How To Manage The Supply Chain Challenge

For too long, we have thought about satisfying our needs and desires immediately, perhaps even to fill other life gaps. For online or in-store purchases, almost immediate service times are required. This has an impact not only in terms of logistics but, above all, in terms of ecology and sustainability due to the increase in energy consumption and the risk of producing surpluses and waste. Let’s think about online shopping. With the worldwide availability of Internet access, e-commerce is now a widespread mode. An estimate referring to the pre-Covid period already estimated that 1.8 billion people had bought online. 

A constantly increasing number (with a dizzying peak as a result of the pandemic), so much so that it is expected that by 2024 the volumes of the e-commerce market will represent over 60%, compared to the current 47%. Some online sellers also offer same-day delivery. In these cases, priority is given to speed at the expense of optimization. It is estimated that this service requires, on average, three times more energy than traditional delivery times. Today our attention is focused on the ecological emergency, the socio-political situation, inflation and the risk of recession: it’s time to make more prudent choices. Based on these considerations, technology must help to avoid a further deterioration of the conditions of life on Earth. 

Every contribution from consumers, suppliers, logistics operators and planning system providers becomes increasingly necessary and welcome. Technology can help us analyze needs better to predict which products are most likely to be in demand so that they can be found where they will be needed even before the consumer orders them. To do this, it is necessary to adopt advanced predictive and fulfillment planning systems, increasingly enhanced by AI technologies. Solutions based on artificial intelligence make it possible to respond to business continuity needs and operational optimization in the context of an increasingly challenging and fragmented global supply chain.

How AI Powers Supply Chain Planning

The scenario that supply chain leaders face daily today is complex. The current context sees the global supply chain struggling to recover from the pandemic and face new crises that create further disruptions. We want to think of a “new normal”. Still, perhaps we need to get used to the idea of ​​a “no normal”, described as “an environment of uncertainty and ambiguity that requires continuous flexibility, innovation and investment (or reinvestment) in data and analysis strategies. The supply chain is confronted with a cost structure, which must be flexible and agile for the business to be profitable. 

Effective planning draws on real-time data and information, essential for developing scenarios that consider external decisions, such as a gas blockade or sudden and unexpected energy and raw materials increase. Hence the software systems supporting supply chain planning and optimization decisions must be connected in real-time to contribute to the improvement and efficiency of all processes. Only a flexible supply chain with these characteristics can react promptly in the event of unexpected changes or disturbances. Today the supply chain manager is well aware that advanced systems must manage the complexities of the supply chain with a robust artificial intelligence component, where people are an integral part of the process: we are talking about “human-centric digital automation”. 

The most advanced systems automatically decide many of the procedures necessary to operate the production machine and the entire supply chain, signaling exceptional events that require intervention by the team. Some companies still base their planning on Excel sheets. Still, now that the crisis has made clear the need for a structured process and has accelerated the path towards digitalization, investments in advanced technologies are growing, with obvious benefits in terms of performance. The ability to collect data from the most disparate sources (an enormous amount of data!) allows a system equipped with artificial intelligence to interpret them to find helpful information, identify trends and correlations, and be made available to the supply chain team.

Because The Supply Chain Plays A Decisive Role In Sustainability

The impact each company has in terms of sustainability is increasingly significant for consumers, who reward companies with a real eco-friendly relationship. Today, the Chief Supply Chain Officer (CSCO) must also assume the manager role of the global ecosystem in which the company operates in the reference market. And even among the CEOs, awareness of the importance of eco-sustainability has grown, which depends on how the product is constructed and distributed. As software provider suppliers, we have a strong responsibility: to innovate to make our client companies more and more competitive.

The supply chain is the key to keeping the promise and creating an excellent shopping experience and plays a more than strategic role in creating a sustainable business by optimizing costs and opportunities. A sustainable supply chain goes hand in hand with savings. The automatic response to change and supply chain disruptions is to increase safety stocks, which can lead to high excess costs and waste. AI-powered supply chain planning offers a way to avoid this problem and increase service levels and product availability. Having the right stocks in the right place brings several other advantages for cost and waste reduction: less urgent shipments or transfers, less CO2 emissions, reduction of expenses related to the warehouse (rent, energy, heating…), best efficiency, and best service.

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