22 October 2018

Inventory management – what more can be done with artificial intelligence

The labour market is currently experiencing transformation and is being shaken by the gradual introduction of latest innovations in tech. Artificial Intelligence (AI), specifically, has revolutionized certain fields, leading to the automation of thousands of jobs. It has also renewed a large number of professions with newly evolved and reinvented missions.

Supply-related professions aren’t immune by the emergence of new technology and are at the forefront of those constantly seeking an innovative supply chain. Among them, roles such as stock managers, suppliers or demand planners, whose main objective optimal stock management, i.e. controlling the right stock in the right place at the right time, are essentially becoming a real-time collaboration between man and machine.

 

For these profiles, the major challenge is to find a balance, making it possible to optimize inventory allocation and generating the lowest cost and highest margin. To address this, AI introduced in supply chain software creates a combination of efficiency and tools for a successful inventory management.

 

The companies who have already entered this technological sphere, have begun to move towards leading educational change to facilitate synergies between man and machine. This is a collaboration that will undoubtedly redefine daily business operations, and the scope of the stock manager in five ways.

 

The merging of human qualities and the machine

AI facilitates the stock manager’s missions by reducing their recurring operational tasks. As an example, the automation of orders from suppliers allows him to devote more time to the analysis of high importance items and critical situations, such as quality issues and supplier deadlines.

 

Without AI, ordering is a technical and daily action performed by the supplier, resulting from a logical combination. Today, advances in AI simplify the supplier’s task because the only real issues in the ordering process are between the recommendation made by the algorithm and the confirmation of the business.

 

Rethinking supervision and control

The spectacular discoveries related to AI indicate that the stock manager will continue to be reinvented with the rise of software programs. Today we have reached a point where the volume of data generated daily is far greater than procurement teams and relevant spreadsheets. This is why AI is used as a genuine recommendation and decision-making tool.

 

As a true supplier/IA duo, AI anticipates problematic situations (based on the calculation of its algorithms), alerts the user and recommends the necessary controls to correct deviations, challenging his vision. The stock manager, for his part, enriches the tool with various exogenous data (local events, for example), making it possible to refine the AI calculations, and supervise consistency with the company strategy.

 

Identification and pursuit of the best strategy

AI is involved in this collaboration as a forecaster with all the necessary information to define the future. It allows demand planners to design different stock allocation scenarios based on different combinations of settings and constraints (Minimum quantity, Franco, PCB, supply frequency, etc.). Procurement teams will submit them to the AI to make informed decisions to determine the best procurement plan adapted to the brand strategy (sales, commercial operations, peak traffic, etc.).

 

Understanding, explaining, acting… Analysis at the heart of everyday life

In a context where man collaborates in this way with Artificial Intelligence, it is necessary for demand planners to include certain key information. Their objective is to monitor and orchestrate inventory management through an adequate understanding of how it works, in order to fall in line with company strategy.

 

That is why it is now possible, for example in the case of calculating sales forecasts, to understand product characteristics, stores, time, social networks, and the weight each characteristic caries in the demand forecast. This allows the planners to enter the origin of the result and to be able to explain it.

 

This process reinforces the contribution of the procurement teams’ business expertise in providing new exogenous data that they believe could increase relevant and reliable sales forecasts.

 

A new challenge: aligning the different company visions

Procurement services are generally at the heart of the company. This confronts stock managers with varying company visions and they are tasked with crafting the most optimal solution that meets all objectives, which is a daily challenge!

 

Between the purchasing department that constantly drives the implementation of its new products, the network department, which constantly requires more stock for the customers and the financial department who is constantly seeking higher margins and lower costs, stock managers must manage and meet these visions. This is quite the art!

 

The difficulty decreases when AI comes into play, supply chain software has become a collaborative tool, saving time and providing great flexibility to manage fast and frequent changes. They become a legitimate basis for establishing harmony between services and providing optimal vision.

 

But for this dual provisioner/IA device to work perfectly with the common goal of finding the best balance, supply chain software must meet essential prerequisites. Supply chain publishers must use their creativity to offer work tools that pose the main advantages of being easy to use and accessibility to the largest data sets.

 

To date, AI has transformed the role of man to position him to the new posture of “augmented man”. What will happen in the next ten years? What does AI research have in store for us? Will they have an impact how companies function today? Will we move towards a hyperspecialisation of companies by function and rather by purpose, leading to the emergence of new professional roles?

 

By Emmanuelle Gantier, Product Manager at Vekia