A major outcome of COVID-19 is the need for companies to know so much more about their supply chains and to be ready for the unexpected.
The outcome – a new era of intuitive supply chains driven by data and digitisation – according to Chris Mills, Regional Managing Director, Transportation for Western Europe at global logistics platform provider, C.H Robinson.
Whilst unprecedented, the coronavirus has caught supply chains napping around the world – from a too heavy reliance on certain territories for the source of goods, to too little visibility across multi-tiered supply networks and insufficient data intelligence to inform high speed decision making.
At the same time the emergency response to COVID-19 has further strengthened the case for artificial intelligence. We’ve heard how researchers from Fudan University in Shanghai has used COVID-19 as a case study to test and prove the capability of AI in making real time predictions. The World Health Organisation has said that AI and big data were a key part of China’s response to the virus. Leaders representing major brands in computing, social media and smart phones met officials at Downing Street to discuss their role in the Coronavirus in terms of modelling and tracking data. Whilst the NHS turned to artificial intelligence to help predict demand for intensive care beds and ventilators allowing hospitals to plan ahead by being notified in advance when capacity would be reached, allowing extra resources to be brought in.
By revealing risks and weaknesses in existing supply chains and proving the value of AI through managing the emergency needs of the pandemic, the coronavirus will likely act as the trigger to a major step change in the way companies go about logistics – one that we predict will lead to a new era of intuitive supply chains.
So, what does an intuitive supply chain look like?
It is ultra-intelligent due to its innate ability to draw upon and analyse major quantities of data across business functions, suppliers and competitors thanks to artificial intelligence. It intuitively reads all types of situations, from predicting the unpredictable to instantly responding to fluctuations in demand through understanding changing consumer behaviours and buying patterns. The intuitive supply chain can even respond to weather and political conditions before they occur.
It’s super intelligent powers will also support end-to-end supply chain visibility, the lack of which has caused many challenges during the coronavirus outbreak. It will do this by delivering insights at scale providing a deep understanding of multi-tiered supplier networks, the goods that pass through them and stock levels held at key points at warehouses, point of production or at the retail end. This enhanced visibility will mean that supply chain leaders can intuitively make contingency plans in response to unforeseen events whether they be internal (a fault on a production line) or external (delayed shipments).
The intuitive supply chain also takes advantage of combining artificial intelligence with the internet of things to extend the possibilities of best practice logistics management, such as monitoring the physical impact of goods in transit covering such aspects as shock, tilt, humidity, light, temperature and pressure which will alert them to potential spoilage, damages and goods tampering. This takes customer experience to a whole new level and drastically reduces costs associated with damaged and spoilt goods.”
The supply chain of the future will be all about predict and prevent rather than its predecessor which focussed on track and trace.
In the warehouse the introduction of AI will work out how to perform tasks and get around the facility in the least time. It will plan paths for the movement of goods to maximise throughput. SKU lots will also be optimally positioned. Goods that need to be picked up at the same time will automatically be identified. The combined data that can be assimilated across the supply chain at great speed will ensure that overstocking and understocking will be avoided.
AI is at the heart of our Navisphere system working with machine learning algorithms to harness the power of more than two petabytes of data in informing strategic decision making, supporting global visibility across multi-modal transportation networks to deal with any eventuality and providing the ability to plug inefficiency gaps to enhance freight flows and reduce costs. It fully integrates with customers’ own systems and through various functions and application programming interface (API) technology it can pull in data from carriers, customers and other external sources, such as road data, weather forecasts and traffic reports.
Fulfilment, procurement and production operations can access the information live on Navisphere and adapt their own processes at an early stage. For example, production departments benefit from receiving precise information on when the ordered supplies arrive at the company. Internal logistics and production processes can in turn be coordinated and optimized accordingly.
Recent introductions include a benchmark tool that enables customers to alter lead times and volumes and thereby reduce costs and improve dwell times/on time performance. Currently development is focused on providing insights which can improve the carbon footprints of supply chains.
Through the AI-driven intuition of Navisphere we’ve reduced a 56-day order cycle to 20 days or less. A customer has been able to reduce air freight shipping costs by 85%, while two customers from the manufacturing industry have saved on shipping costs 50% and 20%, respectively. At the same time, one of our biggest clients, a leader in the FMCG world, has reduced their transportation budget and cut the total weight and volume shipped by 65% due to added visibility, efficiency, and up-front planning.
It was revealing when in late February and early March during the coronavirus the Institute of Supply Management carried out one of its monthly economic surveys which found that nearly three quarters of companies it contacted reported some kind of supply chain disruption, with 44% admitting they didn’t have a plan to deal with it.
Prior to the coronavirus, Gartner predicted at least 50% of global companies would use AI related transformational technologies in supply chains operations by 2023. That could be significantly more now in the wake of coronavirus as companies look to implement it at pace and others are encouraged to start seriously investing in it. It is no longer a luxury but a necessity. – and with-it becoming part of the new normal logistics, an era of intuitive supply chains will be born.