and even sustainability. By enhancing the visibility of these factors, SRM software ensures that manufacturers are purchasing from reliable suppliers to increase their operational resilience.
Furthermore, this technology can be extended to increase the speed at which manufacturers ship their products. By identifying shippers that slow down the supply chain, they can remove those that are unable to keep the necessary pace and replace them with a more efficient shipping partner.
DEMAND FORECASTING CAPABILITIES
AI technology, such as machine learning algorithms, can be used to accurately predict changes in consumer demand. Rather than trying to calculate how busy they might be throughout a specific period, these algorithms can assist manufacturers to plan for fluctuations and predict their supply chain costs by using historical data and previous trends to provide a realistic picture of demand. In practice, the technology tracks various parts of the chain, including how much stock is available, when this will run out, and sales fluctuations. According to McKinsey, companies that utilise AI-powered forecasting can reduce their supply chain errors by up to 50%. At the same time, demand forecasting increases manufacturers’ agility and inventory management.
AUTOMATION
Across the supply chain, transportation, and the warehouse, AI-backed automated processes are transforming shipping operations. Even the most basic tasks can impact on the overall success of the supply chain. As an example, the simple human error of failing to correctly distribute an
44 SEPTEMBER 2022 | FACTORY&HANDLINGSOLUTIONS
invoice or failing to pay a vendor on time due to insufficient reminders can consequently impact on the shipment and production of a product. However, due to its ability to carry out repetitive, often error-prone, and, depending on the depth of the software, somewhat technical tasks automatically, automation reduces the occurrence of these back-office and document processing mistakes. As a result, this technology also helps to drive efficiency and productivity gains beyond the supply chain and throughout the organisation, and reduces the necessity for manual human work.
WHY INVEST NOW?
Understandably, manufacturers and several global industries are concerned with the speed at which supply chain disruptions have impacted their productivity and ability to operate. As the volume and variety of these disruptions means its impact is unlikely to subside soon, manufacturers are left with little choice other than to make investments that will fight against uncertainties in the coming years. Particularly against the backdrop of inflationary pressures, manufacturers’ resilience to withstand supply chain disruptions is not only a crucial factor in their ability to keep up with mounting competition, but also towards their mere survival. By investing in AI-powered technology, manufacturers will be better equipped to fulfil this goal and the secure invaluable data-driven insights that are necessary to ease today’s supply chain challenges.
Due to the nature of AI meaning that the technology improves over time, the sooner manufacturers advance their supply chain operations, the sooner they build a defence to current and future constraints.
Nexer UK
www.nexergroup.com 39
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