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Industry 4.0 for Supply Chain – The role of AI (Part 3)

Industry 4.0 for Supply Chain – The role of AI (Part 3)
Industry 4.0 for Supply Chain – The role of AI (Part 3)

This is part 3 of a 3-part blog, addressing the 3 questions below.

Part 1 – What is Industry 4.0?

Part 2 – Where does Supply Chain figure in Industry 4.0?

Part 3 – What is the role of AI in Supply Chain for Industry 4.0?

You can find Part 1 here.

You can find Part 2 here.

Artificial Intelligence in Industry 4.0, Digital Supply Networks

In the first two parts of this article we covered Industry 4.0 basics and looked at Digital Supply Networks. We understood how automation and the internet of things come together to create a connected world that personifies Industry 4.0. We saw how systems and applications could integrate and coalesce into this massive, constantly evolving and adapting organism called a Digital Supply Network. Automation, connections and integration provide the physical structure of the digital supply network. Artificial Intelligence infuses life into this organism and makes it functional.

AI Steps Up

Digital Supply Networks derive their true benefit by being responsive, adaptive and real time. Without any of these characteristics, they would not be able to differentiate from traditional supply chains. These characteristics require that the supply chain be able to handle whatever is thrown at it, accommodate umpteen scenarios, learn new paths, optimize for cost, utilization and other factors, all of this in near real time and round the clock.

The supply chain needs quick, intelligent, optimal decisions all the time. Artificial Intelligence has come of age and makes this possible. Distilled human intelligence in the form of algorithms, machine learning, neural networks that discern patterns, insights from analytics and statistical routines that use them with “current” information all facilitate real time decision making by systems. Rule and role based human oversight bring in the ability to tap expert intelligence for critical decisions and approvals.

Industry 4.0 for Supply Chain – The role of AI (Part 3)
Industry 4.0 for Supply Chain – The role of AI (Part 3)

AI takes over tasks that humans perform and provides consistent quality output, in much lesser time. Tremendous improvements in computational power and toolsets have given plenty of teeth to AI. The AI systems in Digital Supply Networks take care of planning and scheduling, allocation of resources, process customization and optimization.

Real world applications

Let us look at some specific applications of AI in supply chain.

  • Forecasting of demand based on historical patterns and current factors can be effectively done to in turn aid resource planning, production planning and procurement. Optimal inventory levels can be achieved to ensure SLAs while not locking up capital, based on analytics and forecasts.
  • Scheduling of operations in factory and warehouse environments can be done based on the order book. AI can optimize these schedules to improve utilization, reduce costs, evenly distribute work and more.
  • Turnaround time for picking and put-away operations in the warehouse can be reduced using intelligent suggestions for locations to store material or pick them from. Machine learning ensures that the system learns and improves continuously.
  • Dock and truck scheduling for loading and unloading in busy warehouses can be done by systems that can factor in constraints such as arrival and departure time restrictions, lunch breaks, breathers between trucks, skills and equipment needed for trucks such as forklifts, size of team needed for the order, special needs such as cold docks, extra-long trucks and so forth.
  • Loading sequence and pattern for storage bins, trucks to maximize space utilization with bin packing techniques. In case of trucks the loading sequence also can factor sequence of delivery to ensure ease of access.
  • Route planning for delivery in case of milk runs, as well as for on demand orders can be created to reduce travel time, reduce fuel costs, optimize number of trucks needed. Information pertaining to traffic, preferred delivery slots can be used in planning while ad hoc orders and express orders can be dynamically factored in to re-plan with minimal disruption.
  • Goods to picker solutions with automated robots require intelligent traffic management within the warehouse to reduce power costs, time needed and avoid log jams, while efficiently scaling up to meet demand.

Artificial Intelligence’s true power comes to the fore when it goes beyond automation of mundane human decisions, to working with factors that do not model easily, learning from data, dealing with numerous complex factors, large scale, quick turn-around needs.

As we saw from the potential applications listed above the intelligence is distributed across sub-systems. The federation of these intelligent subsystems creates a powerful collective intelligence where each subsystem provides stimuli/inputs to other subsystems.

This brings us to a conclusion of the 3 part-article. Embracing Industry 4.0 entails big changes to processes, organization ethos, skillsets and infrastructure. It opens up revolutionary possibilities and readies organizations for a new age economy. Take steps today to stay ahead of the curve and participate in creating and shaping the new age economy. Coming soon! How to get started with your Industry 4.0 journey.

Industry 4.0 for Supply Chain – The role of AI (Part 2)

Industry 4.0 for Supply Chain – The role of AI (Part 2)

This is part 2 of a 3-part blog, addressing the 3 questions below.

Part 1 – What is Industry 4.0?

Part 2 – Where does Supply Chain figure in Industry 4.0?

Part 3 – What is the role of AI in Supply Chain for Industry 4.0?

You can find Part 1 here.

How does Industry 4.0 influence Supply Chains?

Industry 4.0 and the Internet of Everything (another name for IoT), bring a connected world into play. The benefits to be reaped are possible precisely because they are all connected. To elaborate this let us look at an example.

The car manufacturer Toyota has established just-in-time manufacturing practices. The inventory levels of car parts that they hold have shrunk to accommodate these practices. The assembly line gets parts from Toyota plants and from their ecosystem of suppliers. Toyota conveys their need for inventory at a detailed level to their suppliers who deliver just in time. This brings down costs dramatically for Toyota. In a connected world any change in the production plan at Toyota will be automatically notified to the supplier, who in turn can ramp up or ramp down their production. Such plan changes can be in turn notified to their suppliers who can act on this information. The flow of information can traverse the entire supply chain and can result in business decisions being made in the best interest of each of the parties involved.

Digital Supply Networks

Digital Supply Networks are the supply chain networks of the future. They are characterized by being connected / digital. They are real time networks that offer online access to services, as well as visibility in the execution. They can offer scheduled as well as on demand services and can respond to demand stimuli to fine tune the supply. Let us see what all that jargon translates to with an example.

An interior designer is furnishing an office space and places an order on an ecommerce portal for specialized lighting equipment. The order includes customization such as color and style of casing and printing of the company logo on the casing. The customer has chosen to pay a premium for quick delivery. The placement of the order triggers a chain of events that flow through the digital supply chain. The factory gets a “priority” order that is scheduled for production. The required quantity of casing for that order is not available in stock, automatically creating a shortage alert. The system places an “expedited delivery” order to cover the shortage and also ensure recommended minimum inventory level for that type of casing. A forecasting model ingests data for this order, as well as the stock shortage to fine tune the minimum inventory level for the casing.

The casing supplier places an “on demand” order on his transportation partner to deliver the casings from ready inventory to their customer. The transportation partner is an aggregator who allocates a truck based on proximity, vehicle type and other business factors. The casing supplier also starts a production run to replenish his ready inventory. His production system places an order for raw material on their supplier. A smart contract raises an invoice on the factory as per payment terms for “expedited delivery”. The contract settlement triggers are sent to finance departments.

The factory which is now producing the lighting equipment also schedules a delivery of the finished product to the e-commerce portal’s designated cross dock. Their fleet provider who has a set of trucks works out an optimal fleet plan for the day based on orders on hand. The factory is informed of an ETA for the truck to pick up the goods. Alternately the factory can specify an expected time that the fleet provider can factor.

When the products are ready, the orders are delivered by the ecommerce company to the customer within the guaranteed time. The number of business that come into play to make this happen are numerous and they constitute the digital supply network. These businesses are connected and can send each other real time updates as well as service requests or orders. The businesses themselves are dynamic and align/realign the execution to incoming orders.

Digital Supply Networks are built using ecosystems and providers who can be tapped on need basis. These businesses are able to talk to each other digitally, thanks to APIs that allow integration. Services can be ordered, status can be tracked, alerts are pushed and the provider is truly online and real time. Some exciting technology such as smart contracts and blockchain are ushering in the potential to work with even new providers in a trusted manner.

Each link the supply chain has to learn how to be real-time and dynamic in their business to leverage an ecosystem that can save costs as well as increase service levels dramatically. Retail shops, distribution warehouses, ecommerce cross docks, manufacturing units, fleet providers, aggregators, truck owners, finance departments, ports, banks and financial institutions, trusted platforms will all be part of this digital supply chain that is a living breathing organism which will respond to customer demand. Exciting times ahead.

In the next part we will look at how Artificial Intelligence plays a role in digital supply networks.

Cross Dock Operations

Cross-dock operations are one of the most crucial concepts in supply chain management, which reduces the overall cost of the Supply Chain while increasing the efficiency of the supply chain. A cross dock is typically useful in a scenario where a large quantity of material has to be shipped on a regular basis to a customer / manufacture from multiple suppliers.

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Why Warehouse Management System?

It is not so easy to manage warehouse operations. It includes efficient utilization of man-power, equipment & space and at the same time reduce the inventory carrying cost – all of which helps to run a profitable business in today’s competitive business environment. It looks simple in theory. But in reality, the warehouse operation is vast and requires the right mix of people, procedures, systems, and solutions to run uninterrupted operations. Many companies adopted WMS which helps them to manage their warehouse operations, they control inward, outward movements and storage of materials and then processing the related transactions. (more…)

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