Supply Chain Pros: Could AI Save Your Day Job?

Supply chain leaders know AI is a game-changer, a technology that will allow them to optimise their supply chain for competitive advantage. But just how much will it impact your profession?

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Today, business leaders are looking to their supply chains to create differentiation and they recognise that data is a key driver. Having said that, only a small fraction of supply chain data is effectively used, and most companies are virtually blind to data that is unstructured – for instance, from social, weather and IoT sources. With limited visibility it’s difficult to optimize supply chain operations, leaving the business exposed to unnecessary disruptions, delays and risks, as well as increased costs. In fact, 87 per cent of Chief Supply Chain Officers say it is extremely difficult to predict and manage disruptions.

Supply chain leaders know AI is a game-changer, a technology that will allow them to optimise their supply chain for competitive advantage. They understand and have relied on descriptive analytics – using massive volumes of data within the enterprise to understand better what has happened in the past and what is happening today. They’re now ready to explore how to use AI to see beyond the four walls of their business; understand how potential disruptions in the environment could impact the supply chain; and act quickly to seize opportunities or mitigate risk.

A new era of AI in the supply chain

Already, AI capabilities in IBM Watson Supply Chain Solutions are moving from descriptive analytics to predictive insights. We’re helping clients look ahead of supply chain events and see likely delays, demand spikes, supply changes and stockouts with new capabilities, such as anomaly detection in supply chain processes and leveraging conversational analytics for response management. Going even further, we are showing clients the power of prescriptive analytics, where Watson evaluates several dynamic parameters associated with a supply chain scenario and in near real time suggests the best actions and can even automatically create supply chain playbooks.

But this is not the end of the journey. We are also creating a plan where Watson adapts on its own, learning what matters to you and developing the capability to show you where to focus your attention to mitigate disruptions and take advantage of opportunities.

Here are some new capabilities available today (and some that are still to come!) :

  • Expanding data sources for Watson – IBM Supply Chain Insights allows us to add new data sources specific to each client’s challenges in as little as five weeks, accelerating the content that Watson draws from to gain intelligence, from basic ontology and supply chain terminology to weather and now many more external data sources. 
  • Anomaly detection – This new capability in IBM Business Transaction Intelligence for Supply Chain Business Network tracks supply chain transactions, spots anomalies and provides early warning signals so you can discover potential problems and take corrective action sooner. 
  • Optimising order and response management – IBM Order Management software uses AI to select the best location to fulfill an order, adjust availability promises and safety stock levels, and empower customer service reps to make more informed decisions and answer questions with greater accuracy and speed.
  • What’s next for AI – In the future, Watson Supply Chain capabilities will include predicting supply chain cycle times, to new frontiers where Watson adapts to your supply chain and users and learns about trends, issues, actions and behaviors to make recommendations. 

Could AI save your day job?

On 30th April I’ll be taking part in a new Procurious webinar: “How AI Saved My Day Job – Confessions from a Supply Chain Pro.” We’ll be exploring the real-life applications of AI in workplaces today and the problems it can solve for supply chain professionals.

How AI Saved My Day Job – Confessions from a Supply Chain Pro will go-live on 30th April 2019. Sign up here (it’s free) to join the Supply Chain Pros group on Procurious and gain access to this webinar.

How Networking Can Help You Find The Best Suppliers

How can procurement professionals use social networking to find competitive suppliers?

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As procurement professionals continue to look for more efficient ways to grow and optimise their supply network to meet demands, the supply market analysis (sourcing) process should be streamlined through online networks, such as Procurious, and offline networks including industry conferences, mixers and memberships.

I recently conducted a research study to investigate how social networking, both online and offline, influences the relationship between supply market analysis and cost reduction. Through online survey responses from existing and former procurement professionals, data was collected to establish the foundation of this concept. Pursuant to a seven-point Likert scale, a total of 51,485 survey participants were asked a series of questions in the context of three areas: supply market analysis, social networking, and cost reduction.

In general, it was discovered that procurement professionals do use social networking to find competitive suppliers. However, the study also revealed that social networking, in and of itself, is not a universal solution for identifying competitive suppliers. Rather, it is another option for finding suppliers that ultimately impact cost reduction. When considering the competitiveness of the supply market, roughly 77 per cent of procurement professionals indicated that their supply market was highly competitive. This suggested that most professionals have the option to switch to alternative suppliers. Social networking revealed that when looked at as a linear combination of network range, network size, and network strength, it amplifies the relationship between supply market analysis and cost reduction. Furthermore, there is an opportunity for professionals to enhance the way they source by concentrating on certain dimensions of social networking.

The post hoc analysis uncovered two key insights regarding the dimensions of a procurement professional’s social network:

1. There is a lack of significance related to network size

2. Network range and network strength foster more social networking value.

Procurement professionals can accomplish this by cultivating closer relationships with their social contacts, and by increasing the communication frequency with their contacts. By doing so, they can effectively organise their social network to source suppliers who ultimately provide improved reduction in costs. When procurement professionals reflected on cost reductions achieved from purchasing decisions, they agreed that they experienced a cost reduction. Approximately, 44 per cent of professionals conveyed that they experienced cost reductions considerably higher than expected based on their actions. This suggested that purchasing decisions can have an impact on cost reduction.

The constructs of supply market analysis, social networking, and cost reduction were adopted from existing research to substantiate the framework of the study. Supply market analysis was measured according to a supply market profile, which considered the competitiveness of the supply market, the number of capable suppliers in the supply market, and the switching costs of the supply market. Social networking was measured through three dimensions of social networking: network size, network range, and network strength. Network strength considered the interaction frequency, relationship duration, and emotional intensity of a connection. Network range contemplated the diversity of contacts in a social network. Network size assessed the total group of links that a person has with another one’s total of information channels. Cost reduction was measured through cost performance, in terms of broad retrospective results. For example, higher than average cost reductions were achieved and cost reductions were considerably higher than expected.

This study revealed opportunities to expand sourcing strategies without limiting the sourcing approach. Social networking can be integrated as part of a hybrid sourcing approach of traditional sourcing schemes to improve cost. When compared to traditional strategic sourcing tactics, understanding the role of social networking can be a viable way to link innovation with the sourcing process. The linkage thus relates to improved cost performance as confirmed by the data collected from procurement professionals.

The content of this article was taken from Adam Cockrell’s dissertation – Supply Market Analysis: The moderating effect of social networking on cost reduction – DePaul University.