The pandemic continues to disrupt various economies. To date, there are over 12 million confirmed cases all around the globe. Unfortunately, the development of vaccines and a well-defined medical treatment is still underway. Despite the pressing concerns on the COVID-19 outbreak, a lot of countries have begun opening up their economies. 

Thousands of companies that were on a standstill during the beginning of the outbreak have resumed their operations. In the procurement and supply chain industry, companies continue to move forward, seeking better and more efficient ways to do business.

One of the key adaptations used in the industry is the increased and improved use of AI and machine learning. With AI and machine learning in place, businesses get to streamline work processes, automate repetitive work, and boost employee efficiency.

Introduction to AI and Machine learning

Artificial Intelligence and machine learning have been used in the procurement and supply chain for years. The industry is highly data-driven, so algorithms in AI and machine learning come in quite handy. These provide companies with extensive computational power to process massive datasets.

Both are applied in various ways. A fine example would be AI and machine learning’s role in inventory management. In this industry, inventory management can make or break a company. Without a good system in place, businesses might end up incurring additional expenses, suffer from delayed production, and even lose sales opportunities. 

By processing available data, organisations can pinpoint concerns such as slow-moving inventory and impending stock-outs. 

The classical model of monitoring inventory requires decision-making parties to make assumptions based on some key factors such as lead times and market demands. Today, with the help of technology, decision-makers get to analyze large chunks of data and have that plugged into a supply chain model to get better estimates. And over time, the processes improve because machine learning allows for the recognition of patterns or trends.   

Besides helping manage inventories, here are other specific applications of artificial intelligence and machine learning:

Enterprise-level applications

Artificial Intelligence and machine learning are often associated with enterprise-level applications. It’s often used in major decision-making activities as well as engaging with customers or clients. 

• Automating purchase orders –  More and more companies have been automating purchase orders using AI for quite some time. This minimizes human errors and frees employees from manual and repetitive work.  

• Predicting the better supplier –Finding the most suitable suppliers is probably one of the biggest challenges faced by companies in the procurement and supply niche. To solve this issue, Junichiro Mori et. al in 2010 showed how machine learning techniques can be used to create prediction models in selecting a supplier. 

• AI chatbot support – Chatbot support has plenty of applications in the procurement and supply chain business. For example, it can be used to:

• • • Automate goods pick-up process in warehouses
    • Answer customer queries
    • Track shipment coming from suppliers
    • Integrate GPS functionalities in delivery vehicles so managers can keep track of progress and send in new dispatch orders

• Forecasting demand for new products – During tough times, all sorts of new products get launched in the market. Procurement and supply chain professionals can make use of machine learning to take into considerations factors that can affect the demands for new items.  
  

  

Operations level applications 

AI and machine learning aren’t just relevant and useful for decision-makers in the industry. Below are some great examples of operations-level applications of AI:

• Driverless trucks in a mining company -. Automating mining machinery such as loading trucks provides huge savings to Australian mining companies. It also helps ensure the safety of workers, especially for underground mines.  

• AI-driven crop monitoring – Asia shows a promising future in using AI in agriculture. Primarily the developments are geared towards the use of AI-driven crop monitoring, soil monitoring and greenhouse management,

• Predictive equipment maintenance –  Having a broken piece of equipment is bad news for a lot of manufacturers as well as suppliers. It could mean expensive equipment replacement, delayed delivery or worse, loss of clients. This is why predictive equipment maintenance is absolutely essential to many organisations. 

• Prediction of stocks in transit – With predictive analysis, companies delivering and receiving stocks get to address crucial issues before they happen. It can help minimize expenses and schedule disruptions.   

Trends during and after the pandemic

Globe Newswire points out that the AI in the procurement and supply chain market is estimated to reach more than $21 billion by 2027. The report attributes the expected market growth to the following:

• Increased awareness of corporate applications of AI
• Increased use of big data analytics
• Wider use and understanding of computer vision and machine learning  

On top of these factors, digitisation of companies can also be seen as a major factor that will drive the growth of the AI market in the supply chain niche. Definitely, the current situation has pushed companies to start or ramp up their digitisation process. Companies can no longer treat tech and business strategy as separate components. 

During these challenging times, a company’s digitisation journey can enable workers to opt for remote working arrangements. Customers get to continue their transactions even with less physical contact. It also allows companies to minimise their spending on additional workforce because they can automate repetitive and manual tasks.  

In short, AI, machine learning and digitisation are definitely here to stay. In fact, they will help businesses in the procurement and supply chain market to adapt to the situation and the shakey and uncertain future.

Key takeaway

In a huge way, the coronavirus pandemic has emphasized the role of technology in doing business better. Solutions such as artificial intelligence and machine learning are amongst the biggest enablers of digitisation and tech advancement, regardless of the industry. 

Understanding how these work can provide your organisation with the tools needed to stay afloat during these trying times. 

Stay on top of the latest news in the supply chain management market industry by joining our email newsletter subscription.

Russell Harrison is the Executive Advisor at The Supply Advisory (a division of Datasearch Consulting), a leading executive recruitment firm specialising in Procurement & Supply Chain.

You can view the The Supply Advisory website or contact them directly at info@supplyadvisory.com for a more detailed discussion.