A look into the future: The self-learning supply chain
When "deep learning" AI is incorporated into supply chain systems, they will be able to analyze past supply chain failures in order to prevent new ones.
The self-learning supply chain marks the next major frontier of supply chain innovation. It's a futuristic vision of a world in which supply chain systems, infused with artificial intelligence (AI), can analyze existing supply chain strategies and data to learn what factors lead to supply chain failures. These AI-driven systems then use this knowledge to predict future supply chain problems and proactively prescribe or autonomously execute resolutions. While there is still a way to go before the self-learning supply chain is a reality, recent advancements in AI suggest it is no longer "blue-sky thinking."
The self-learning supply chain of the future marries the benefits of AI with the digital technologies that many companies have already started incorporating into their supply chain disciplines. This digital supply chain transformation is being fueled by several technology advancements: physical "things" incorporating computer technology; readily available big data such as social media, news, events, and weather (SNEW); and computer systems and software becoming more intelligent. These digital technologies are transforming the very nature of the supply chain—which was once built for volume and scale—into an agile, digitally connected framework that leverages a single set of physical assets to support multiple virtual supply chains. These virtual supply chains, sometimes defined as supply chain grids, replace the traditional fixed linear supply chains of the past by providing new flow options that enable accelerated order fulfillment based on near real-time awareness of assets and inventory.
The path toward the digital supply chain We predict that the path toward digital supply chain maturity will occur in four stages: visibility, predictive analytics, the prescriptive supply chain, and ultimately in the future, the self-learning supply chain (See Figure 1). As companies move up the maturity curve, their reliance on manual capabilities will be replaced with autonomous capabilities, providing them with significant efficiency gains and cost savings.
Most companies today are in the first stage of digital supply chain maturity: the visibility phase. Currently, there is a huge focus on end-to-end supply chain visibility to help companies better manage constraints. At this maturity stage, visibility is often enabled by various system integrations such as connecting enterprise resource planning (ERP) systems with best-of-breed solutions and customer systems. This type of system integration enables a business to gain an end-to-end view of how product flows through their supply chain.
The next stage of digital supply chain maturity is predictive analytics. This phase leverages predictive analytic algorithms, enabled by big data—such as Internet of Things (IoT) sensor data, SNEW data, and others—to predict where supply chain issues may arise in the future. Predictive analytics, for instance, can be used to analyze real-time data like weather forecasts and port congestion to predict the impact on freighters in route and determine which shipments will be late—even before the captain may know.
The prescriptive supply chain, enabled by supervised machine learning is the next stage of digital supply chain maturity.1 In this stage, intelligent systems will be able to move beyond predicting potential supply chain issues to prescribing the course of action to take to resolve the issue. This technology is already being incorporated into best-of-breed offerings, where prescriptive analytics are used to learn from planners' historical actions. For a shipment that's predicted to be late, for instance, the solution could provide several resolution options (such as swap demand from another resource or purchase from another supplier) and then recommend the best course of action.
The final stage of digital supply chain maturity is the self-learning supply chain, enabled by deep learning. This capability will provide companies—as well as the solution providers that sell it—with the highest level of differentiation in the markets they serve. Deep learning is a form of AI, in which machines learn from machines. As we'll discuss below, this type of AI is already occurring.
The first iteration of the software—AlphaGo—was programmed with a dataset of human game strategies. The software studied the gaming strategies and used the knowledge it gained to beat the 18-time human world champion of Go. The most recent version of the software—AlphaGo Zero—was programmed with only the game rules. AlphaGo Zero then developed its own game strategies by competing against itself—millions of times—over the course of three days.
Recently, AlphaGo Zero competed against the original AlphaGo and won 100 times out of a 100. Writing about the achievement in Nature magazine, researchers from DeepMind said, "Humankind has accumulated Go knowledge from millions of games played over thousands of years, collectively distilled into patterns, proverbs, and books. In the space of a few days, starting tabula rasa, AlphaGo Zero was able to rediscover much of this Go knowledge, as well as novel strategies that provide new insights into the oldest of games."
How deep learning will impact the supply chain Just like the game of Go, supply chain failures (such as missed shipment windows and low order fill rates) are predicated on millions of potential combinations of action and supply chain policies. There are literally millions of combinations of ways that companies can flow product through the supply chain, and larger enterprises receive millions of order lines every day. Additionally, companies must make numerous decisions about strategic concerns such as their network strategy, replenishment method, and transportation mode. All of these decisions have a direct impact on service performance and cost. Furthermore, there are environmental factors—like weather, social sentiment, news, events, competitor activity—that can add complexity to making optimal decisions.
With AI embedded in the self-learning supply chain, machines will be able to examine supply chain strategies to determine where supply chain failures have occurred and why, along with what combination of external factors—such as transactions, loyalty, inventory levels, weather, competitor events, market performance, traffic, or socio-economic events—contributed to the supply chain failure. Machine-learning algorithms will then sift through this data to learn how these factors interact to result in a high probability of a supply chain failure.
In the future, this type of self-learning supply chain will be able to tell a planner that when a certain combination of events occurs at the same time it is predictive of a supply chain failure. The machine will then be able to prevent the failure by moving inventory to a new location, or it will alert the planner to respond to the problem.
The self-learning supply chain of the future We believe that deep-learning algorithms will drive the supply chains of the future. They will be able to analyze all these combinations of factors, determine which of these items are predictive of a service failure, and build risk mitigation strategies that help organizations "win" by serving customers at the highest level of confidence, at the lowest possible cost. Companies that can do these things—serve customers better than anyone else (that is, faster, with a higher degree of order fill, and on time)—and do it at the lowest cost, will be hard to beat.
Getting to this level of maturity will require reliance on a partner ecosystem that can collect data signals (SNEW and others) to feed into these deep-learning models for real-time insights that can then be used as input to the supply chain plan. While the technology required to support the self-learning supply chain is still being developed, there is a lot of value to be gained in starting to master the early stages of digital supply chain maturity. Companies that embark on a digital supply chain journey now will be well positioned to capitalize on deep learning supply chain capabilities when they are available.
Notes: 1.Supervised learning takes input variables (x) and an output variable (y) and uses an algorithm to learn the mapping function from the input(s) to the output. Common supervised learning frameworks include classification and regression.
Supply Chain Xchange Executive Editor Susan Lacefield moderates a panel discussion with Supply Chain Xchange's Outstanding Women in Supply Chain Award Winners (from left to right) Annette Danek-Akey, Sherry Harriman, Leslie O'Regan, and Ammie McAsey.
Supply Chain Xchange recognized four women who have made significant contributions to the supply chain management profession today with its second annual Outstanding Women in Supply Chain Award. The award winners include Annette Danek-Akey, Chief Supply Chain Officer at Barnes & Noble; Sherry Harriman, Senior Vice President of Logistics and Supply Chain for Academy Sports + Outdoors; Leslie O’Regan, Director of Product Management for DC Systems & 3PLs at American Eagle Outfitters; and Ammie McAsey, Senior Vice President of Customer Distribution Experience for McKesson’s U.S. Pharmaceutical division.
Throughout their careers, these four supply chain executive have demonstrated strategic thinking, innovative problem solving, and effective leadership as well as a commitment to giving back to the profession.
The awards were presented at the Council of Supply Chain Management Professionals (CSCMP) annual EDGE Conference in Nashville, Tenn. In addition to the awards presentation, the leaders discussed their leadership philosophies and career path during a panel discussion at the EDGE conference.
The surge of “nearshoring” supply chains from China to Mexico offers obvious benefits in cost, geography, and shipping time, as long as U.S. companies are realistic about smoothing out the challenges of the burgeoning trend, according to a panel today at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
Those challenges span a list including: developing infrastructure, weak security, manual processes, and shifting regulations, speakers said in a session titled “Nearshoring: Transforming Surface Transportation in the U.S.”
For example, a recent Mexican government rail expansion added lines to tourist destinations in Cancun instead of freight capacity in the Southwest, said panelist Edward Habe, Vice President of Mexico Sales, for Averitt. Truckload cargo inspections may rely on a single person looking at paper filings on the border, instead of a 24/7 online system, said Bob McCloskey, Director for Logistics and Distribution at Clarios, LLC. And business partners inside Mexico often have undisclosed tier-two, tier-three, and tier-four relationships that are difficult to track from the U.S., said Beth Kussatz, Manager of Northern American Network Design & Implementation, Deere & Co.
Still, dedicated companies can work with Mexican authorities, regulators, and providers to overcome those bottlenecks with clever solutions, the panelists agreed. “Don’t be afraid,” Habe said. “It just makes sense in today’s world, the local regionalization of manufacturing. It’s in our interest that this works.”
A quick reaction in the first 24 hours is critical for keeping your business running after a cyberattack, according to Estes Express Lines, the less than truckload (LTL) carrier whose computer systems were struck by hackers in October, 2023.
Immediately after discovering the breach, the company cut off their internet, called in a third-party information technology (IT) support team, and then used their only remaining tools—employees’ personal email and phone contacts—to start reaching out to their shipper clients. The message on Day One: even though the company was reduced to running the business with paper and pencil instead of computers, they were still picking up loads on time with trucks.
“Customers never want to hear bad news, but they really don’t want to hear bad news from someone other than you,” the company’s president and COO, Webb Estes, said in a session today at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
After five or six painful days, Estes transitioned from paper back to computers. But they continued sending clients daily video updates from their president, and putting their chief information officer on conference calls to answer specific questions.
Although lawyers had advised them not to be so open, the strategy worked. It took 19 days to get all computer systems running again, but at the end of the first month they had returned to 85% of their original client list, and now have 99% back, Estes said in the session called “Hackers are Always Probing: Cybersecurity Recovery and Prevention Lessons Learned.”
The first full day of CSCMP’s EDGE 2024 conference ended with the telling of a great American story.
Author and entrepreneur Fawn Weaver explained how she stumbled across the little-known story of Nathan Green and, in deciding to tell that story, launched the fastest-growing and most award-winning whiskey brand of the past five years—and how she also became the first African American woman to lead a major spirits company.
Weaver is CEO of Uncle Nearest Premium Whiskey, a company she founded in 2016 and that is part of her larger private investment business, Grant Sidney, Inc. Weaver told the story of "Nearest" Green—as Nathan Green was known in his hometown of Lynchburg, Tenn.—to Agile Business Media & Events Chairman Mitch MacDonald, in a keynote interview Monday afternoon.
As it turns out, Green—who was born into slavery and freed after the Civil War—was the first master distiller for the Jack Daniel’s Whiskey brand. His story was well-known among the local descendants of both Daniel and Green, but a mystery in the larger world of bourbon and a missing piece of American history and culture. Through extensive research and interviews with descendants of the Daniel and Green families, Weaver discovered what she describes as a positive American story.
“I believed it was a story of love, honor, and respect,” she told MacDonald during the interview. “I believed it was a great American story.”
Weaver told the story in her best-selling book, Love & Whiskey: The Remarkable True Story of Jack Daniel, His Master Distiller Nearest Green, and the Improbable Rise of Uncle Nearest, and has channeled it into an even larger story with the founding of the brand. Today, Uncle Nearest Premium Whiskey is made at a 323-acre distillery in Shelbyville, Tenn.—the first distillery in U.S. history to commemorate an African American and the only major distillery in the world owned and operated by a Black person.
Weaver and MacDonald's wide-ranging discussion covered the barriers Weaver encountered in bringing the brand to life, her vision for where it’s headed, and her take on the supply chain—which she said she views as both a necessary cost of doing business and an opportunity.
“[It’s] an opportunity if you can move quickly,” she said, emphasizing a recent project to fast-track a new Uncle Nearest product in which collaborating with the company’s supply chain partners was vital.
Uncle Nearest Premium Whiskey has earned more than 600 awards, including “World’s Best” by Whisky Magazine two years in a row, the “Double Gold” by San Francisco World Spirits Competition, and Wine Enthusiast’s “Spirit Brand of the Year.”
CSCMP’s EDGE 2024 runs through Wednesday, October 2, at the Gaylord Opryland Hotel & Convention Center in Nashville.
This story was updated on October 1, 2024.
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Miquel Serracanta of CSCMP International, Mark Baxa of CSCMP, and Sebastian Jarzebowski of Kozminski University sign an agreement making Kozminski University the newest CSCMP Academic Enterprise Member.
The Council of Supply Chain Management Professionals (CSCMP) and Kozminski University, a business school based in Warsaw, Poland, inked a deal on Sunday night, making Kozminski CSCMP’s newest Academic Enterprise Member.
This three-year collaborative membership will involve Kozminski using CSCMP educational content in its undergraduate supply chain program. As a result, Kozminski’s graduates will leave the program not only with a bachelor’s degree from the school but also certified through CSCMP’s SCPro certification program.
“This partnership emphasizes the global reach of CSCMP’s certification program and its applicability worldwide,” said Mark Baxa, CSCMP’s president and CEO.
Kozminski University’s Academic Director of Logistics and Supply Chain Management Sebastian Jarzebowki was on hand to sign the agreement at the CSCMP EDGE Conference in Nashville, Tennessee. Jarzebowski said that his students will benefit not only from receiving a globally recognized certification but also from joining a network of supply chain professionals.
Kozminski University joins the EAE Business School in Barcelona and the Rome Business School in the CSCMP Academic Enterprise Program. Baxa sees the membership program as a growth platform for the industry association not only in Europe but also worldwide.