Read Shannon Vaillancourt’s FORBES article here.
Artificial intelligence (AI) is impacting every industry, and supply chain management is no different. While companies now have access to nearly unlimited data, I believe just having data is not enough to improve supply chain performance. Instead, we can leverage artificial intelligence to use this data to make the right decision to move forward faster, smarter and cheaper. Without the good data, however, AI may just as well be making the wrong decision.
Defining Artificial Intelligence
The definition of AI can be difficult to pin down. The concept was pioneered by British mathematician and computer scientist Alan Turing during World War II. In his groundbreaking paper “Computing Machinery and Intelligence,” Turing asked the question, “Can machines think?”
Turing proposed that artificial intelligence could be defined using an exercise called the “imitation game.” In the test, Turing proposed a scenario in which a human would ask typewritten questions of two subjects in a different room. If one of the subjects was replaced by a computer, and the human could not detect which subject was the computer, the computer would pass what we now call the “Turing Test.”
The Future Of AI In Supply Chain Management
Today, computers have become more powerful, and we may take many artificial intelligence functions for granted, only associating AI with what hasn’t been done yet. Building on Turing’s definition of a machine being able to emulate human responses, one of the simpler, modern definitions is that AI is the replacement of a person doing nonroutine tasks. As I see it, this definition of AI is what’s making a big impact on supply chain management today and will continue to do so in the future. With the cloud, computing power is now relatively inexpensive, thus allowing AI to become more integrated into the everyday routine in a company’s supply chain.
The most compelling aspect of AI for transforming supply chain management, I believe, is its ability to perform nonroutine tasks faster and more accurately than a person is able to. With the sheer volume of supply chain data we can generate now, it is simply impossible to sort and analyze this data without AI assistance. But leaders must also make sure they have the proper foundation in place to fully leverage the benefits of this technology.
Garbage In, Garbage Out: The Dangers Of Bad Data
There’s an old saying in computer science: “Garbage in, garbage out.” It’s a simple concept: No matter how sophisticated your software is, if you feed it bad data, your results will be faulty.
I think this is where many companies are missing the mark when it comes to AI. They are skipping a step on their data journey and are trying to utilize AI with their nonintegrated, inaccurate data. The bad results are then blamed on AI technology instead of the bad data. This is why I prefer to focus on the simpler definition of AI (replacement of a person doing nonroutine tasks), and utilize AI technology to create integrated, accurate data that can then be used by experienced managers to make smarter decisions.
What To Keep In Mind About AI And Supply Chain Management
It’s important to remember that AI is just another tool in supply chain management. It needs to be used properly for the right purpose in order to be effective. Here are three important principles to keep in mind.
- You’re not replacing people; you’re empowering them. Artificial intelligence could allow your supply chain professionals to shift from tactical, time-consuming “busywork” jobs, such as verifying and sorting data, to instead creating and planning strategically.
- AI can’t do everything. The strategic work of planning your supply chain is too complex – and subject to too many other business variables – to be done by AI on its own. However, building a solid data foundation with AI tools allows your people to leverage their experience and creativity to develop superior strategies.
- Accurate, complete data is crucial. Is your data accurate and complete? You need to be able to answer that question or your artificial intelligence tools won’t do a bit of good. If you’re working with bad data, all you’re doing is making the wrong decisions at the speed of light – something that could negatively impact your bottom line. You have to be honest about where your organization is on its data journey. Are you really far enough down the road to use your data in an AI solution, or do you need to solidify the data foundation that you will build your world-class supply chain strategy on?
Supercharging Your Supply Chain
Artificial intelligence is already transforming supply chain management practices all over the world. It’s an incredibly powerful tool. If used properly, it can provide decision makers with better information – and suggest innovative strategies and implementations. However, any system is only as good as the data that fuels it. By taking steps to use AI with clean, integrated supply chain data, you’ll be on the fast track to supercharging your supply chain.