Automation technologies are no longer a competitive advantage for many businesses; they’re becoming a baseline necessity for companies that want to keep pace. According to Gartner, ”by 2023, at least 50% of large global companies will be using AI, advanced analytics and IoT in supply chain operations.”* Automation is a growing trend in the supply chain market as businesses look for ways to gain efficiencies. “When you automate something, not only does it get done faster — the service level, the speed, goes up at the same time,” Oracle CEO Mark Hurd said at Oracle OpenWorld 2018. AI allows supply chain leaders to use the immense amounts of data available to them to better orchestrate and optimize their processes, from sourcing to completed transactions.
The most recent wave in supply chain automation came with the integration of cloud-based technology. It’s predicted that 80 percent of supply chain interactions will take place in the cloud by 2020. The use of cloud-based, integrated apps streamlines supply chain operations in an intuitive way — a way “mix-and-match” software solutions weren’t capable of. “This nonsense about ‘these are separate solutions and you're going to extract data from an application, send it to some other solution that's called Blockchain or some other solution that's called AI,’ that's not how the market is going to end.” Hurd said. Instead, he believes each of these components will be integrated into the cloud apps themselves.
The next wave of supply chain automation will see businesses realizing the integration of AI and ML into those cloud-based application suites. AI’s capabilities in the supply chain include robotic processes, such as automated inventory and virtual assistants, and assisting with daily administrative tasks. Hurd sees such integrations as a natural evolution of the technologies, saying, “These chatbots, digital assistants, these AI machine learning algorithms, will be integrated directly into the applications themselves. One hundred percent of cloud apps will include AI.”
Hurd is not the only business leader taking note of this trend. Forbes reported, “66% of supply chain leaders say advanced supply chain analytics are critically important to their supply chain operations in the next 2 to 3 years.” Automation is a major catalyst for improved compliance, shortened transaction times, and lower overall supply chain costs. Supply chain managers can apply the capabilities of AI to analyze and track data, clean it, detect anomalies, and generate predictions to improve and connect the supply chain from start to finish.
Vendor management, recruitment and talent management, and invoicing can be processed more than 30 percent faster with the help of AI and automated processing. As businesses employ more cloud technology in their processes, there will be improved communication among individuals in different sectors of the supply chain. Additionally, Material Handling and Logistics reported, “by 2021, 20 percent of the top manufacturers will depend on a secure backbone of embedded intelligence, using IoT, blockchain, and cognitive systems, to automate large-scale processes and speed execution times by up to 25 percent.”
Although the integration of AI and ML into automation technologies has inherent benefits to business processes, it also has significant implications on supporting technologies, like the Internet of Things (IoT). IoT will play a significant role in future supply chain management operations. The same Material Handling and Logistics report mentioned above asserted 20 percent of top manufacturers will use the IoT by the end of 2020. That’s because IoT, with the power of AI and ML behind it, can provide enormous benefits to the manufacturing industry.
As noted by Intel, a full 30 percent of perishable products never make it all the way through the supply chain. Through the use of connected reporting over automated systems, this statistic can decrease dramatically. IoT sensors can monitor the conditions of products in transit, and the automated system can adjust the shipment’s environment in real time based on the data. This provides an optimal setting for perishable goods from end to end, saving money and ensuring as much product as possible remains intact and ready for sale.
Business leaders will have to prepare their organizations for the new wave of supply chain technology and the changes it will bring. Hurd stresses the challenges CIOs will face when readying their businesses, stating in a recent LinkedIn post that "the challenge all CIOs and their organizations face is to modernize and simplify their IT environments in order to launch new and expanded mobile, data analytics, Internet of Things, artificial intelligence, and other digital initiatives.” As a new wave of cloud technology is being integrated, supply chain leaders need to prepare their organizations for the tremendous benefits AI and ML capabilities will bring.
*Smarter With Gartner, Gartner Predicts 2019 for Supply Chain Operations, December 17, 2018,https://www.gartner.com/smarterwithgartner/gartner-predicts-2019-for-supply-chain-operations/