Small Business Enterprise - SBDC November 2022

AI in business

Making a robust supply chain

It seems artificial intelligence (AI) is turning up everywhere these days— sometimes where it is needed and sometimes not. But can AI help make a supply chain more robust in real and tangible ways?

AI is turning up everywhere

There are a number of growing ethical issues concerning the use and application of AI, such as biased-trained AI in healthcare or employment. Those are generally not a problem when AI is used for the management of materials and supplies.

The problems most likely encountered are how to use this capability and is it appropriate for the task at-hand. Software using AI can identify and solve many problems that are either not practical or not possible with conventional means. Although many common business and manufacturing processes function well without the use of AI, if properly applied, AI can be a competitive edge in business.

AI for supply chain and materials management

Most enterprise resource planning and material requirements planning (ERP/ MRP) systems are transaction and workflow based, as is the management of the supply chain for a business. Often, management capabilities are built into ERP/MRP systems for activities such as triggering orders, sending invoices, transferring inventory and maintaining inventory. This is a critical part of an effective supply chain, and AI is able to help us beyond what a normal ERP/ MRS system is able to do.

An AI agent uses inputs to make decisions and create useful outputs. The agent is either embedded into the software or an external system. In manufacturing, the inputs might be inventory levels, orders, processing status, safety-stock levels, ship windows or material lead times. Outputs may be reports, triggered actions or notifications.

Smart management of risk, cost and uncertainty

The internal “brain” of the AI agent uses rules, facts and models to describe patterns in the inputs to look for and react to. This also may involve proactive behavior such as modifying how the reaction to events happens in real time. A manufacturer can harness this ability for activities such as automating restock orders and maintaining critical parts. It can improve visibility within the business using enhanced monitoring and predictive analysis of all activities. AI can examine this information in complex ways for taking demand signals and orders into effective planning for sourcing and ordering materials. Everything effecting material and product flow can be examined. This technology also allows “what-if ” analysis to predict shortages and drive decisions internally. Giving manufacturers better control over risk, cost and dealing with uncertainty.

It is clear AI is here to stay. And there soon will come a point when this capability will make the difference between being competitive and not. Is your business ready for this?

Michael Rogers is in charge of cyber security and new emerging technologies at Rockford SBDC.