How AI Is Helping the Supply Chain Disrupted by Covid-19
By John P. Desmond,, AI Trends Editor
The supply chain of the biggest supplier of toilet paper in the US was severely disrupted by the Covid-19 pandemic in 2020.
“The norms are gone,” stated Bill Waid, a general manager with FICO, which sells supply chain management software to Procter & Gamble, which is by far and away the leading manufacturer of toilet paper in the US, according to an account in datanami. “Whatever was considered the way you approached your supply chain and how you actually met it–all those rules went out the door when this hit,” Waid stated. “Demand is going up and down and supplies are short in many areas while there are gluts in others.”
Consumers are redirecting money they once spent at restaurants or movie theaters to the purchase of record amounts of imported clothing, computers, furniture and other goods.
One wonders what AI brings to the table in the midst of so much uncertainty in the $635 consumer goods supply chain. Suppliers have been forced to override computer-generated predictions that determine which products in what quantities are delivered where. And demand for toilet paper skyrocketed.
It turns out, the ability of the AI-powered supply chain software to simulate alternative outcomes and quickly respond, is helpful. P&G can use the FICO supply chain modeling software to respond to rapid shifts, but the pandemic required a human intervention.
“What was normally modeled in their supply chain [for toilet paper] was just completely disrupted. They required overrides and overrules,” stated Waid. “They said, ‘Okay we’re not going to be able to fulfill on toilet paper. If we put that aside, what can we fulfill on, and how do we actually keep the operations going.’”
The AI model limits needed to be adjusted. During normal operations, companies typically would configure the model to fulfill all orders at the main priority, with variables such as timeliness of delivery, distance of delivery and profit being secondary. But with toilet paper flying off the shelves, not all the orders could be fulfilled. So the delivery models needed to be modified.
“You need to be able to very quickly simulate multiple options and assess those scenarios side by side, to come up with the most optimal outcome you can get,” Waid stated. “Coping is probably the best word you can use here.”
Pandemic Has Exposed Weaknesses in Supply Chains
The pandemic is shining a spotlight on weaknesses in the consumer supply chain. The switch to just-in-time (JIT) manufacturing has resulted in lean supply chains that hold lower inventory to remove the risk associated with overproduction and surplus, The strategy, inspired by the automotive industry, has enabled supplies to lower their costs, according to a recent account in SupplyChainBrain.
“Yet, when something like a pandemic or a natural disaster occurs that creates a surge in demand, it’s difficult to ramp up production, or tap surplus supplies to fill the pipeline,” stated the author, Carlos Melendez, chief operating officer of Wovenware, an AI and software development firm based in San Juan, Puerto Rico. “What’s required today instead is a new model that enables real-time demand manufacturing over JIT,” he suggested.
Suppliers are turning to AI to help address the challenges, pursuing applications around predictive analytics, warehouse robotics, and robotics process automation (RPA) for example. Another approach is to turn to micro warehouses, with storage located within two miles of a customer base, in a decentralization of distribution.
A higher degree of automation is also likely. “The supply chain of the future will very well be composed of fewer human workers,” Melendez suggested. This will encompass greater AI-driven automation for managing and predicting inventory needs, processing data and handling back-office tasks and warehouse operations; and new delivery channels, including drones, for safer, contact-free home deliveries.
This new supply chain will need to overcome some hurdles to become a reality. “Interoperable, integrated systems will need to share data across the supply chain to be effective,” he suggested. “But companies will need to be open to this interoperability to succeed.”
The pandemic has caused major disruptions in the container ship distribution system as well, with costs rising dramatically and shortages of steel containers having repercussions. At the Port of Los Angeles one day last week, 42 ships were anchored offshore waiting to unload their cargoes, with every warehouse within 60 miles already full, and many dock workers out sick with coronavirus, according to an account in The Washington Post.
“It’s multiple different bottlenecks all at the same time,” stated Lars Jensen, chief executive of SeaIntelligence, a Copenhagen-based consultancy. “It’s like a train wreck in slow motion.”
Intelligent Automation a Path Forward for Some
As companies seek to make their supply chains more resilient, some will turn to intelligent automation technology, in the opinion of Tom Ivory, VP and Global Leader of IBM Services Automation Innovation Unit, writing recently in Supply Chain.
Intelligent automation combines AI, machine learning and process automation, to create smart business processes and learn and adapt on their own.
To be successful, Ivory recommends: having company-wide governance in place that provides a holistic view of all operations; a willingness to scale the technology beyond routine or mundane tasks; getting the right talent either internally or from an outside provider; and knowing the business goals, what you are trying to achieve.
IBM recommends companies start small, picking five to seven tasks to automate at first, looking for that early success.
More companies are turning to software, sensors, robotics and AI tools to help factories stay open during the pandemic, according to a recent account in The Wall Street Journal.
“Covid-19 has really been the catalyst and accelerant for the adoption of software solutions to automate workflows and make it more efficient and have less risk when you have less people around doing things,” stated TJ Nahigian, cofounder and managing partner of Base10 Partners, an investment firm.
Some companies are turning to technology to automate in preparation for the next pandemic.
“After this global crisis cools off, there will be an acceleration to even more of a continuous versus static supply chain,” predicted Adam Compain, founder and CEO of ClearMetal, focused on supply chain continuous delivery.