AI Transforms Supply Chain Activities

2013 study estimated that nearly half of American jobs would be replaced by artificial intelligence (AI) in the near future. Meanwhile, innovator and entrepreneur Sebastian Thrun declared that “no office job is safe.” However, Americans themselves are not too worried about it.

A recent LevaData survey of more than 1,000 U.S. adults revealed that while about two-thirds of Americans believe that AI will eliminate certain jobs—and more than half say the rise of AI will mean fewer jobs, period—21% are confident that AI won’t replace their  job in the next ten years, and 41% say that they are confident that AI will never replace their job.

On the other hand, just over a quarter of Americans expect to soon be working alongside a robot. These Americans likely have it right

These perceptions are durable. Even a 1966 report on technology, automation, and economic progress noted, “technology eliminates jobs, not work.” There is no question that AI is changing the nature of supply chain jobs. But the supply chain of the future will be a carefully orchestrated partnership between AI-based solutions and humans.

AI in the supply chain today

AI is increasingly important in the digital transformation of supply chain. In the last five to seven years, many large global manufacturers have begun supply chain transformation projects, and the use of AI and machine learning coupled with advanced analytics and big data has been a major part of this transformation. 

Specifically, there are three key areas of AI-based capabilities that are transforming supply chain. The first is in the area of demand sensing, which is the ability to understand or predict consumer behavior sentiment and align that to a demand management process. The second is in the area of advanced algorithmic-based planning systems, which look at how to build new algorithms that are actually learning instead of more traditional heuristic-based optimization algorithms. The third application is supply sensing and optimization of procurement and sourcing, which uses AI to sense risks and opportunities and recommend responses, particularly around negotiations. 

A perfect partnership

The strategic sourcing commodity management area is already evolving. Teams have gotten smaller, and the average responsibility per managed spend with suppliers has increased per person. There isn't an opportunity for full time employment (FTE) reduction or automation as much as you see in other areas of the supply chain, where there are opportunities to automate internal processing functions, like the validation of invoices or the purchase order management process.  

Strategic sourcing will, however, continue to be about providing automated capabilities to professionals to improve their effectiveness. AI will allow them to be more productive by eliminating analysis time and manual spreadsheet development, yes, but the true impact of AI in these jobs will be higher-level. It isn’t the classic “robots replacing jobs.” The ability to leverage AI will be a required core competency. Those who lack the requisite skills to take advantage of AI’s many benefits will be replaced.  

The supply chain leaders of the future—particularly in procurement—will need to possess a strong ability to leverage data and analytics. Analytical reasoning skills and analysis will be much more important than, for example, relationship development or apprenticing. There is a need to develop this new talent very quickly and to retrain existing talent to adopt some of these new capabilities.

We are in a period of transition now. And it is clear that AI is having and will continue to have a huge impact on supply chain jobs. The primary impact, though, won’t be as simple as replacing people with robotics. AI will change the playing field, but the most successful supply chain teams will continue to be run by humans.

3 comments on “AI Transforms Supply Chain Activities

  1. Hpprintersupport4
    June 6, 2018

    Artificial Intelligence transforms the IT industries. It revolutionizes the society. AI is currently used for handling big data problem. To know more visit Hp printer support.

  2. nathandavidson
    October 17, 2018

    You know just thinking about what could possibly have been the motivation behind AI and all of these automated robotics brings me to the conclusion that people are just SO LAZY. Haha! I think that all of this effort and work put in to create something that can do that jobs that humans have been “happily” carrying out themselves is just for the sake of not wanting to do it themselves anymore!

  3. michaelmaloney
    February 28, 2019

    Considering these models serve to automate and streamline your company operations, it would make sense to install some sort of computer or technology to help to govern the analysis and running of these models at the end of the day. I don't think the options are very sophisticated just yet, but it's just a matter of time before we start to see AI integrated with all of these add-ons for the business!

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