AI has revolutionised a whole raft of sectors, but is supply chain set to be hit hardest?

Is AI Changing Supply Chain?

At the beginning of 2019, it was predicted that as supply chains are becoming increasingly complex and globalised, Artificial Intelligence (AI) would be the top trend to watch out for in the supply chain world. As we fly through the penultimate month of the year, have businesses behaved as predicted and incorporated AI into their supply chains?

What is AI?

Artificial Intelligence is the use of computers to mimic the human behaviour of learning from experiences, recognising patterns, retaining knowledge and producing solutions in decision-making situations. A widely celebrated example is Ocado’s highly scalable and adoptable grid robot operation which picks, lifts, sorts, moves, packs online grocery orders in an impressively organised and speedy sequence. Being highly scalable and adoptable across multiple sectors and markets, this allows a variety of goods such as medicine and food get to the end customer more efficiently. Similarly, courier service UPS uses an AI GPS system called ORION to navigate the delivery fleet onto the most optimal travel routes avoiding road incidents, weather warnings and diversions ultimately saving time, miles and money.

Advantages/Pros of AI in Supply Chain

Investing in AI throughout the supply chain can reap an abundance of benefits for business operations, from automated warehouses with machine-learning robots to optimised inventory management through AI which forecasts demand and supply.

A study by PwC estimated that UK GDP could increase by up to 10% by 2030 due to AI. By saving time, money and reducing human error, AI can revolutionise how businesses communicate information throughout the supply chain, increasing efficiencies across multiple stages of production and subsequently raising profits, having a knock-on impact on the wider economy’s performance.

Disadvantages/Cons of AI in Supply Chain

It is estimated that while 70% of businesses understand the associated positives of AI, less than a fifth have adopted artificial intelligence technologies. With all the hype of reaped business prowess and socio-economic benefits, what is stopping commercial and SME businesses alike embracing AI?

Do we fear a Terminator-style scenario with a futuristic robot takeover? Throughout the discussions around AI there is still concern over job stability, particularly within traditional manufacturing industries, with logistics, warehousing and distribution functions being in the firing line due to the benefits that automation could provide – in fact, the OECD estimated that approximately 14% of occupations are at risk. It must be highlighted however that with the adoption of AI and implementation of automated processes, humans will still be heavily involved in the supply chain through newly created job opportunities. Ocado has estimated that automation has actually created approximately 14,000 new jobs that otherwise would not have existed. AI will undoubtedly take over repetitive and low skilled manual tasks, which only serves to highlight the important role of employers and the government in upskilling and educating the workforce so that AI is not perceived as a like-for-like replacement, but as a complement to human skills and capabilities.

Some businesses may be resistant to change or not ready to adopt AI into the supply chain. Within a business with a lack of strategy, available data, established technological infrastructure or limited financial resources, developing and implementing a solid MRP system may be a challenge in itself, without bringing the concept of automated robots, forecasting tools or interactive chatbots into the equation.

Conclusion

It is evident that Artificial Intelligence holds a great deal of promise for a positive and cost-effective impact on the supply chain within manufacturing businesses. With significant barriers to entry however, it seems that whilst some businesses champion the technological advancements, others in earlier stages of their digital journey are left unable or unsure how to take the leap, with many employees left in a state of distress at the prospect of losing their jobs to a faceless robot. Much more must be done from the top levels of government down to the management of individual companies to ensure that staff are upskilled into more valuable roles, and to convey the benefits of AI and automation in the supply chain.

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