Artificial intelligence systems, when applied to supply chain decision-making, can shake up the fields of procurement and sourcing as few solutions have before. These processes don't replace human number-crunching - in ideal cases, they can move more quickly than any living employee, letting companies optimize their supply chains at speeds that would not have previously been possible, catching savings opportunities invisible to the unaided eye.
The evolution of business intelligence over the years has led to machine learning and other AI processes. Pools of data have grown larger and more diverse, and the algorithms' power has increased along with them. Supply chain leaders who haven't checked in with these systems in a few years may not realize the opportunities their organizations are missing out on.
Making an impact in the hotel business
There are few better showcases for AI's potential than large-scale supply chains. Gigabit Magazine recently profiled Crown Resorts' sourcing approach. This massive hospitality company has to deal with a vast amount of information flowing in from multiple properties. Before the business refreshed its procurement system, its information was fragmented, and insights were hard to come by. After a digital revamp, things have changed.
Gigabit explained that with a smart procurement management system in place, Crown now has more visibility into its spending and fewer manual processes to slow it down. It uses AI-powered analytics to perform spend management across the whole chain at a speed that wouldn't have been possible before. In a reflection of modern, highly automated supply chain capabilities, the tech system can automatically apply categories to all the supplies bought for Crown across its multiple locations.
The procurement leaders no longer have to prioritize their supplier network. When all the data flowing through the system is highly visible there's less need to focus on a core group of companies. Now that the organization has immediate visibility into its transactions and the companies behind them, it can capitalize on chances to increase efficiency or otherwise optimize processes.
An in-depth World Economic Forum report on the manufacturing supply chain recently demonstrated another potential venue for AI to prove its worth. Decision-making among executives can improve when the choices are based on high-speed insights generated by algorithms. The research noted that AI is one of the technologies with the ability to close the gap between large and small companies when it comes to agility. Big businesses, once encumbered by their size and number of moving parts, can boost their efficiency and speed when equipped with AI-derived insights.
The WEF called the changing nature of large company operations a "structural and, ultimately, cultural shift." Firms that use their digital tools to their fullest potential will be able to drive better cost reduction amounts when optimizing their processes. An era of large manufacturing organizations moving with the speed of much smaller competitors may be at hand, because data visibility can now reach every corner of those huge businesses.
The potential of AI is becoming clearer, but organizations still have a lot to learn. For now, it seems evident that leaders must keep an eye on these algorithms.