Prior to the pandemic, supply chains were already facing challenges due to the increase in customers, supplier tiers, and the overall boom of e-Commerce. However, the pandemic further exposed vulnerabilities, highlighting the need for a more agile and sustainable supply chain.
Small businesses especially can be more vulnerable and at higher risk of struggling to keep up with challenges and increasing demand because they have fewer resources at their disposal. Fortunately, the recent advancement of technologies, such as artificial intelligence (AI), enables all companies, including small businesses, to better address global supply chain concerns.
Research has shown that AI solutions are adaptable and scalable, enabling improved monitoring and knowledge sharing, which can significantly improve supply chain performance. For example, adopting AI technologies can help optimize processes, minimize errors, reduce waste and emissions, enable more effective risk management, and overall allow for a more efficient and agile supply chain.
Issues with the Modern Supply Chain
One of the primary issues causing problems for the global supply chain is sudden and rapid growth. Businesses simply cannot keep up with the demands of more customers, particularly international customers that can now more easily access products online thanks to the digital revolution and e-Commerce.
This boom in business is creating congestion and supply chain bottlenecks. This includes backups at every point of the supply chain process, from sourcing raw materials to delivering the finished product to the customer.
While this has been an ongoing issue, the pandemic exacerbated the problem, making it clear that drastic change in the supply chain is paramount. Additionally, with climate change an ever-growing concern, there is also pressure for organizations’ supply chains to be more sustainable.
The EPA states that more than 90% of greenhouse gas emissions come from supply chains. Supply chain practices consume so many resources and materials and produce so much waste and pollution — and these practices are not sustainable.
Though digitizing supply chain processes has helped, even computers consume energy, which negatively impacts the environment. So the answer isn’t to simply digitize as much of the supply chain as possible but to specifically implement technologies, like AI, that get things done faster and more efficiently, which will help consume fewer resources and produce less waste and pollution.
Achieving a More Sustainable Supply Chain with AI and Other Smart Technologies
Through the use of AI and other advanced technologies, it is possible to achieve a more sustainable supply chain that is capable of doing more with less. In other words, small businesses can move beyond current SC challenges and ensure the future of their business by leveraging the latest innovations.
Machine Learning Automation
Digital automation in the supply chain is nothing new, but as digital technologies evolve, systems can work better, smarter, and faster. Adopting AI technologies to help with task automation in the supply chain can reduce cycle times and improve reliability. It can also help cut down on warehousing, labor, and inventory management costs.
Improving overall efficiencies and reducing the time it takes to complete tasks can also help enhance the quality of products and speed up delivery. And when everything is running optimally, this will also help cut down on energy and resource consumption and reduce waste.
Simulation Modeling
AI-powered systems have the ability to make smart predictions and simulate hypothetical scenarios, which can help supply chains avoid bottlenecking and other potential issues. This enables supply chain managers to step in and act before something actually becomes a problem.
For example, manual supply chain assessment can easily result in human errors that can lead to bottlenecks due to short orders of materials. But with AI, these issues will be predicted before they happen, which can alert managers so they fix the root cause, such as not enough materials, before it turns into a supply issue.
Internet of Things
The Internet of Things (IoT) is a network of connected devices that can all communicate with one another via the Internet. Throughout the supply chain process, there are numerous areas where better communication and sharing of data can improve operations. And when IoT devices are also powered by AI, the processing and sharing of data is even more optimized.
For example, IoT devices can help with scheduling, dispatching, and tracking fleets that are carrying materials or finished products. These devices can also help communicate and share data concerning inventory management. Overall, IoT can help small businesses cut costs, streamline processes, and provide greater transparency within their supply chain practices.
Geospatial AI
Geospatial AI is something that can specifically be used for GPS devices to optimize transportation and shipping within the supply chain. Specifically, it can help optimize routes and account for other issues that could cause congestion by providing real-time data updates. This enables better and faster shipping and can help cut down on fuel consumption, which helps protect the environment.
Big Data and Predictive Analytics
One of the most significant benefits of AI in the supply chain is its ability to analyze, understand, process, and share large amounts of data in shorter amounts of time. Being able to compute so much data can greatly improve the agility of supply chains, making them more efficient and resilient.
Businesses can use AI-powered systems to collect and analyze data, which can then enable them to use insights for smarter, more informed decision-making. Being able to share data more easily also enables better collaboration between teams and suppliers, which can help reduce disruptions and improve the direct procurement life cycle.
Predictive data analytics also uses AI and machine learning to help with forecasting, such as when goods will arrive, if a supply shortage is going to cause a backup, or even if bad weather is going to slow down delivery. This allows businesses to better stay on top of potential issues and mitigate problems on the customer end.
In Summary
There are numerous benefits to leveraging AI to create a more agile and sustainable supply chain. It can lower environmental impact, improve efficiencies, lower costs, help improve brand reputation and customer satisfaction, aids in risk management, and even foster innovation that will lead to even more exciting transformations in the supply chain.
