Some of the world’s most significant leaders and thinkers are claiming, that Artificial Intelligence is history’s biggest paradigm shift. Yet, we are still only at the beginning of the AI (r)evolution. The question you might be looking for an answer to is perhaps: How will my company get started with AI in Supply Chain?

How to get started with AI in Supply Chain is a typical question that we hear from our clients.  The reason being, that to some Supply Chain Executives implementing AI, can seem as complicated as landing a space shuttle on the moon. But it does not have to be complicated. It is all about thinking big and taking a step by step approach. Even though some of the world’s most significant leaders are suggesting that artificial intelligence is history’s biggest paradigm shift, we are still only at the beginning of the AI (r)evolution.

It may be difficult to imagine a world in which Artificial Intelligence (AI) creates production drawings, controls robotics to perform industrial operations or improves Supply Chain performance. However, it was once unfathomable that a computer could beat a human at chess or drive a car autonomously.

To get started with AI in Supply Chain there are some basic questions you could ask:

  • Which Supply Chain problems are we looking to solve with AI?
  • How transformational are we looking to be, i.e., how big a step are we looking to take?
  • How automated or autonomous are we looking to become?

Make sure to solve real Supply Chain problems and take a step by step approach

Given the broad scope of AI and variations of use cases, it is vital to start by identifying what problems to solve (key objective) and what opportunities to pursue and learn through piloting.

o be honest, what we are also trying to say here is that the most important thing is to start with something rather than starting with the right thing. Embarking on the AI journey is a true learning process.

As Walmart’s CEO says, “AI is less like a project and more like an ongoing effort. As an ongoing effort, you want to figure out how AI can impact every aspect of your business. You want to understand how it affects your businesses’ core decisions, how it changes your overall strategy and business model, how you can get it into the hands of your frontline employees so they can better do their jobs, how it automates processes that don’t need human interaction and how roles in your organization need to change to best complement what AI can do for you”.

5 Steps to get Started with AI in Supply Chain

Hire new skills ahead of the curve – or train existing talent

Success depends very much on the trust and capabilities that the employees are able and willing to put into adopting new technology. When designed with people at the center, AI can extend companies’ capabilities, free up creative and strategic endeavors and help achieve more.

Start by using historical data

A technology partner can guide you through your journey, establishing a solid foundational baseline model on which to layer more and different types of data. A phased approach will help ensure a sustainable solution that meets your business objectives today and as your needs change. Data volume, data granularity, data quality, and data variety play a vital role.

Choose self-adapting models

To achieve the stability and adaptability required for operational use, it’s crucial to use self-adaptive models. These models will require less rework as time passes. Though model evaluation and tuning will always be necessary to a certain degree.

Ensure a digital culture that allows for experimentation

From a leadership perspective, it is essential to foster a culture that allows for experimentation and failure. Not all hypotheses will work or give the desired outcome.

Partner with a company which has practical experience with AI

In this approach, you are working with a partner firm that can help you with your AI journey. This partner can work with you to come up with the right AI strategies and projects, help you build out and test new ideas, and help you grow your internal capabilities. Not all firms can help you with this.

To make this work, you need to find the right partner. You should look for the following characteristics:

  1. A partner that can help you generate AI hypotheses that will work or have a chance to change your Supply Chain. This comes with experience in the area and a mix of business and technical skills. This can be difficult when growing an internal team simply because of its small size.
  2. A partner with a wide range of business and technical experience. As you develop your AI competences, you’re likely to need a diverse range of skills to help you come up with innovative solutions.
  3. A partner with a willingness to be transparent and share. You need to learn how AI works, and you need to own the overall solution moving forward. The AI journey will not be static.

How automated or autonomous are you looking to become?

Your decision on how autonomous the process should be as an impact on how the AI technology should be designed to work. Below you will find a description of the different levels:

Predictive

What if you could predict how your suppliers will perform? You can. The technologies available can interpret massive amounts of data from your Supply Chain and make educated scenarios on future performance based on past deliverables. It is a prediction, so it might not be 100% correct. It is all about using real-time and past data to create likely or ideal scenarios for a given situation. The ability for AI algorithms to learn from historic data sets transforms decision-making. It allows executives to work alongside AI to make more efficient, informed decisions.

Prescriptive

Imagine if you could automate the selection of suppliers or the route optimizations for your vehicles? This can be done with the technologies available. By inferring and producing simple predictive and transparent “if-then logic rules”, you can enable the automation of many of the decisions currently being made.

Autonomous

Imagine if you could predict product demand so that you could order the right amount of materials from your suppliers before you need them? With AI, you can. Low-power, low-cost IoT edge devices cannot process conventional, math-based predictive models. They must send data, often lots of data, over the network to a large prediction server and await a response. Logic-based models can be processed by virtually any computing device and used in real-time to respond to events as they happen. They can make informed decisions based on automated alerts.

We hope we have inspired you to bring AI into your Supply Chain and sincerely hopes it can improve your Supply Chain performance.

It may be difficult to imagine a world in which Artificial Intelligence (AI) improves Supply Chain Performance. But it was also once unfathomable that a machine could beat a human at chess. In this white paper, we will share with you how you can create your own approach to Supply Chain AI and how to implement it.

It may be difficult to imagine a world in which Artificial Intelligence (AI) improves Supply Chain Performance. But it was also once unfathomable that a machine could beat a human at chess. Since the Supply Chain has a great influence on all cost drivers in a company, optimizing the Supply Chain through Supply Chain AI opens for possibilities to win new market shares, boost sales and establish new business models. Supply Chain Executives from various industries are turning their heads towards AI. AI is still the “stuff of the future” and some are even suggesting that AI is history’s biggest paradigm shift. No matter what, the Supply Chain landscape is changing.

Supply Chain AI can solve real Supply Chain problems

The changing landscape of the Supply Chain demand more accurate supply chain planning and synchronization, and faster multichannel responsiveness that go far beyond the abilities of the typical workforce and infrastructure. It requires instant visibility, quick decision making and increased flexibility across the whole network. Also here Supply Chain AI can become a competitive advantage as it is possible, with the use of the right kind of supply Chain AI technologies, to solve some of these real Supply Chain challenges.

This whitepaper will give you the following:

  1. You will learn how and why you should turn Supply Chain into a competitive advantage with AI
  2. You will learn how Optilon helped a Swedish manufacturer save 22% on their logistics cost – by automatically correcting addresses
  3. You will learn how you can create your own approach to AI in the Supply Chain and implement it in your own organization

Download your own copy of the whitepaper right HERE.

Download now

Watch this 30 minute webinar about how you can apply AI (Artificial Intelligence) in your own company. We provide you with insights, advice and the audience contributes with great questions.

Do you want to know more about AI in supply chain?

Please contact Optilon’s Application Board Director Anders Remnebäck on +46 709 379 282 or anders.remneback@optilon.se.

TO THE WEBINAR

Effective inventory management is one of the single biggest actions a company can take to maximize its competitiveness. It simply ensures that resources are being used smartly. In this blog post, we will look into how you can utilize AI to improve your Supply Chain inventory performance by optimizing your assortment.

Effective inventory management is one of the single biggest actions a company can take to maximize its competitiveness. It simply ensures that resources are being used smartly. That being said, a new report published by Optilon shows that many companies have a blind spot when it comes to inventory management. 22 percent of the inventory is redundant for a Swedish average company. This could be the case for many companies in the Nordics.

It’s not just about having fewer goods in stock. By always having the right mix of goods, missed sales are greatly reduced, while taking up less storage space and reducing the risk of an item being outdated. Having the right mix assures smart use of resources, but what is the effect of also understanding how you should manage your assortment? In this blog text we will look into how you can utilize AI to manage the product portfolio and increase your sales

Why is the right assortment important?
Effective inventory management can have a major impact on a company’s profitability. The findings in the report mean, that these companies have more goods in stock than they need. A product less in the warehouse does not only mean less tied-up capital, but also less warehouse space, reduced distribution, and administration costs and obsolescence (when a product becomes outdated).

Inventory optimization is not just about having fewer goods in stock. By always having the right mix of goods, missed sales are greatly reduced, while taking up less storage space and reducing the risk of an item being outdated. It provides an efficient recoil for the companies. They reduce costs while increasing revenue and freeing up capital.

Companies should reduce the inventory in specific categories of products, removing some SKUs, and minimizing the loss of revenues. They need to optimize the assortment without losing customers, taking into account, that customers may switch (together with all their purchases) to competitors if one of their favorite items is removed and it is not replaceable by any other.

The Traditional Inventory Approach
The Traditional Inventory Approach often entails removing SKUs that perform worst from the inventory, or in other words, remove products from categories that sell the least. Using this approach, it is possible that some clients are specifically interested in these SKUs, so that if they are discarded, customers are lost completely with all the revenues they bring.

A new algorithmic Approach
In contrast to the traditional approach, you can focus on removing SKUs which are indifferent to the consumer. With AI technology you have the possibility to predict if, from the consumer’s point of view, the removed SKU is replaceable by another item and we find the right match in term of profitability. In order to achieve this, our models, using only transactional data, answers the following inventory questions:

  • Frequent itemset mining – Which items are often sold together from a historical perspective?
  • Product alternativeness scoring – Which items provide good alternatives for items in the scope of removal?
  • Volume replacement scoring – How many customers actually buying item A will switch to item B if item A is removed from the inventory?
  • Revenue replacement scoring – Which portion of revenues is expected to be covered by the replacement product if the replaced product is removed?
  • Marginal replacement scoring – Which portion of margins are expected to be provided by the replacement product if the replaced product is removed?

Optimization Results
Our algorithmic approach has been tested side-by-side with the traditional method of removing least sold products and the algorithmic approach achieved 88% less estimated sales loss in the set of identified items for removal.

Are you looking for more information about AI and how you can incorporate it into your own Supply Chain – then you can download some of our great content via the below link.

Download whitepaper on AI

Blockchain is not a way station on the road to increased digitalization. It is a paradigm shift in how businesses, customers and partners interact and exchange value. Those who wait until the later phases will be shut out of opportunities to learn, earn value and influence blockchain´s development in the value chain. Blockchain is potentially a disruption of how Supply Chain of the future operates.

Digital advances have enabled businesses to streamline an increase in interactions between customers and value chain partners. Many companies have information-heavy processes that still require multiple entities to exchange private documents. The technologies to do so are un-secure, error-prone and fraud-ridden.

This post will investigate what blockchain is all about and how it can make a difference in the Supply Chain.

What is Supply Chain Blockchain?
For generations, businesses have relied on centralized infrastructures, such as payment systems, insurance, delivery and logistics services, and governments – to execute commercial transactions and manage risk. But these systems were not designed to handle the kinds of machine-to-machine transactions made possible by digital platforms.

Blockchains create decentralized, distributed and digital records of transactions that are anonymous, tamper-proof and unchangeable. This technology establishes trust among unfamiliar or unknown partners by ensuring that every successful transaction is recorded and stored in multiple locations across the entire distributed network.

Complex mechanisms are put in place to validate the accuracy and integrity of transactional information. Finally, in theory, there is no intermediary, although this is not always the case. This greatly eliminates the opportunity for criminal interventions or invalidated transactions.

Blockchain is not a database. Blockchain enables trusted interactions between unknown participants.

How can Blockchain in Supply Chain build the business case?
There are 6 ways that blockchain can support building the business case.

  • Business growth
    Blockchain allows any individual or commercial entity in the world to safely transact with any other without an intermediary. Enabling expansion of markets.
  • Digitalizing manual processes
    It will provide better tools to manage expensive and opaque processes and enable trade in a broad range of assets that until now could not be effectively represented, priced or traded with existing means. Enabling more efficient information exchange.
  • Making digital processes both safe and transparent, identity authentication (efficiency)
    It will move the world economy away from the slow, expensive, analog-based methods we have relied on since the 19th century to establish identity and legal status in financial transactions. It is a trusted digital environment by combining existing technologies and techniques to form a distributed digital ledger that captures and records the information needed by participants in a network to interact and transact. Simply because it will provide the identity of each participant in the network, without them having to show it to everyone.
  • Know your customer, leverage customer data to drive sales
    Couple the supply chain data end-to-end and utilize it commercially.
  • Fight counterfeiting
    Counterfeiting is a hot topic within blockchain. Many large brands have a need to protect their products from counterfeiting. At the same time, they are yearning for a direct customer relationship instead of via the retailer or ecommerce site.
  • Visibility/Traceability
    Many brands struggle with developing creating a more transparent Supply Chain. Blockchain can help make the transactions in the Supply Chain more visible and traceable by creating a digital twin.

Getting the journey started
Many organizations have not yet focused enough on the type of supply chain decisions or processes that blockchain might enhance.

There is significant experimentation with blockchain across every industry around the world. Corporations that have long relied on centralized systems for control and security are being pushed to accept the concept of decentralization and distributed control that is central to blockchain.

Our advice to you: Experiment, focus on a short term tactical, narrow-scope, deployment. Do that by building a solid proof of concept.

Questions which can help you unlock the business value of Blockchain in Supply Chain:

  • How will you unlock the value for your business, now and tomorrow when leveraging blockchain?
  • How will you build the internal capabilities needed to build and manage blockchain platforms?
  • How will you build the organizational and leadership capabilities needed to engage in this new way?
  • Which intractable challenges involving access to, exchange of or sovereignty over data could you address?
  • What simple administrative decisions would you leave to an algorithm to make today?
  • What would be the priority use cases?
  • How will you pursue them – independently, as part of a partnership or as part of a consortium?
  • To what extent are you willing to move away from existing governance and operating models?

Alis Sindbjerg Hemmingsen is a Thought Leader at Optilon. She has more than 25 years of experience within the Supply Chain field. Optilon has a long track record helping companies achieve competitive advantages by improving Supply Chain performance. Learn more about Optilon here. 

More blog texts about blockchain

Anti-counterfeiting through Supply Chain blockchain

Onboarding and offboarding blockchain in supply chain

Would you like to learn more about Blockchain in Supply Chain?

Please contact Optilon’s Application Board Director Anders Remnebäck on +46 709 379 282 or anders.remneback@optilon.se.

All industries are becoming more and more technology-driven. We are always looking for new technologies to solve old frustrating problems, or to give us a competitive edge in fast-moving business environments.

It has been predicted for a few years now that the Supply Chain will be a great place to introduce blockchain technology. It is because of the blockchain’s inherent characteristics such as transparency, immutable records, resilience against attacks, etc.

When starting a blockchain project, it is for obvious reasons easy to focus on the blockchain technology itself. However, in this post, I will point out one area that is of specific interest when implementing a blockchain project. It has little to do with the technology and more to do with new challenges regarding business structures, business relationships and related interfacing technologies that arise because of the nature of blockchain technology.

Onboarding and offboarding in the blockchain is important
The first challenge to look at is the onboarding/offboarding process to/from the blockchain. Imagine a complex supply chain with tier 3, tier 2 and tier 1 suppliers and several manufacturers. These relationships are not static. They can be quite dynamic.

Let’s say a number of these actors agreed to use a blockchain to track their interactions and the flow of goods from one to the other. It would be necessary for the parties to agree on how you would join and onboard the blockchain, as well as offboard.

For the blockchain to function in a way, that serves the purpose of tracking the provenance of the goods that flow through the blockchain, the on/offboarding process needs to ensure that only qualified suppliers can join. If any dodgy counterfeit supplier could join, the blockchain would not be able to serve its purpose. It could not provide the supply chain with integrity ensuring the provenance of the items flowing through the supply chain.

The challenge is similar to the “Know Your Customer” (KYC) regulation in the banking sector. Banks must ensure that they have thoroughly verified the identity of a new customer before opening a bank account. The regulation makes it harder for criminals to launder money or commit tax fraud.

Define the roles in the blockchain from the beginning
Who in the supply chain should have the role of enforcing the on/offboarding of suppliers? And take on the cost of that administration? If the question is answered from a business perspective, it is a great start. A dominant player in the supply chain, e.g. a huge manufacturer, may enforce the policy by stating – “if you want us to buy your products you must join the blockchain, and this is the process”!

In heavily regulated industries there might already be suitable actors/regulators who can stipulate the rules and take on the verification and administration. It should also be in their interest. In many business domains, there are already purchasing portals that essentially provides the services of vendor auditing and verification. Regardless of the solution, it is a process and solution that must be defined and implemented when using blockchain for supply chain integrity and visibility.

Mikael Ahlström has spent over 25 years in the technology space. His experience ranges from industries such as telecom, utilities, supply chain and finance. During the last years there has been an intensified focus working on technologies for tracking and tracing of provenance using technologies such as blockchain for purposes such as anti-counterfeiting, supply chain visibility/integrity and optimization. Learn more about Mikael Ahlström here.

More blog texts about blockchain

Anti-counterfeiting through Supply Chain blockchain

How to unlock business value through blockchain in supply chain

Would you like to learn more about Blockchain in Supply Chain?

Please contact Optilon’s Application Board Director Anders Remnebäck on +46 709 379 282 or anders.remneback@optilon.se.

Counterfeiting is a challenge many brands encounter. Digital advances have enabled businesses to streamline loads of interactions between customers and value chain partners. Many companies have information-heavy processes, which still require multiple entities to exchange private documents. The technologies to do so are unsecure, error prone and fraud ridden.

Counterfeiting is a dilemma for many brands
Many large brands have a need to protect their products from counterfeiting. At the same time, they desire a direct customer relationship instead of having one via the retailer or the ecommerce site.

Retailers are trying to find ways to provide an in-store experience that gets the consumer out of the couch, but not necessarily off-line. High fashion, luxury goods, and quality toys are still bought in the store. We want to touch, feel, try on, test and experience the premium goods before we decide to buy, and we want it to be a great experience.

However, these products can very often be found on ecommerce sites at a discounted price – but can the site and the product be trusted? Do they sell authentic items?

Blockchain can help brands build trust
Premium goods have a high secondhand value and are therefore also sold over the internet. How can a buyer be sure that they are not buying a counterfeit product? High value brands have an excellent opportunity to use blockchain to protect their goods from counterfeiting while building a direct relationship with their fans. Customers buying these products very often want to be recognized and associated with the brands.

Use already existing technologies
Using an already existing technology, such as a unique identifier, could be a way forward. It can be placed as part of the product or packaging and can be scanned as the last step of the manufacturing process. The identifier will be registered in the blockchain so that the product can be identified at any point in the consumer space, the secondhand market and for many other use cases. This could of course be achieved by a secure database. But using a blockchain solution, allows the brand owner to gradually integrate their production line and supply chain upstream, over time adding a higher degree of integrity and visibility to their supply chain.

Unique identifiers such as QR codes and NFC chips would allow the consumer to validate the items authenticity using a regular smart phone and at the same time opt in to be registered as the owner of the product. The brand owner would have the choice to provide product information, receipts, warranties and service records via the blockchain.

Knowledge about the consumer
At the same time a very real “link” is established directly from the brand to the consumer. When the item is sold second hand the seller can transfer the ownership to the new owner, who then gets access to remaining warranty, service record history etc.

The value of the blockchain will be the possibility to follow an item as it changes custody from manufacturer to purchaser. This value will increase more and more with increased counterfeiting (which is increasing at an ever-faster pace).

We demand secure products, and products that can demonstrate that they have been manufactured in an environmentally responsible manner. As the millennials are getting more and more purchasing power, and influence the value of solutions, securing the integrity of the supply chain will grow immensely and blockchain fits into that category of solutions.

Mikael Ahlström has spent over 25 years in the technology space. His experience ranges from industries such as telecom, utilities, supply chain and finance. During the last years there has been an intensified focus working on technologies for tracking and tracing of provenance using technologies such as blockchain for purposes such as anti-counterfeiting, supply chain visibility/integrity and optimization. Learn more about Mikael Ahlström here.

Blockchains, however, create decentralized, distributed and digital records of transactions that are anonymous, tamper-proof and unchangeable. This technology establishes trust among unfamiliar or unknown partners by ensuring that every successful transaction is recorded and stored in multiple locations across the entire distributed network.

The challenge is, however, how to unlock business value. This post will cover how it can be done from a counterfeiting perspective.

More blog texts about blockchain

Onboarding and offboarding blockchain in supply chain

How to unlock business value through blockchain in supply chain

Would you like to learn more about Blockchain in Supply Chain?

Please contact Optilon’s Application Board Director Anders Remnebäck on +46 709 379 282 or anders.remneback@optilon.se.

Our newsletter

Subscribe for industry news, events and resources.

Contact

Services

Community

Resources

About Us

© Optilon 2023

Join us at the Optilon Supply Chain Conference 2023!

Learn from experts and supply chain leaders, and discover innovative solutions to help you stay ahead of the game. This event is free but there are limited tickets available.

Read more