Building the intelligent supply chain of the future

Posted on 3 Jul 2019 by Jonny Williamson

In their keynote at this year’s Manufacturing Innovation Summit, Ruptesh Pattanayak and Fabio Tiozzo explained how the idea of AI-enabled supply chains have become a reality.

AI promises to be one of the most disruptive technologies to hit manufacturing in many years, with supply chain and operation activities among the areas set to benefit the most from added flexibility, agility, efficiency and increased profit margin.

Microsoft - Trends driving transformation in manufacturing and supply chain

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The intelligent supply chain is one of five building blocks of intelligent manufacturing – all of which are being driven and powered by the cloud:

Connected Product Innovation – reimagine manufacturing and accelerate innovation with insights from connected products, services and digital twins.

Connected Sales and Service – empower your sales and service workforce to improve customer engagement and drive complex product and service sales with digital tools

Factory of the Future – optimise digital operations by connecting your people, devices and processes to overcome skills gaps and increase factory productivity

Intelligent Supply Chain – optimise digital operations with intelligent business applications that help you achieve the right balance of customer service and supply chain cost

Connected Field Service – deliver new services that connect your smart products with empowered technicians to deliver proactive, predictive services, turning your service centres into profit centres.

Specifically, the intelligent supply chain capitalises on many of the technologies driving the so-called Fourth Industrial Revolution to improve visibility of manufacturing operations, reduce costs and transform how we move goods from A to B.

It addresses the key supply chain challenges manufacturers face:

  • delivery mismatch of parts/products
  • lack of end-to-end visibility
  • shipment traceability
  • poor warehouse productivity
  • multiple data systems offering no single, accurate view in real-time
  • high lead time due to customer queries
  • high inventory carrying cost
  • operation inefficiency leading to manual errors

Digital technology is fundamentally transforming the manufacturing industry by acheiving new levels of operational efficiency and new innovative business models, said Ruptesh Pattanayak, director of industry solutions for manufacturing & resources at Microsoft.

This transformation is also changing traditional work from routine task-oriented execution to problem-solving.

The modern workplace empowers workers with devices, while productivity-enhancing tools enable them to manage manufacturing complexities, work more effectively, and collaborate specifically to their business and operational needs.”

The intelligent supply chain

As a manufacturer itself, Microsoft manages a compliment of supply chain functions in-house – from the point that a product becomes a reality through sourcing and manufacturing to delivery and ongoing customer services.

Microsoft manages a global supply chain including 33 factories and distribution centres serving more than 120 markets globally. Annually, Microsoft spends on average $8bn, produces more than 42,000 different configurations of devices and manufactures over 200 million units.

And all the data related to the supply chain can be accessed via one single data lake, Pattanayak noted.

Why did Microsoft decide to embrace the intelligent supply chain? 

Low prices and thin margins – manufacturing and supply chains are required to aggressively manage sourcing, production, fulfilment and after-sales support costs to put products in a position to compete in an increasingly crowded marketplace.

Increasing customer service expectations – today’s era of free shipping, same day delivery, white glove services and liberal returns policies is at odds with pricing pressure.

Product quality imperative – shipping consumer electronics products brings significant risks for their lifetime, there is a clear need for the supply chain to mitigate these risks by proactively identifying and fixing issues before shipping to customers.

Shorter product lifecycles are the reality in today’s marketplace – precise global launch windows require intricate orchestration, getting it wrong brins the risk of write-offs, write-downs and missed sales.

Why is AI a game-changer for supply chains? 

According to Fabio Tiozzo, strategic Service Director at JDA Software, the key advantage of AI is that it can learn without being explicitly programmed.

This means configuration and maintenance is relatively light touch and the over total cost of ownership is lower.

More strategically, AI can predict events and recommend actions which improve demand planners’ efficiency, deliver optimal results and increase supply chain performance.

It also creates headcount efficiencies, enabling productivity to be raised without having to employ more people.

The intelligent supply chain road map:

Microsoft – The intelligent supply chain of the future Roadmap