AI, IoT and the power of resilience

For many supply chains, the key to building resilience and agility relies on more and better data.  In his book “The Power of Resilience” Yossi Sheffi speaks to the need to build resilience in supply chain operations through the application of data.  Situational awareness, accurate understanding of risk, and the potential outcomes of any planned response all depend on quickly gaining a deep understanding of a company’s current situation and an accurate view of the possible paths forward.  This is especially important as companies face an increasing rate of disruption generated by the pandemic, geopolitical turbulence, climate change, and social activism.

Traditional supply chain planning applications rely on a stable set of inputs – demand, supply, replenishment, and transportation just to name a few.  The focus is considering these “known” factors into an optimal plan for the business.  As variability in planned inputs increases, traditional optimization approaches show their weaknesses in generating an agile and resilient response.  More data, deeper situational awareness, and a more agile response to supply chain planning has become a priority for any company trying to navigate in the uncertain market of today.  IoT and AI are quickly becoming core pillars in building this resilient and agile planning capability.

Companies must improve the ability to blend their own supply chain data with a number of softer attributes gleaned from thousands of sources including supplier financials, weather, geopolitical disruptions, changing market preferences, and transportation and production disruptions and shortages.  It is only the inclusion of this additional data that creates the ability to increase agility and resilience.  AI/ML approaches allow us to consider these much larger and more holistic data sets in formulating our plans for the future.  This thinking led me to propose the emergence of Industry clouds in 2014 – The idea that industry participants and consortia would begin to come together to share data and build services to improve outcomes for an entire industry  Sheffi talks about the importance of working with customers, multiple tiers of suppliers, and even competitors to improve resilience and agility.  Look for companies with IoT / AI enabled supply chains to create innovative ways to use and share data to create advantage and improve outcomes.

In upcoming blogs we will talk about how the use of AI and IoT in supply chain planning and operations can be used to build resilience and agility.  We will also examine some of the new and innovative sources of soft attribute data to drive improved outcomes.

Scott Lundstrom

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