AI and Machine Learning will play a key role in strengthening supply chains next Christmas 

Tim Lawrence explores real-world successes, urging businesses to embrace transformative solutions
Tim Lawrence
Christmas presents

Artificial intelligence has taken the commercial landscape by storm, as business leaders in almost every industry explore new use cases for the technology, and seek to better understand how it could improve efficiency and solve their industrial challenges. One area that has often been overlooked however, is the potential for artificial intelligence and machine learning to strengthen businesses’ supply chains and mitigate disruption. This is a particularly strong use case during periods of increased demand, namely during the festive season and lead up to Christmas. 

At Digital Catapult we encourage adoption of industrial solutions that leverage emerging technologies including AI, to help businesses achieve their commercial objectives and drive economic growth. When it comes to the supply chain, we’ve seen how AI and ML can be a critical enabler to strengthen supply chains on our Digital Supply Chain Hub (DSCH) programme, which looks to make UK supply chains more resilient, efficient and sustainable. On this programme, results have demonstrated how this emerging technology will play a key role in helping businesses to mitigate supply chain disruption during the next festive season. 

Sensing demand and leveraging predictive analytics 

One of the ways that AI helped businesses to make a success of the festive season last year is through demand sensing and predictive analytics. ​​The total value of seasonal sales in the United Kingdom was forecast to amount to approximately 85 billion British pounds last year, demonstrating the importance of the festive period for UK retailers. As such, getting this wrong and failing to prepare can lead to businesses failing in January. 

AI algorithms are effective at analysing data that manufacturers, suppliers and businesses have obtained during the festive seasons of years gone and combined with more recent data such as weather, short-term trends and recent sales. From this data, AI platforms can predict when there is likely to be demand for specific products, allowing manufacturers and businesses to prepare for busy periods in advance, ensuring that they have enough stock in supply to meet customer expectations. 

This helps businesses to maintain an agile supply chain, ensure that products in demand are available, and encourages businesses to minimise waste, excess stock and the impact of supply chain disruption. On the Digital Supply Chain Hub programme, we have found that through effective use of AI and machine learning, some companies have seen a 30% reduction in inventory and waste management. 

At Digital Catapult, we’ve also seen the value of AI in not only predicting demand but risk too. During busy periods, businesses must be prepared for the unknown, and leaders should feel empowered that they have the tools necessary to overcome any obstacle that may arise. Using AI-powered solutions, business leaders have the tools they need to predict risk, and manage disruption effectively, as and when it arises. For example, adverse weather conditions, the Panama canal problems and industrial action are all examples of events which could disrupt the supply chain and cause problems for businesses and their customers next Christmas. AI-enabled solutions, can however, help businesses to predict when a disruption may occur, and provide data and analysis on how this could be mitigated, strengthening the supply chain during the coming months. 

Optimising the supply chain 

AI can also help businesses with supply chain optimisation by improving supply chain visibility and optimising supply and delivery routes. AI provides real-time visibility into the entire supply chain by aggregating and analysing data from multiple sources. This visibility is crucial during busy periods for businesses, allowing leaders to understand where their products are and when. This is not just to track deliveries for the customer but materials and other resources too. Armed with this knowledge and information, businesses are able to identify obstacles, track shipments and respond quickly to disruptions, optimising and strengthening their supply chain in time for the next festive period. 

Once a business has better visibility of their supply chain, AI can also be leveraged effectively to optimise the route of products to the end customer. AI-powered algorithms are able to optimise transportation routes for shipments, taking into account factors such as traffic conditions, weather and fuel costs. During a busy period like the festive season, this level of information on a route is critical to determining whether products meet customers in time for the next Christmas. This is being tested as part of the Logistics Living Lab initiative, which Digital Catapult is delivering with partners, to reduce the number of empty lorries on roads across the UK through shared logistics infrastructure, allowing optimisation of routes and vehicles, and ultimately leading to faster deliveries.

Improving transparency and managing supplier relationships 

In today's business landscape, stakeholders and commercial partners increasingly demand access to supply chain data to mitigate risks associated with illicit labour practices, environmental harm, and unfair procurement methods. Despite this expectation, many businesses lack awareness regarding how to effectively monitor their supply chain, track Scope 1, 2, and 3 emissions, and demonstrate the sustainability of their supply chain in alignment with commercial standards.

One notable benefit of AI is its capacity to not only trace the entire supply chain journey but also using it to discover supply chain relationships and mapping supply chains to provide visibility. This enhanced visibility serves to instil trust among customers and commercial partners, particularly during busy seasons like the festive period. By leveraging AI, businesses can address the growing demand for transparency, ensuring that they meet ethical and sustainable criteria, and consequently, foster greater confidence in the relationships they cultivate with stakeholders and partners.

Moreover, AI-powered technology can also help businesses to manage their supplier relationships too. Through access to more data from AI, businesses are better informed to make decisions when it comes to selecting commercial partners. In understanding the risks involved in partnerships, market trends and potential disruption, business leaders are more empowered to make better decisions, negotiate better terms and ensure a more resilient supply chain. AI is therefore critical to helping business leaders to make their supply chain increasingly agile through access to greater detail on suppliers, strengthening relationships in the long-term and ahead of the next festive season. 

As business leaders relax after a busy festive season, artificial intelligence will undoubtedly play a key role in ensuring the next Christmas is a success. Whether it's through demand sensing and predictive analytics or through managing supplier relationships and optimisation, the use cases for AI in strengthening supply chains are unparalleled. Any business that’s interested in exploring how AI solutions might strengthen their supply chain should reach out to Digital Catapult here.

Written by
Tim Lawrence
Written by
January 9, 2024