1.

IT in supply chain

● Procurement Cycle
Selection of vendors:
 2. AI in supply chain

Artificial Intelligence is an intelligence displayed by machines, in which, ​learning and

action-based capabilities mimic autonomy ​rather than process-oriented
intelligence.
The simplest way to understand the potential application of AI is to clearly define it’s
potential value-added.
Introduced by Gartner Analyst, Noha Tohamy, at Gartner’s Supply Chain Executive
Conference, AI was broken down into two categories:

● “Augmentation​: AI, which assists humans with their day-to-day tasks,

personally or commercially without having complete control of the output.
Such Artificial Intelligence is used in Virtual Assistant, Data analysis,
software solutions; where they are mainly used to reduce errors due to
human bias.
● Automation​: AI, which works completely autonomously in any field
without the need for any human intervention. For example, robots
performing key process steps in manufacturing plants”

How can AI be applied within SCM activities?

1. Chatbots for Operational Procurement:

Streamlining procurement related tasks through the automation and

augmentation of Chabot capability requires access to robust and intelligent data
sets, in which, the ‘procuebot’ would be able to access as a frame of reference; or
it’s ‘brains’

As for daily tasks, Chatbots could be utilized to:

 ● Speak to suppliers during trivial conversations.
● Set and send actions to suppliers regarding governance and compliance
materials.
● Place purchasing requests.
● Research and answer internal questions regarding procurement functionalities or
a supplier/supplier set.

2. Machine Learning (ML) for Supply Chain Planning (SCP)

ML, applied within SCP could help with forecasting within inventory, demand and
supply. If applied correctly through SCM work tools, ML could revolutionize the ​agility
and​ optimization​ of supply chain decision-makin​g.

By utilizing ML technology, SCM professionals — responsible for SCP — would be giving

best possible scenarios based upon intelligent algorithms and machine-to-machine
analysis of big data sets. This kind of capability could ​optimize the delivery of goods
while balancing supply and demand, and wouldn’t require human analysis, but
rather action setting for parameters of success.

3. Autonomous Vehicles for Logistics and Shipping

Intelligence in logistics and shipping has become a center-stage kind of focus within
supply chain management in the recent years. Faster and more accurate shipping
reduces lead times and transportation expenses​, adds elements of
environmental friendly operations, reduces labor costs, and — most important of all —
widens the gap between competitors.
If autonomous vehicles were developed to the potential — that certain business analysts
and tech gurus have hypothesized — the impact on logistics optimization would be
astronomical.

4. Natural Language Processing (NLP) for Data Cleansing and Building Data
Robustness

NLP is an element of AI and Machine Learning, which has staggering potential for
deciphering large amounts of foreign language data in a streamlined
manner.

NLP, applied through the correct work took, could build data sets regarding suppliers,
and decipher untapped information, due to language barrier. From a CSR or
Sustainability & Governance perspective, NLP technology could streamline auditing and
compliance actions previously unable because of existing language barriers between
buyer-supplier bodies

5. ML and Predictive Analytics for Supplier Selection and Supplier

Relationship Management (SRM)

Supplier selection and sourcing from the right suppliers is an increasing concern for
enhancing supply chain sustainability, CSR and supply chain ethics. Supplier related
risks have become the ball and chain for globally visible brands. One slip-up in the
operations of a supplier body, and bad PR is heading right towards your company.

Data sets, generated from SRM actions, such as supplier assessments, audits, and credit
scoring provide an important basis for further decisions regarding a supplier.
With the help of Machine Learning and intelligible algorithms, this (otherwise) ​passive
data gathering could be made active.

Supplier selection would be more predictive and intelligible than ever

before​; creating a platform for success from the very first collaborations. All of this
information would be easily available for human inspections but generated through
machine-to-machine automation; providing multiple ‘best supplier scenarios’ based on
whatever parameters, in which, the user desires.

One could hypothesize that SCM is a part of the value chain that would be heavily
impacted by AI implementation, for the better and the worst. Of course,
augmentation and automation raise security and safety concerns for IT
infrastructure and human life​.

But, something that is potentially even more threatening to business: ​AI

implementation will begin replacing jobs.

“Four years ago, an Oxford University study predicted 47% of jobs could be automated
by 2033. Even the near-term outlook has been quite negative: A 2016 report by the
Organization for Economic Cooperation and Development (OECD) said 9% of jobs in
the 21 countries that make up its membership could be automated. And in January
2017, McKinsey’s research arm estimated AI-driven job losses at 5%”.

These numbers are tough for most to accept, but the true future of business lies within
machine-to-machine work; the automation of — currently — human manned-positions.
 Areas in Supply Problem which can be How from AI example
Chain addressed

Inventory control expected customer Such an ability 1. Recognising this

and planning demands, the size and can be potential, Allen (1986)
type of inventory at enhanced by the developed an expert system
hand and the amount presence of called the ​Inventory
of order cycle time to accurate, Management Assistant
fulfill the customer real-time (IMA) that was designed to
order is often difficult information aid the US Air Force
to estimate, predict about expected Logistics Command in
and obtain, traditional customer replenishing various types
decision rules based demands​, the of spare aircraft parts and
on mathematical size and type of reducing safety stocks. The
models such as inventory at IMA was reported to
economic order hand and the improve the effectiveness
quantity cannot amount of order of inventory management
reflect the very cycle time to by 8–18% by reducing the
essence of inventory fulfill the inventory errors.
management customer order. 2. Another intriguing
application of AI
techniques to inventory
control and planning
includes ​fuzzy logic​ rules
to make online, intelligent,
airline seat inventory
control decisions as to
whether to accept or reject
any passenger request for
seating arrangements.
Transportation This class of ant colony optimisation
network design problems include: the algorithm​. This algorithm
TSP, the vehicle has been applied
routing and successfully to handle well
scheduling problem, known network design
the minimum problems such as the TSP,
spanning tree the vehicle routing
problem, the freight problem, and the minimum
consolidation spanning tree problem
problem, and the
intermodal
connection problem.
Other related
problems include:
road network design,
gas distribution
pipeline network
design, parking space
utilisation, traffic
assignment, and ramp
metering in freeway
networks

Purchasing and What volume of intelligent

supply goods does the software agents
management company expect to that could
produce? automate the
How much capital processes of
investment is needed searching for
to produce goods or prospective
render services? suppliers
How much risk is through online
involved in catalogs,
developing new evaluating
products or suppliers with
innovating respect to
technology to stay multiple
attributes,
 competitive in the screening
market? qualified
suppliers and
completing the
purchase order

Demand Given the volatile In contrast to exponential

planning and nature of future smoothing, which merely
forecasting demand coupled with relies on historical data, the
the varying degree of dynamic pattern matching
uncertainty and procedure utilised multiple
variability associated agents to capture past
with such demand, it (base-line agent), current
has been a daunting (causal agent), and future
task to develop (pattern agent) customer
accurate forecasting behaviors that helped
techniques and/or improve its forecasting
select a forecasting accuracy
technique that is most
suitable for particular
business
environments

Order-picking order picking intelligent agent-based

problems involves selecting the system that optimally
items that have been assigned workers to a
placed on order. Due specified zone from which
to its labor-intensive orders were picked.
operations, order
picking typically
accounts for the
largest portion of
warehousing
operating expenditure
 3. Big data in supply chain
What is big supply chain analytics?
Big supply chain analytics uses data and quantitative methods to improve
decision making for all activities across the supply chain. In particular, it does
two new things. First, it expands the dataset for analysis beyond the
traditional internal data held on Enterprise Resource Planning (ERP) and
supply chain management (SCM) systems. Second, it applies powerful
statistical methods to both new and existing data sources. This creates new
insights that help improve supply chain decision-making, all the way from the
improvement of front-line operations, to strategic choices, such as the
selection of the right supply chain operating models.
 Big data in supply chain is restrained due to two challenges:
● there is a lack of capabilities. Supply chain managers—even those with a
high degree of technical skill—have little or no experience with the data
analysis techniques used by data scientists.As a result, they often lack the
vision to see what might be possible withbig data analytics.
● Second (and perhaps more significantly), most companies lack a structured
process to explore, evaluate and capture big data opportunities in their
supply chains.
How big data can be useful in each driver of our supply chain ??
1) Sales,inventory:Typically, planning is already the most data-driven process in the
supply chain, using a wide range of inputs from Enterprise Resource Planning
(ERP) and SCM planning tools. There is now significant potential to truly redefine
the planning process, however, using new internal and external data sources to
make real-time demand and supply shaping a reality.
We can think about managing inventory in a supply chain similar to the way
electricity is managed: Storing electricity is expensive and difficult; power
companies bring in additional consumers or start and stop plants to ensure a
balanced power grid. Retailers now have the opportunity to use a similar approach.
Visibility of point of sale (POS) data, inventory data, and production volumes can be
analyzed in real time to identify mismatches between supply and demand. These can
then drive actions, like price changes, the timing of promotions or the addition of
new lines, to realign things.
Retailers can also use new data sources to improve planning processes and their
demand-sensing capabilities. For example, Blue Yonder has developed data
intensive forecasting methods now deployed into retailing where 130,000 SKUs and
200 influencing variables generate 150,000,000 probability distributions every day.
This has dramatically increased forecast accuracy; enabled a better view of the
company’s logistic capacity needs; and reduced obsolescence, inventory levels, and
stockouts The recent growth of third party cloud-based services like Blue Yonder is
making such activities more accessible for other retailers, too.
2) Transportation :
Truck companies already make use of analytics to improve their
operations. For example, they use fuel consumption analytics to improve
driving efficiency; and they use GPS technologies to reduce waiting times
by allocating warehouse bays in real time.
Courier companies have started real-time routing of deliveries to
customers based on their truck’s geo-location and traffic data. UPS, for
example has spent ten years developing its On-Road Integrated
Optimization and Navigation system (Orion) to optimize the 55,000 routes
 in the network. The company’s CEO David Abney says the new system
will save the company $300 million to $400 million a year3.
Big analytics will also enable logistics providers to deliver parcels with
fewer delivery attempts, by allowing them to mine their data to predict
when a particular customer is more likely to be at home. On a more
strategic basis, companies can cut costs and carbon emissions by
selecting the right transport modes. A major CPG player is investing in
analytics that will help it to understand when goods need be shipped
rapidly by truck or when there is time for slower barge or train delivery
3)