As turmoil at ports persists there is no end in the sceneA disturbing realization is sinking in: This chaos will not subside with time, and the impact of “Massive supply chain disruption“It is being felt across the country. For example, about 30% baby formula brands could soon sell out, leaving retailers to split the number of containers customers can buy and leaving parents worried they won’t have enough food to feed their babies. This issue concerns the industryimpact on automotive, healthcare, hotel, IT, manufacturing, apparel, etc
So, what’s the problem? Infrastructure and a shortage of truck drivers are often blamed. US trucking companies have record deficits 80,000 drivers by 2021. That’s a reasonable explanation because truckers carry a substantial portion of the goods shipped in the United States. However, that is not the only cause of supply chain problems.
Why Supply Chain Challenges
Current inventory and planning systems operate on fixed time and demand forecast, while the real world operates in drive-time. As a result, poor decision making and bad planning by procurement leaders and finance executives are leading to port congestion. To remedy this, leaders must abandon planning initiatives and proactively manage their shipments.
Every time the means of transport are changed when transporting goods, there will be long queues due to the change, exacerbating the problem.
While it seems reasonable to think that new means of transport could help ease congestion, this is not a realistic solution.
Chokepoints cannot develop without a substantial investment, so port limitations are overcome from an infrastructure perspective. However, for retailers to change the way they plan and prioritize shipments, they will need help.
How to plan your transportation more accurately
Retailers need Real-time inventory visibility in their businesses for more precise planning. Ideally, queuing plan information could be shared with terminal companies and third-party logistics companies out of the gate into a value chain. This improves the efficiency of the first-in, first-out process.
AI can help identify changes in transportation or routes early to ensure on-time delivery of critical items.
While AI implementations are still new to supply chain management, early adopters have seen success. According to McKinsey & Co., businesses already use AI-enabled supply chain management improve logistics costs by 15% and inventory levels increased by 35%. As AI technology continues to improve, many companies are interested in benefiting from its capabilities. Therefore, Infoholic Research predicts that AI in logistics and supply chain markets will grow at a rate of compound annual growth rate of 42.9% until 2023.
Use cases for AI to overcome supply chain disruptions
As AI adoption increases, there is hope that it can help alleviate supply chain problems. Here are some important use cases
1. Timely prediction, full drop rate.
Customers are used to receiving their purchases in just a few days. However, World Economic Forum data shows that delivery times across the US and Europe will hit a record high by the end of 2021. Furthermore, the current environment suggests that those bullish timeframes are likely to continue.
Even in unforeseen circumstances such as natural disasters and bad weather conditions, buyers expect that the companies they purchase from will have a backup plan to ensure timely delivery.
AI can help companies prediction on time, full reduction early use historical data to determine how suppliers fulfill orders. This allows companies to set deadlines for modal shifts for customers that generate the most significant margins. Furthermore, AI provides complete visibility of materials across the entire value chain, making it easier to identify and remove bottlenecks quickly.2. Deprive customers of high and unsuitable prices.
Not all business relationships are suitable. Gartner predicts that 75% company will reduce unsuitable customers by 2025.
While some companies may not be willing to part ways with costly customers, these loss-making leaders should not occupy the top of their priority list.
However, identifying these customers can be a challenge for businesses. With the help of sorting algorithms, AI can automatically identify customers whose size is not good for gaining market share and draining valuable capacity. Besides, AI can identify new opportunities to improve and discover how these opportunities will impact profitability.
3. Increase profit margin.
Without a clear understanding of consumer needs, companies run the risk of pushing unsold products, costing businesses millions of dollars.
AI-powered forecasting can help companies sense changes in demand early, allowing them to optimize products for the best margins.
According to McKinsey, AI-enhanced supply chain management provides a 65% off lost revenue caused by product out of stock. On the sales side, AI can help sales teams identify upsell and cross-sell opportunities for key accounts. Often, companies have limited knowledge of who they should further sell to. However, since most sales tasks take place digitally, sales teams are constantly gathering data. AI can leverage this information to make sales teams more efficient.
4. Faster Shipping
In a survey by Convey, 28.6% of respondents said they are more likely to place orders with companies that can deliver products within a week of purchase. That’s a pretty small amount of time, so faster shipping is crucial if companies want to encourage consumers to shop with them.
AI can identify shippers that slow down the supply chain. Once identified, companies can weed out players who aren’t keeping pace and replace them with someone more efficient. Furthermore, vendors can use AI to create simulations based on congestion and disruption.
Once the AI knows that a particular part of the supply chain is congested, it can predict when companies may experience shortages based on inventory levels or extended delivery times.
It will take longer to get over the “Major Supply Chain Disruption”. If businesses really want to deliver products efficiently, they will need to change the way they plan. By implementing AI technology, companies will be better equipped with the information they need to ease today’s supply chain challenges.
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