Unpopular opinion: AI in Supply Chain and Operations

AI in Supply Chain & Operations

We all know nowadays trend of AI into... everything.

From VA, operations even finance.

Several surveys “prove” executives are pro-AI developing in their business, even for core functions.

The carrot?

Employment cost reduction.

Seems rational.

Let’s take a look what AI is & how it works.

AI is actually a combination of unlimited different sources, providing “sufficient” (questionable term) data to compute via algorithms to identify patterns.

To do so, unlimited amounts of data are required & “sufficient” (again questionable term) time to build a model/models. 

Thereafter, these computations develop on their own, obtaining new data/records/facts.

Eventually, a PC, will produce a final product.

In SC & Operations rumors have it, it 'll produce an immaculate planning, a flawless procurement strategy, will plan the WH facilities & will optimize volumes & will calculate the storage & distribution costs/efficiencies to maximize logistics’ productivity.

Now, let’s make it personal.

Have you exhausted your ERP system (i.e SAP / Oracle) & its MM, FI, ERP, CRM, WMS etc functions? Have you tailored it to your organization’s needs & the only thing left is an automation to reduce human resources?

Let me confidently state that you haven't even optimized the SKU system. You surely have double codes, inactive codes, codes with wrong UoM & you don’t have conversion rates for internal use.

I 'm also confident that besides strategic partnerships with vendors, you are not sure that you 'll continue with the same vendor tomorrow, due to price fluctuations, time constraints or even geopolitical reasons.

You ain't sure if you are going have the fleet in-house or if you will change to a 2PL or 3PL.

Before replying to the above rhetorical questions, bear in mind that Supply Chain is heavily influenced by human hands.

A container is loaded/unloaded by humans, with exceptions of automated WHs that the loading may be done with machinery. But that’s not the norm.

A quality inspection is done definitely by humans.

An urgent request can only be managed by a human, because such a request is not a pattern.

A lorry is driven by a human.

The last mile van is also driven by a human.

A claim will also be raised by a human.

The insurance company requires photos & evidence collected only by a human.

I could go on and on.

The thing is that a Chain that has this much of human intervention, can not be fully automated.

It is not only the heavy human influence that can't be translated into a pattern, it's also the unexpected that doesn’t have a counteraction written in SOP booklet.

So, is AI a failure for supply chain?

No.

It can be a useful tool in certain areas under certain circumstances.

However, prior to making a decision to introduce AI to any organization, I ‘d feel obliged to ensure that the limits of our ERP are exhausted and our systems are optimized from A-Z