Artificial Intelligence (AI) is everywhere around us. From simple digital watches to complex urban planning and development, the new form of intelligence is revolutionizing the way people live and the way companies work.
Supply chain management is not an exception here because AI is changing it slowly but steadily. The process lasts for a long time, which makes a lot of supply chain managers confused and uncertain of whether to embrace AI technologies or not.
The issue is very important, so we decided to give you a hand by discussing the benefits and disadvantages of AI-powered supply chains. Let’s take a look!
What Is AI?
Before we explain the impact of new technologies on supply chains, we have to discuss the very concept of AI. By definition, Artificial Intelligence represents the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.
To put it simply, AI has human-like abilities in terms of software performance, but it runs on much more powerful hardware. Unlike humans, intelligent machines can process enormous data volumes in real-time.
Its hardware and software make a great combination, which is why supply chain systems are interested in using AI in everyday work. By 2020, one-third of manufacturing supply chains will have analytics-powered cognitive capabilities, thus improving cost efficiency by 10%.
However, the fact remains that nearly two-thirds (63%) of businesses still do not use any technology to monitor their supply chain performance. This happens mostly because they are not aware of AI’s features, so let’s discuss it in the next chapter.
The Digital Supply Chain: The Landscape, Trends, Types, and the Application in Supply Chain Management
Pros and Cons of Using AI to Manage Supply Chains
However advanced, no technology is ideal. That is why we are talking about the pros and cons of AI. The list of positive and negative features is long, so let’s just dive straight into it. Here are the advantages of AI-based supply chains:
Automation is the most important benefit of using AI to control supply chains. For instance, an AI-powered warehouse mainly relies on robots to store, locate, and pick goods. Pre-programmed machines can do it routinely, thus speeding up the packaging processes and taking productivity to the whole new level. Fewer people get involved, but the business goes on smoothly.
- Inventory management
With its ability to accumulate, filter, and analyze gigantic datasets, AI is getting better at inventory management day after day. The system is able to discover consumer habits and compare supply and demand in order to keep stocks to the bare minimum without disrupting the supply chain.
This is not a novelty since many other companies use the same strategy to control operations. For example, the best paper writing service often relies on AI to predict future trends and identify seasonal demands. Such a tactic helps them to always stay on track and deliver papers in a timely manner.
- Timely deliver
Speaking of delivery, it is important to mention that AI makes logistics simpler and more accurate. New systems take into account multiple factors simultaneously such as weather forecasts, alternative routes, traffic, delays, etc. It makes them capable of creating highly accurate estimations timing-wise, so you can deliver goods as promised.
- Improved safety
As supply chain processes keep getting better and more organized, workplace safety is also making its own progress. Internal procedures ensure a safer environment, while the growing number of machines and robots eliminate the risk of manmade incidents.
- Reduce operational costs
Cost-reduction is yet another advantage of adding AI to the supply chain. Most of the work is now automated, which means that you have to employ fewer people. Besides that, machines can work 24/7 without a break, while the number of mistakes and workplace incidents also goes down steadily. Therefore, AI makes the supply chain more profitable long-term.
- Better customer service
Your supply chain business should use AI to boost customer service. How come? The answer lies in chatbot technologies. Chatbots can help companies save on customer service costs by speeding up response times and answering 80% of clients’ routine questions. Artificial operators are available around the clock and they get smarter with each conversation, so they are likely to fully replace human agents in the near future.
You’ve seen the benefits, but now it is time to mention the downsides of using AI to handle supply chains:
- Skill gaps
It’s not easy to replace old technologies and focus on AI to the fullest extent. The whole process demands time and expert knowledge, which is a big burden for most companies. If you want to switch to AI, make sure to understand everything from software development to data science to make it work flawlessly right from the beginning.
- AI needs control
Although being capable of doing many great things, AI is not a self-sufficient system. On the contrary, you still need to control it and give it inputs to ensure effortless functioning.
- It’s difficult to spot a mistake
AI is not only processing information but also learning and getting even more intelligent. It turns into a complex monitoring system over time, but this is exactly why it’s difficult to notice and identify mistakes when they occur.
- Security issues
AI represents a digital system that administers tons of sensitive business information. This can be a big issue if you don’t invest in high-quality protection systems with state of the art safety mechanisms. Only one security incident could jeopardize supply chain performance, so you better make sure to keep it protected 365 days a year.
AI is a relatively new concept in logistics and warehousing, so it’s natural to see both positive and negative reactions. The process is not lopsided, which is why we discussed the pros and cons of AI-powered supply chains.
AI is still in the early stages of deployment, but it is clear that the new form of intelligence can significantly improve the overall functioning of supply chain systems. All it takes is time and patience to learn how to deal with it, while AI will make sure to do the rest of the work and prove that its benefits are much greater than its downsides.