June 21, 2017 | Written by: Karen Butner
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Supply chain executives across all industries have been developing digital strategies over the past several years. They are aggressively addressing integrated technologies, including the Internet of Things (IoT) on mobile, collaborative and cloud-based platforms. These executives are applying predictive analytics even more rapidly to all supply chain processes, including asset, inventory, fleet and energy management. They are further automating digital manufacturing, customer service and distribution with robotics and drones. And now, in this cognitive era, these digital operations are being enhanced even more – with artificial intelligence (AI). When combined with advanced automation, thinking and learning, supply chains can be trained to augment and enhance human decision-making and bring about a new level of operational excellence.
To better understand the impact of AI and cognitive computing solutions on supply chain and operations, researchers working with the IBM Institute for Business Value surveyed senior operational executives across a wide range of industries and geographies. We asked more than 1,600 Chief Operating Officers (COOs), Chief Supply Chain Officers (CSCOs) and executives of product development, procurement and manufacturing about their current views on AI and cognitive computing, their priorities and the value that they expect to derive.
Our research shows that COOs and CSCOs are aggressively reinventing business models, strategies and technological capabilities. They are resolute on assisting the CEO in defining agile business models and working with the CMO to support the go-to-market strategy, while backing investments and explorations into new ways of optimizing their supply chain operations.
Pioneering firms are applying these AI and cognitive technologies to their products and their daily operations. Some are living the future; others have just begun the journey.
Figure 1: Digital investments in the next three years
Supply chain is a natural fit for AI
In our global research data, we identified a group of more than 700 outperformers (12 percent of the total sample) with stronger financial performance than their peers. These companies, across many industries, report annual revenue growth and profit increases of more than
5 percent over the past three years. We ranked public sector organizations based on effectiveness and efficiency.
Eighty-eight percent of the highest-performing organizations surveyed report that AI is inevitable in their industry. Among those polled, fully 95 percent of the highest-performing organizations see AI as central to their innovation success.
Machine learning is becoming mainstream in the operational technology portfolio. Baseline forecasts for new products are instrumental in determining new product introductions and go-to-market plans. When applied to demand signals, AI can determine changing demand behaviors and optimize inventory levels and replenishment plans to feed the continuous loop of product lifecycle management.
Sales and operations planning is the ultimate collaborative decision-making process. Companies can apply AI technologies to sales and operations planning and other massive supply chain data pools to manage demand volatility, supply constraints, production scheduling and dynamic distribution. AI can augment human interaction by allocating resources, assigning people and scheduling processes.
Figure 2: Outperforming executives use of cognitive computing and AI
Thinking and learning, supply chains can be trained to augment and enhance human decision making and bring about a new level of operational excellence. Are you ready to embrace AI/cognitive for unparalleled operational excellence?
Learn more on improving operations:
Read the full report, “Welcome to the cognitive supply chain: Digital operations – reimagined” to start your journey. Discover how organizations are using Watson IoT to transform supply chains.