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The impact and potential of AI in supply chain management

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The impact and potential of AI in supply chain management 1

By Philip Ashton, CEO of 7bridges

Supply chains are changing all the time, and by their nature tend to be a complex combination of processes and third parties. But as the fourth industrial revolution takes shape, supply chains are developing and advancing rapidly.

Amazon has led the way for consumer-facing logistics, integrating technology at every stage of their supply chains and making one-day deliveries the market standard. All other businesses, large or small, B2B or consumer-facing, are now having to compete with this benchmark of convenience that has been set.

To make matters worse, this year has seen the single largest disruption to the international supply chain in living memory. The shock caused by the global COVID-19 pandemic has affected the whole supply chain, from manufacturers to consumers, and has resulted in the closure of warehouses, price hikes and missed deliveries.

As businesses react and are required to pivot quickly, there is a growing argument for experimenting with technology such as AI to help navigate and manage the increased complexity in supply chains. With entire industries looking for solutions to supply chain disruption, there are several key benefits to AI adoption:

Resilience

The COVID-19 pandemic is unprecedented in modern times, but smaller shocks to supply chains happen regularly, particularly for those that cross international borders. For example, last year’s discussion of choice, Brexit, will cause disruption to supply chains across the continent, and the implementation of any new processes, such as new customs paperwork or the application of trade tariffs, will slow deliveries and increase costs.

Integrating AI allows businesses to react autonomously to temporary market shifts or long-term disruption in the supply chain to ensure deliveries are always made on time, and in full. As macro events occur, the technology can automatically reroute shipments to take conditions into account, removing the need for cumbersome manual calculations and processes. This agility can keep operations running and scaling as competitors falter, saving on direct costs and future proofing the business

COVID-19 has undoubtedly alerted businesses to the realities of disaster planning – now is the time to build in extra layers of fail-safes to ensure that operations can continue through the next ‘worst case scenario’.

Efficiency

Any business involved in direct-to-consumer deliveries needs to constantly upgrade and improve their logistics operations. Next-day or even same-day deliveries are now expected as a minimum; consumer studies have found that shipping dates affect purchasing decisions for more than 90 percent of shoppers. In addition, more than a quarter of online shoppers will abandon their basket at checkout if delivery is too slow.

In an increasingly crowded and competitive ecommerce marketplace, logistics failures or slow service could cause significant business harm, as consumers take their custom to more responsive suppliers. The primary way that businesses can ensure their deliveries are always being completed in the fastest and most efficient way possible is to implement an AI-based solution that considers historic and real time service performance.

Flexibility

One of the most significant advantages of utilising artificial intelligence within logistics is that it is not rules-based, but optimises within a set of constraints. As a result, it does not have to be reprogrammed – instead it reacts and adapts to any new environment or condition, making any AI solution innately flexible and scalable. For businesses looking to grow and gain market share, this is incredibly valuable.

AI allows businesses to predict orders and intelligently distribute stock closer to the customer, before they’ve even ordered. By calculating all the possible permutations to the large number of complex variables involved in sending a shipment, AI can optimise the process for each order within a set of customer or business constraints, and thus allowing individual flexibility on a large scale.

In addition, AI can incorporate ever-changing manufacturing schedules when deciding when and how to distribute stock directly from the manufacturer to warehouses, stores or consumers, allowing flexibility if and when there are disruptions higher up the chain.

Cost

As with other automation technologies, AI can take responsibility for the manual, menial processes and free up humans to add more value by focusing on the strategy and guide rails for the technology. AI is also able to process larger volumes of data and permutations far beyond human capability, enabling much better and considered decisions being made. With AI doing the ‘heavy lifting’, organisations are able to reduce direct costs by 50%.

For example, humans can set rules on how to fulfil one order based on storage, handling and transportation costs. AI, on the other hand, will consider how to fulfil the same order but in the context of potentially hundreds of thousands of other orders. It will take into account stock and replenishment requirements, fulfilment location, pick and pack load and consolidation opportunities across single and multiple sites, while adapting to near real-time service levels of each provider and relevant surcharges. The benefits come from making these numerous micro, contextual and near real-time decisions that reduce waste on a large scale in aggregate.

Artificial intelligence will quickly become a central part of all supply chain management systems, both for large, international enterprises and smaller direct-to-consumer operations. COVID-19 has created unparalleled challenges for logistics teams, but has also presented the industry with an opportunity to safeguard supply chains and ensure that they are ready for whatever the future holds.

Technology

Take Five: Davos goes virtual

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Take Five: Davos goes virtual 2

1/NON-DAVOS DAVOS

It is the end of January, so time for the Davos World Economic Forum (WEF), and Chinese President Xi Jinping, German Chancellor Angela Merkel, Japanese Prime Minister Yoshihide Suga and European Central Bank chief Christine Lagarde are among this year’s big-name speakers.

But Davos was not spared the pandemic hit; instead of gathering at the Swiss ski resort, the world’s great and good will do so virtually.

With the global economy deep in crisis, there is no shortage of topics: soaring unemployment and debt levels, growing income inequality and climate change.

And, like everyone else, the WEF is pinning hopes on normality returning – it plans a face-to-face meeting in Singapore in May.

2/FAANGS RETURN

Outpaced by a late-2020 surge in so-called value stocks, tech shares have roared back amid the pandemic’s unrelenting march. That is reflected in recent hefty gains for Russell’s 1000 “growth” index versus its value counterpart.

The gains could extend when Apple, Microsoft and Facebook report earnings. Also on deck is Tesla, which recently joined the S&P 500.

The results could push the combined market capitalisation of the FAANGs – Facebook, Amazon, AAPL Netflix and Google-parent Alphabet – back above their all-time peak of $6.16 trillion.

Netflix has done its part; robust subscription numbers reported on Jan. 19 have boosted its shares 17%. Now there are high expectations for the rest. Morgan Stanley has boosted the price target for Apple, declaring themselves “buyers ahead of what we expect to be a record December quarter print”. Microsoft reports on Jan. 26, followed by Apple, Facebook and Tesla a day later.

Graphic: The return of the FAANGs – https://fingfx.thomsonreuters.com/gfx/mkt/oakpeyelnpr/Pasted%20image%201611266376120.png

3/RED ENVELOPE FOR HONG KONG

Record amounts of Chinese money are flowing into Hong Kong stocks, pushing the Hang Seng index above the 30,000 mark, making it a global top performer and putting a floor under Chinese companies blacklisted by Washington.

The inflows have also pushed Hong Kong interbank rates to multi-year lows, meaning authorities may not even need to inject cash, as they usually do in the run-up to February’s Lunar New Year holiday.

An upcoming $5 billion IPO from Chinese online video company Kuaishou may draw in even more mainland money.

For a city rocked by pro-democracy unrest since 2019, this endorsement of its markets is a positive. Unless, that is, one views this as another sign of China’s growing political and financial stranglehold on the special administrative region.

Graphic: Mainland investors hunt for bargains in Hong Kong – https://fingfx.thomsonreuters.com/gfx/buzz/xlbvgylqevq/mainland%20investors%20hunt%20for%20bargains%20in%20Hong%20Kong.jpg

4/DRIVING OUT EUROPE INC BLUES

Europe’s STOXX 600 firms are expected to report a 26% earnings drop during the Q4 season which has just got under way. But that is history – let’s look instead at the January-March 2021 season when a 44% profit jump is predicted.

Such a surge seems intriguing given new continent-wide lockdowns. The explanation lies in consumer cyclicals, which Refinitiv I/B/E/S predicts will post an eye-popping 3,118% profit gain, versus the pandemic doldrums of Q1 2020.

Drilling down to single stocks, Daimler (1,471%), Fiat Chrysler, now Stellantis (177%) and Volkswagen (602%) turn out to be the largest contributors. Carmakers have seen their biggest earnings revisions in a decade and boosting shares to 14-month highs.

Graphic: Autos – https://fingfx.thomsonreuters.com/gfx/mkt/qzjvqmnwxvx/Autos%20hold%20key.JPG

5/SILVER LININGS

The coming week brings prelimary Q4 GDP data from France, Spain and Germany. Okay, the data is outdated and we already know the first quarter will show an activity dip from lockdown extensions. But let’s not be too hasty in dismissing the end-2020 numbers.

If the economies fared better than expected, it provides a cushion for the blow coming this quarter – that is the conclusion some reached after 2020 growth in powerhouse Germany turned out less bad than feared.

Also pay attention to Germany’s January inflation numbers, out Thursday. Those could show that a reversal in VAT cuts is easing the downward pressure on prices. In short, amid the pain inflicted by lockdowns, some positives might well lurk.

Graphic: Germany’s GDP data set for a bumpy ride – https://fingfx.thomsonreuters.com/gfx/mkt/xlbvgyjmmvq/theme2201DR.PNG

(Reporting by Ira Iosebashvili in New York; Vidya Ranganathan in Singapore; Karin Strohecker and Dhara Ranasinghe in London; Danilo Masoni in Milan; compiled by Sujata Rao)

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Hisham Itani and Resource Group Recognized in the 2020 Global Banking & Finance Awards®

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Hisham Itani and Resource Group Recognized in the 2020 Global Banking & Finance Awards® 3

Global Banking & Finance Review has awarded Hisham Itani the Chairman and CEO of Resource Group, Technology CEO of the Year Middle East 2020 in recognition of his vision, strategy and strong leadership that have contributed greatly to Resource Group’s success in winning the Most Innovative Holding Group Middle East 2020 in this Global Banking & Finance Awards®.

 

Resource Group is an investment group with a portfolio of diversified businesses that capitalizes on technology and human talent for value creation. The company has proven that it has gone the extra mile to develop innovative solutions aimed at improving people’s lives and helping Lebanon transition toward a knowledge-based economy. Global Banking and Financial Review, the renowned online and print magazine identified a number of areas that Resource Group has excelled. The company has been awarded Most Innovative Holding Group Middle East 2020, and Hisham Itani the Chairman and CEO, receives the award for Technology CEO of the Year Middle East 2020. Under his leadership, Resource Group has grown from a family security-printing business to a diversified international investment group, with a portfolio of companies across 10 sectors in over 75 countries.

Wanda Rich, editor Global Banking & Finance, said “Mr. Itani took the security printing business to another level and expanded into different technology verticals in an impressive list of success stories”. The list includes digital security, smartcard manufacturing, mobile value added solutions, cyber security and secure communication solutions, telecom infrastructure and managed services, elections supply chain services, lottery systems and operations, mobile and virtual reality games, among others.

Resource Group’s focus on technology has had a constructive and tangible impact on government automation and on citizen experience in target markets.

Editor Wanda Rich says “We are proud to offer Resource Group these prestigious awards and wish them continued success and growth into 2021 during these challenging economic times”.

Global Banking and Finance Review is a renowned online and print magazine. The magazine’s website alone receives over 7 million page views annually. Global Banking and Finance Review provides a balanced view with formative and independent news from the financial community. The Global Banking & Finance Awards® were created to recognize companies of all sizes that are prominent in particular areas of expertise and excellence within the global financial community. The awards are known throughout the global banking and financial community. They reflect the innovation, achievement, strategy, progressive and inspirational changes taking place within the financial sector.

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Bouncing back in 2021: Digital Transformation is no longer a choice as dependence on 5G, IoT and Data increases in society and business

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5G and Open Banking: Explosive growth or business as usual?

By Ivan Ericsson, Head of Quality Management, Expleo Group Limited

The global pandemic has put enormous strain on businesses and brought into sharp focus the importance of being agile, adaptable and able to increase the pace of innovation and change at short notice – catapulting technology right to the top of the agenda for many organisations.

As the economy works to get back on its feet, technology is only going to play a bigger role in our lives. At Expleo, as experts in digital transformation and the reliable implementation of technological innovations, we’ve outlined the biggest tech-driven trends that we expect to see in 2021 and beyond.

1)     “Digital transformation” no longer a choice

If the COVID-19 pandemic has taught businesses anything, it’s that they need to be poised to respond to abrupt market disruption at any moment, making digital transformation mandatory overnight.

With no room for delay, hugely complex corporations – that have historically been slow to adopt technology – have had to accelerate their reliance on technology just to keep afloat in recent months. Digital change, at speed, has become the norm.

Even last year, the idea of an unscheduled video conference call might put people on edge – now most of us wouldn’t think twice about calling a colleague over Teams or Zoom even for a 2-minute conversation. At the same time, social infrastructure has moved with the needs of its users, with telecoms giants strengthening and opening up networks so we can keep communicating despite social distancing.

There are now very few excuses left for operating in a non-digital way. All businesses need to be intelligent businesses that can change direction nimbly, with speed, confidence and composure. As we see more businesses putting this into practice, it’ll likely result in an increased number embracing and normalising some of the behaviours of tech-savvy giants like Apple and Amazon, who have no doubt thrived during this period.

Their success can largely be attributed to normalising an agile approach. By ensuring all applications have testing facilities built in – a “quality shadow” if you will – it allows for continuous improvements, and the ability to change direction quickly and confidently, when needed. This is particularly valuable today as the world becomes more fast-paced and increasingly unpredictable.

2)     Big data/AI/predictive analytics

We’re moving into a space where big data can be extracted from the most seemingly innocuous places. In a hyper-connected world, a move as simple as a dog walk could offer huge swathes of data to the right companies. Many businesses already realise the benefits of capturing and utilising big data, but not all have taken advantage of it. The businesses that move quickest are most likely to reap the rewards in a more impactful way than their ‘data shy’ competitors. Where data used to be a side effect of business operation, it is now the driving force.

As businesses begin to rely more heavily on data to make critical decisions, independent assurance becomes increasingly important to get those decisions right. Forward-thinking, data-driven organisations must therefore assure that the data is correct in the first place, to avoid giving businesses false confidence and risk them moving in the wrong direction – something that is rarely affordable in today’s competitive and fast-paced environment. If businesses are not 100% confident in assuring the quality and accuracy of their own data, they should look to a third party for support.

A key data trend we expect to see moving further into 2021 is the increased use of predictive analytics. At the moment, businesses will often use data analytics to give us insights into our past activities, or to tell us where we are right now. However, the real value lies in knowing where we are going and how we are going to get there. Data analytics will help to identify the optional levels that can be pulled to drive change and realise business benefit.

Secondly, as intuitive technology advances and becomes more accessible, we expect over the next 12 months to see companies of all sizes begin to adopt artificial intelligence (AI) to drive intelligent analytics. In this context, AI refers to various technologies that allow machines to learn, sifting through ‘messy’ big data in order to find and unlock valuable predictive insights into future events. This allows businesses to better adapt their strategy to likely future outcomes and get a head start in the market.

However, with this ever-increasing emphasis on data and data protection, ethical AI will have a more prominent role to play in 2021 and beyond. Protected, usable Data is a by-product of good data security and privacy measures; however, the public remain wary of how their data is being used, particularly after the fallout from Cambridge Analytica’s use of data to influence an election[1]. Businesses, therefore, must give their customers confidence that their data is secure and protected.

3)     Moral relevance/corporate altruism

Research shows that young people are increasingly researching and considering the ethics of brands they’re purchasing from. And it won’t be long before this attitude starts seeping into every other aspect of their lives, with more and more people wanting to work for what they consider to be “purpose-driven” businesses.

Talent is the lifeblood of any company, so for big corporations, many of whom were born to create profit, this could put them in a tricky position. They might already be influencing society in a positive way – but this is unlikely to have ever been their main goal.

Moving forward, however, all organisations will have to start thinking about the “Triple Bottom Line”. That means considering the environmental and social impact of your business, alongside your commercial imperative.

We’ll soon see a mindset switch across businesses, from ‘competing’ to ‘advancing’. Instead of wanting to be the “best,” the question will be, how can I better serve the world around me?

In line with this, businesses will have to start thinking more about how to use tech for good, as we’ve seen with the likes of Microsoft Teams connecting tens of millions of people every day, during this very dark time[2].

2021 is likely to bring even more inroads when it comes to using technology to improve society, whether it’s developing bespoke problem-solving technologies or using IT to ‘eco-proof’ existing sectors, the goal for businesses is to rise to this challenge and build a better future for people and the planet through the use of technology. But all organisations will continue to need to be able to justify technology use and prove that they’re using it ethically, and in a secure manner.

4)     5G new networks – just about all big trends are driven by/reliant upon faster networks – particularly relevant for a more distributed workforce

Greater access and utilisation of 5G networks across the country will underpin and accelerate all of the key trends discussed. Everything we do on our smart devices we can expect to do at higher speed, greater capacity and with lower lag times.

As our digital footprints extend beyond simple web browsing and into our daily lives through smart technology, we are creating huge amounts of data every minute. This vast flow of data is increasingly dependent on new high bandwidth networks to facilitate it. Therefore, the merging of technology and engineering will become critical in ensuring big data is carried successfully to drive analytics and drive business.

The fact we have managed to successfully work from home during COVID is a glowing recommendation for the quality of the networks as they exist today, and they will only get better.

The telecoms industry is already working overtime to ensure that people all over the country get reliable access to the internet – and the fact that there is still inequality in this area proves just how challenging this is. But, in line with this trend toward hyper automation, which will make data extraction and analysis a part of everyday life for businesses, the consolidation of tech and engineering will be ever more important.

Forward-thinking companies will look to incorporate 5G networks into their business strategy. This could be from an internal perspective to enhance the abilities of their remote workforce. Alternatively, this could relate to their own products or offerings – developing an internet of things (IoT) strategy, improve user experience, or bring products to market faster by analysing big data and adapting quicker. Either way, with increasingly improved networks, businesses are expected to take advantage of the huge increase in accessible and usable data.

Concluding comments:

For businesses to truly reap the benefits of these new technologies, they must be developed and adopted in the right way.

Quality assurance, trust and security are three key requirements that the technology of the future depends on to succeed. Having these requirements at the heart of any digital transformation will ensure that systems perform reliably, having been tested and assured.

By prioritising a seamless customer experience combined with an ability to create, test, and scale digital solutions and operationalise at pace, businesses will be in the best possible position to take advantage of the potential being unlocked by these new technologies.

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