This transcript has been lightly edited for clarity.
What are the most significant impacts of AI and gen AI on supply chain planning and execution? What can we learn from leaders who have successfully scaled these innovations?
I think today we’re finally at a time when gen AI is more than just hype. I’ve seen this play out in the supply chain across industries, and there are three important use cases I’d like to highlight across the three parts of the supply chain: make, plan, and deliver.
In make, labor productivity has seen significant improvements. Almost 40 to 50 percent of the tasks of the last decade can be automated in the next two decades. This helps in defect identification. It helps in predictive maintenance.
On the planning side, demand forecasting, you can actually get data from your consumers, from the weather, from events happening in your community—to form very accurate forecasting models using gen AI tools.
On deliver, which is all about your delivery networks, gen AI has made digital twins way smarter. They can now predict that if there is a particular bottleneck in your network—may it be at a port or at a depot—what the best route is that should be taken, and rewire your network to go on that route without manual intervention.
What strategies are supply chain leaders adopting to build resilience while balancing competitiveness and compliance?
One learning we’ve seen across all these companies is that automation is easier than adoption.
Companies that have built resilience successfully have kept for every $1 they spend on automation, the $1 they spend on adoption. It’s not just about training, retraining, and reskilling your workforce. It’s also about how you ensure you have the right talent in your company to do this.
How many data scientists have you hired in the last year working on manufacturing? How many data engineers do you have? These are the first questions I ask every COO I reach out to. A lot of them say zero, and, unfortunately, that is not going to help you scale the gen AI tools you’ll need. This cannot be fully outsourced. You need the capability in-house as well.
How are geopolitical shifts and regulatory changes rewriting supply chain rules?
Supply chains continue to be in the news. As soon as you have tariffs or any sort of geopolitical tensions, you end up creating a supply chain that is more complex and potentially more expensive.
So first and foremost, the thing we see happening in supply chains is a concept of inflation, because most likely you will not procure from the cheapest source anymore. You will have to diversify, and that’s going to result in a cost escalation.
Companies that have done this well have actually set up a nerve center to take care of it. What is a nerve center in this context? It is a team that has the right tools to predict the implications of different political events.
Each event has implications for the supply chain, and each is something the nerve center takes as input, runs the algorithms, and figures out what’s the next best alternative. The beauty is that the companies that have these nerve centers set up well are seeing at least a 5 to 10 percent delta versus others when it comes to service-level metrics or cost metrics.
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