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Investing in AI Could Help Brands Automate Their Supply Chain and Prepare for Future Disruption

The far-reaching effects of the coronavirus have hit brand supply chains in multiple places, impacting production capability as well as shipping logistics.

As companies attempt to create new protocols and mitigate damage, a new report by IBM’s Institute for Business Value stresses the importance of an agile, automated supply chain system that can respond more quickly to disruptors.

Global pandemics and other disruptions — from political crises to natural disasters — can’t be prevented, but steps can be taken to protect business continuity during these events. In addition to diversifying supplier networks geographically, brands can leverage technology to be sure they’re always responding to the most immediate and relevant information.

“Supply chains are noticing cracks in the system highlighted by the pandemic. They should rapidly accelerate digitization to allow supply chains and manufacturers to emerge stronger,” said Jonathan Wright, global head of cognitive process reengineering at IBM and co-author of the report. “But that has to start now, with businesses applying technologies like AI and blockchain to quickly identify patterns in supply and demand.”

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With an AI-equipped management system, brands are able to direct manual workers to more-critical tasks, while the technology analyzes supply chain efficiency, recommending better distribution paths and order volumes. This is useful during periods of stability to help streamline production, but critical when disruption occurs in the supply chain, because AI can forecast new demand models, provide visibility across the supplier base and suggest where to shift resources for optimal fulfillment.

For smaller businesses with correspondingly small supply networks, the ability to react quickly to unexpected events is still critical in order to stay afloat while feeling the financial pinch. Despite the instinct to conserve cash right now, Wright argues that investing in AI could reap big rewards.

“As a first step, these brands should focus on identifying the products that consumers need the most right now,” said Wright. “AI has the power to identify demand curves down to the state and local level, signaling where different needs will spike.”

Once these prioritized items are identified, businesses can then leverage the AI to help them work with vendors and meet demand. Real-time data provides improved inventory visibility across all parts of the supply chain so that product can be more efficiently deployed, or rerouted if necessary.

AI-based modeling can also be used to help establish base protocols for future disruptions. Geopolitical risks, climate change risks, cyber security risks and natural disasters can be built into its forecasting, in order to proactively suggest contingency measures. Should a threat emerge, management is then able to focus on necessary adjustments as opposed to entirely new strategies.

“Supply chain professionals have been talking about a need for this level of synchronization and automation for some time,” said Wright. “Businesses should now realize the importance of implementing these technologies to benefit both the business and its customer base.”

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