Supply chain management can be defined as the management of the flow of products and services, starting with the origination of the products and ending with the consumption of the product. It also includes the movement and storage of raw materials, inventory, and fully finished goods in progress.
The chaos at ports continues with no end. A troubling realization is sinking into the mind: The” Great Supply Chain Distortion” effects are already being felt nationwide. For example, 30% of baby formula brands may be out of stock soon. This could cause retailers to limit the number of containers they can sell, leaving parents concerned that their children won’t get enough food. This issue covers all industries and impacts automotive, healthcare IT, hospitality, manufacturing, apparel, and other areas.
What is the matter? Often cited reasons include inadequate infrastructure and a shortage of truck drivers. The US trucking sector could experience an unprecedented shortage of 80,000 drivers in 2021. It’s understandable that a significant amount of American goods are transported by trucks. But, it is not the only factor in supply chain issues.
Supply Chain Challenges
The real world is built on dynamic lead times, while current inventory and planning systems are based on fixed lead times and demand forecasting. The port congestion is attributed to poor planning and decision-making by financial officers and procurement officers. Leaders should manage their wares instead of preparing.
There are long queues when switching the mode of transport for shipping products. Supply Chain Management This makes the problem worse.
While it may be sensible to think that new forms of transport can reduce congestion, this is not a practical approach.
Choke points cannot expand without a huge investment. Consequently, port constraints are discussed from an infrastructure perspective. Retailers will need support to make adjustments to their shipment plans and priorities.
Planning Shipments More Accurately
In order to plan more accurately, retailers need real-time inventory visibility across all of their businesses. Supply Chain Management If possible, storage planning information should be shared with third-party logistics companies that exit the gate as a value stream. This improves efficiency and speeds up the first-in/first-out process.
AI is able to quickly detect changes in transport or routes to ensure critical goods are delivered on time
Even though AI implementation is still new in supply chain management, many early adopters are finding success. McKinsey & Company found that AI-enabled supply chain management helped enterprises reduce logistics costs by up to 15% and inventory levels by up to 35%. More companies are taking an interest as AI technology improves. Infoholic Research predicts that AI will continue to grow at a compound annual rate of 42.9% through 2023 in the logistics and supply chain markets.
AI use cases to overcome supply chain disruption
There is hope that AI adoption can help reduce supply chain problems. Here are some examples of important AI use cases
- Anticipate Absolute Rate Decline, Timely
Customers have become accustomed to receiving their merchandise within days. The World Economic Forum data indicates that the U.S.A. And delivery times in Europe are set to reach record levels by the end of 2021. Based on the current environment, these extended delivery times will probably continue.
Buyers expect the companies they buy from to have backup plans in place to ensure quick delivery even in unforeseen circumstances like natural disasters or bad weather conditions.
AI can also help companies use historical data to determine how sellers fulfill orders. Companies can set time limits for changing modes of transport to ensure that customers with the highest profit margins are served. AI also provides complete visibility across the entire value chain, making it possible to identify and eliminate bottlenecks quickly.
- Not suitable and give priority to customers who are high-cost
Certain business relationships may not be appropriate. Gartner predicts that 75% of companies will lose customers who don’t fit in by 2025.
While some companies may not be ready to break up with expensive clients, these loss-making leaders should not be at the top of their priority list.
Identifying these customers can be difficult for businesses. AI can identify bad customers and eliminate valuable potential using sorting algorithms. The AI also identifies new opportunities for improvement and shows how they’ll impact your bottom line.
- The profit margin will be increased
Companies that lack a clear understanding of consumer demand run the risk of pushing products that don’t sell. This can result in millions of dollars in losses for businesses.
AI-powered forecasting is a way for companies to spot changes in demand early and optimize products to maximize profit margins.
AI-enhanced supply chain management can reduce lost sales due to out-of-stock products by up to 65%, claims McKinsey Sales teams can utilize AI to identify cross-sell and upsell opportunities for key accounts. Companies often don’t know to whom they should upsell. Sales teams are constantly collecting data because most of the sales work is done online. This information can be used by AI to improve the efficiency of the sales teams.
- Ship Fast
Conway’s survey found that 28.6% said they would order from companies that would deliver within a week of purchase. This is a very short time frame, so companies need to ship products fast if they want consumers to make purchases with them.
AI can detect shippers that slow down the supply chain. Companies can identify shippers that slow down the supply chain and remove them to make room for something more efficient. Suppliers can also use AI to simulate bottlenecks or interruptions.
When the AI detects that a certain part of the supply chain has become a bottleneck, it can predict when companies will experience a shortage. This is based on the stock level and extended lead time.
It will take more than just time to overcome the “great supply chain disruption”. Businesses have to change their plans if they want to distribute products efficiently. Companies will have the ability to utilize AI technology to improve their supply chain management.
