Unlocking the Value of Supply Chain with AI-driven Processes
Over the past four decades, much of manufacturing production worldwide has been organised in what has become known as Global Value Chains (GVCs). COVID-19 has struck at the core of global value chain hub regions, including China, Europe and the US.
Now, as production comes back up to speed, companies are scrambling for a means of monitoring the inbound flow of product to figure out how it can be received, stored and shipped at a time when demand for all but the most critical items has ceased. This has prompted many businesses to review their current supply chain processes and evaluate how they might build resilience ahead of any future disruption.
Digitalisation is essential for industry in this current climate, both to increase margins and operational performance in good times and to adapt in the bad. AI has reached a key juncture where the real-world benefits are instantly recognisable.
Understanding where AI boosts existing processes
In the industrial sector, AI application is supported by the increasing adoption of devices and sensors connected through the Internet of Things (IoT). Production machines, vehicles, or devices carried by human workers generate enormous amounts of data. AI enables the use of such data for highly value-adding tasks such as predictive maintenance or performance optimisation at unprecedented levels of accuracy. Hence, the combination of IoT and AI has begun the next wave of performance improvements, especially in the industrial sector. Furthering this automation, AI uses the historical IoT data to analyse trends which can help in streamlining and improving the supply chain process through cutting-edge solutions such as AI-driven operations scheduling. This provides recommendations to humans as to the optimal scheduling sequence, substantially reducing error and inefficiencies. Further, this AI learns as it goes and tailors its guidance to particular situations, gaining intelligence the more it runs. In addition, AI-driven robotic process automation removes the human element from repetitive tasks in varying levels of complexity, thus furthering increases in efficiency and accuracy. Through integrated workflows, much of the supply chain process can be intelligently automated. These types of AI-driven capabilities have the potential to redefine the business supply chain process. In certain industries such as oil & gas, these types of operational gains are more important than ever in today’s climate.
Early adopters of AI have deployed these technologies on-premises, in the cloud, at the edge, and through many types of hybrid architectures. AI itself is not one thing but comprised of several technology types, including neural networks, deep learning, natural language processing, computer vision, unsupervised machine learning, supervised machine learning, reinforcement learning, transfer learning, and others. These various types of AI are applied in different ways throughout the industrial world to create targeted solutions provided as descriptive, predictive, prescriptive, and prognostic analytics.
Overcoming the fear of automation
Beyond deciding where and how to best employ AI, an organisational culture open to the collaboration of humans and machines is crucial for getting the most out of AI. Trust is among the key mindsets and attitudes of successful human-machine collaboration.
Here are some practical steps to consider if a business is looking to explore the implementation of Artificial Intelligence or Machine learning capability into their business process:
- Leverage AI to gain significantly more value out of existing industrial software: SCADA (an acronym for Supervisory Control and Data Acquisition generally refers to industrial control systems) and other types of control systems have become standard practice in most industrial facilities. Real-time and historical data is typically used for trending, reporting, and HMI visualisation. AI allows companies to get much more value and insight from this historian data through state-of-the-art technologies such as multi-variate machine learning and deep learning. By integrating software infused with AI into existing industrial IT infrastructures, businesses can greatly amplify the value and ROI by detecting and solving operational and maintenance issues before they become larger problems that often result in unplanned downtime. This alone can increase uptime by 10% annually, resulting in substantial avoided costs and efficiency gains.
- Allow AI to integrate into the core of the supply chain to take advantage of cutting edge capabilities: AI-driven operational scheduling and work process automation can eliminate mistakes and allow industrial companies to get the most out of the resources they have available. Supply chain success is critical to overall business success, and an increase in efficiency can often be the difference between turning a profit or not. AI provides incredible value in this area, and businesses shouldn’t be afraid to leverage its power as an integral part of their supply chain process.
- Use the cloud to ease the implementation of AI, allowing companies to scale: Artificial Intelligence is fast becoming the brains behind the cloud. Consequently, companies can quickly deploy and access a variety of industrial software capabilities that are driven by various types of AI technology. The cloud is the delivery mechanism, and SaaS is the commercial model; however, AI drives much of the value gained. Now more than ever before, AI is becoming more easily accessible and more cost-effective to deploy into industrial environments.
- Bridge the gap between AI and humans: In order to glean maximum value from AI, companies must ensure that they bridge the gap between AI and human understanding. A significant portion of the workforce today is somewhat distrustful or fearful of AI. It is critical that companies do everything they can to ensure that the benefits from AI-infused software are translated into the vernacular of the targeted worker. The benefits provided by AI must be put in context, be useful and actionable. If this does not happen, then much of the value of AI is wasted.
- Be open to continued innovation and change: AI capabilities continue to evolve and improve. Software will become more intelligent through combinations of AI capabilities in order to achieve more sophisticated machine-based thought and reasoning. Amid these changes, companies can reap more and more benefits through deeper insight into cost vs risk decisions, an improved understanding of business processes and associated efficiencies, and better forecasts of future events. By continuing to plan for and incorporate change, companies can take advantage of ever-improving AI capabilities and insight.
Time to reflect and evolve
Businesses now need to be incredibly agile to manage the costs of turning down production, followed by the working capital constraints to then rebuild production levels as economies recover. We are also seeing a period of distrust and disinformation while global supply chains are disrupted; data is key to traceability and provenance, ensuring that drugs and food come from authentic sources. Better visibility allows us to understand where resources such as food and pharmaceuticals are and how we can get energy efficiently to those who need it.
Digital transformation stands to provide an immediate and compelling competitive advantage for those quick to adopt – and to demonstrate provenance. Businesses require intelligent software to address industrial pain points for value creation, productivity improvement, insight discovery, risk management, and cost optimisation. AI is a key differentiator and a propelling force behind improvements in the supply chain.
Upgrading RFID and Automated Track and Trace Solutions
During the COVID-19 pandemic, global supply chains faced the challenge of rapidly adjusting their business priorities to new customer preferences. Local supplier backlogs, winter storms, and the Suez Canal backup in March underscored the need for efficiency and visibility across the supply chain.
According to Christof Backhaus, Digital Lead Product Supply and Smart Label Project Lead at Bayer, companies must now place critical importance on tracking and tracing their products. “All large enterprises in the world dealing with finished goods,” he said, “seek functional and technical solutions to real-time channel inventory.”
Indeed, RFID’s real-time tracking data allows executives to make quick, well-informed decisions in moments of supply chain crisis - and rather than unfolding across days or weeks, it only takes a matter of minutes.
Why does RFID remain relevant despite digital disruption?
Essentially, RFID uses radio frequency waves to transfer data wirelessly between a scanner and a tag. In contrast to barcode technology, which requires a stationary scanner, RFID tags can be pinged from anywhere in the world, allowing companies to track real-time movement through the supply chain. RFID tags can also scan unique SKU numbers and distinguish between varying product sizes, colours, and styles: a critical feature for increasingly personalised end-user products.
Though the first patent for RFID tags appeared in 1973, higher accuracy rates, lower costs, and advances in sensor and data technology have made it newly accessible to a wide range of companies. Today, the technology is used in logistics networks, manufacturing and delivery networks in the pharmaceutical industry, and any business where efficiently tracking and monitoring product location is critical: raw materials, consumer products, cars, electronics, retail, and agriculture.
What are the key benefits?
Overall, automated track and trace solutions keep labour costs low, optimise operating costs, mitigate security risks, use capital effectively, and assist companies in adhering to regulatory requirements.
Below are three in-depth dives into how RFID benefits major industries:
- Pharmaceuticals: RFID tags help manufacturers safeguard sensitive products such as vaccines, tracking where they are and when they will arrive in real-time. Sensors closely monitor temperatures to ensure regulatory compliance. If anyone tampers with a shipment, the sensors alert the company.
- Logistics: RFID identifies process gaps and frequent anomalies by monitoring a product’s lifecycle from shipment to delivery. This data helps decision-makers predict the most efficient routes and therefore optimise their distribution schedules.
- Retail: Sensors help guard shipments against theft and provide critical intelligence when shipments go missing. Before adopting RFID technology in 2203, UK retailer Marks and Spencer relied on barcodes to scan inventory. When they made the switch, their productivity increased from a maximum of 400-600 items scanned per hour to up to 15,000 items scanned per hour. Building on their initial success, the retailer expanded the use of the technology and is still using it today.
Regardless of the industry, RFID promotes accuracy, immediacy, and efficiency. Companies reduce human error by automatically scanning products, keep track of inventory even in geographic locations with poor connectivity, and help streamline warehouse operations by identifying exact product locations.
Which recent innovations have changed the game?
With recent developments in cloud technology and IoT, a multitude of cloud-based alternatives have emerged to challenge traditional RFID technology. One of these cutting-edge solutions is Sony’s Smart Label - an intelligent shipping label that runs on AT&T’s global cellular network.
As with any good innovation, Sony’s proprietary technology started with a customer need ready to be solved: the Bayer Crop Science Division lacked an international IoT solution that could track seed products from start to finish throughout its distribution channel. Millions of dollars of revenue stood at stake, so Bayer turned to Sony to develop a smart label that would set the organisation up to manage its supply chain with end-to-end visibility.
Sony’s printable and disposable adhesive label allows companies to track the condition and location of their products worldwide and act upon the vast amounts of data it collects. The process is simple: the label activates when attached to the package, connects to AT&T’s secure LTE-M network, and sends data to the Smart Label Cloud in real time.
In sharp contrast to other smart label solutions that place trust in a patchwork combination of Wi-Fi, radio-frequency identification, and other limited coverage connections, the Sony Smart Label connects solely through a secure and universally-available cellular network. “Working with Sony,” says Robert Boyanovsky, the vice president of Mobility, IoT and 5G at AT&T, “we provide full visibility of every item shipped.”
Most importantly for companies on the edge, the Smart Label integrates with existing enterprise systems to achieve full visibility, thus adding value without disrupting supply chain process flow.
Why is this important now?
Companies that previously delayed introducing RFID and other automated track-and-trace technologies can capitalise on recent developments that lower costs, improve accuracy, and supercharge traceability.
Clearly the technology has value in today’s uncertain global marketplace, and can help decrease the costs of tracking goods. To quote Christof Backhaus, the Project Lead at Bayer, “the Smart Label indicates how much product is in the market, from the packaging line to the end customer.” Companies no longer have to spend a small fortune to take advantage of recent IoT developments. “Due to the technical composition [of the label],” Backhaus explains, “we don’t require additional infrastructure, manual scanning, or other expensive tools.”
Over the decades since RFID was first introduced, support for introducing it to company supply chains has also improved. AT&T’s IoT Professional Services Organisation, for example, supports companies through the end-to-end design and integration process--from installation to deployment and project management.
Companies that invest in traceable and visible supply chain solutions stand the best chance of survival, adjusting in real-time to natural disasters, shipping backups, and slowed-down supplier turnarounds as a result of the global pandemic. “Smart Label promises to help businesses like Bayer realise the full potential of the IoT,” says AT&T’s Boyanovsky. “[We can] deliver improvements in revenue and cost savings and make supply chains more efficient.”
Certainly, company executives will be hard-pressed to ignore recent innovations. In an age of uncertainty, RFID and its challengers herald a welcome sense of supply chain security. The next step? “Our sales team,” Boyanovsky adds, “is prepared to engage with prospective customers now.”