Are you wondering why you should implement AI to your Supply Chain? Supply Chain is more and more recognized as a key source of competitive advantage and differentiation. Companies strive to build Supply Chains that support company growth, increase transparency, streamline operations, and increases customer satisfaction. Implementing AI to your Supply Chain could become a source for creating competitive advantages. In this blog post, we will look into why Supply Chain AI creates competitive advantages.
The Supply Chain has a great influence on all cost drivers in a company. Optimizing how Supply Chains are operated opens for possibilities to win new market shares, boost sales and establish new business models. Focusing on the Supply Chain can improve the bottom line with 5-20% within 24 months (1). Supply chain AI, is still the “stuff of the future” for some organizations. Some of the world’s most significant leaders and thinkers are even suggesting that artificial intelligence is history’s biggest paradigm shift. Yet, we are still only at the beginning of the AI (r)evolution. Next we will look into why Supply Chain AI supports the company in gaining competitive advantages.
Why Supply Chain AI can support differentiation and lower cost
The Supply Chain is a network of suppliers, manufacturers, distributors, and retailers that act together to control, manage and improve the overall Supply Chain performance. Evaluating the performance of the entire Supply Chain can be a complex task, due to the complexity inherent in the structure and the operations.
No matter how the performance evaluation is done, the company must be able to differentiate against its competitors. Hence, the company must be able to offer value propositions that create an advantage over its competitors. Secondly, the company must operate at a lower cost than its competitors. This is where AI could become a competitive advantage in the Supply Chain, simply because the use of AI in the Supply Chain can both support differentiation but also lower cost.
Why Supply Chain AI can support the new Supply Chain model
The traditional model of the Supply Chain is fundamentally changing. We are shifting towards consumer-led, data driven, highly complex supply networks. The consumer increasingly drives innovation from the heart of the supply network, rather than being on the receiving end of the supply chain. Companies have to act in a more globalized world and balance the global with the local.
Companies have to be agile and willing to change by involving the whole organization. Companies have to put up a sustainable agenda internally as well as externally. They have to build a flexible and resilient culture that makes the organization robust toward big changes and chocs around the world. They have to provide visibility and transparency. Surrounded by an explosion of data, many Supply Chains are also struggling to leverage or take advantage of their data.
Why Supply Chain AI can solve real Supply Chain problems
These shifts in 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.
Would you like to learn more about how you can create competitive advantages with AI then we encourage you to explore some of our content from Optilon Academy right here.
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.
(1) Arlbjørn et al; ”Supply Chain Management, sources for competitive advantages, 2018 edition.