I recently participated in a panel discussion at Manifest 2024 alongside colleagues from Sony, USC, Mattel MAT, and Forum Ventures. It was intriguing to hear the discussions among supply chain leaders regarding artificial intelligence and even more captivating to delve into their insights on the future of supply chains and manufacturing.
When engaging with manufacturing company executives, the focus on artificial intelligence tends to take a back seat. Panelist Nick Vyas from USC highlighted that during his conversations in India and Thailand, other concerns such as upcoming sustainability regulations took precedence over AI. This sentiment resonates with my own experiences.
While AI plays a crucial role in establishing a connected manufacturing ecosystem with predictive analytics and streamlined operations, it is just one component of the larger picture. Without human involvement and practical applications, AI remains merely a background noise.
Currently, the primary concerns revolve around constrained budgets and supply chain uncertainties. The pressure for business expansion has never been higher, necessitating supply chain leaders to achieve more with limited resources. These challenges persist consistently.
Enhancing Supply Chain Resilience
The response to supply chain instability varies, with suggestions ranging from onshoring to offshoring or nearshoring. Amidst these options, the argument for regional diversification stands out as particularly compelling.
In today’s global landscape, every supply chain faces risks. However, the issue does not solely stem from globalization. Therefore, relocating all operations to the US may not necessarily be the optimal solution for American companies. At Fictiv, we have expanded into four global regions to mitigate risks, a strategy also adopted by companies like Tesla TSLA and Apple AAPL.
Cultivating strong partnerships with suppliers across diverse regions proves beneficial. Regional diversification equips companies to navigate through instabilities, volatility, or unforeseen challenges, thereby enhancing resilience in the supply chain.
According to Maia Benson from Forum Ventures, diversifying sourcing strategies is a logical approach. By spreading risks across multiple regions, manufacturers can swiftly adapt to disruptions within their network, thereby fostering resilience.
Improving Operational Efficiency
Another vital aspect of fortifying supply chains involves optimizing workflows and implementing automation where feasible. This brings us back to the imperative for supply chain leaders to achieve more with less. My technological approach emphasizes the strategic application of automation, underscoring the synergy between human expertise and technological advancements. While AI garners significant attention, the true efficacy in manufacturing lies in the collaboration between AI and human intervention.
AI technologies offer substantial automation capabilities, significantly expediting and refining the procurement process. Tasks such as sourcing new suppliers, requesting quotes, reviewing design feedback, and managing supply chain disruptions can be automated through AI algorithms. This automation not only accelerates processes but also minimizes friction, positively impacting the bottom line.
Choosing Between Procuring and Developing AI Solutions
A common dilemma in the realm of AI revolves around the decision to purchase a pre-existing AI solution or develop one in-house. The key consideration here is whether AI will serve as a competitive differentiator for the business. If AI is integral to the core competency and market positioning of the company, building a customized solution may be warranted. Conversely, if AI does not directly contribute to differentiation or revenue generation, exploring existing solutions may be more prudent.
In essence, the choice between buying and building AI solutions hinges on the strategic significance of AI in enhancing the company’s competitive edge. This decision-making process mirrors the evaluation of critical components in a product’s bill of materials to determine ownership and alignment with core strategies.
Greg Javor from Mattel encountered a similar scenario during a recent trip to Asia, where off-the-shelf AI-powered solutions for shop floor scheduling proved overly complex for their operations. Consequently, they opted to develop a tailored solution to meet their specific needs.
Envisioning the Evolving Global Supply Chain
Looking ahead, a vision emerges of an interconnected supply chain landscape underscored by traceability, sustainability, and self-accountability among companies. The fusion of technology and human creativity remains pivotal, with AI serving as a catalyst for innovation but complementing human potential.
Anticipations for the future supply chain span from real-time operations with human decision-making at critical junctures to an integrated end-to-end supply chain transitioning towards direct-to-consumer models. The envisioned future entails a seamless data flow encompassing the entire supply chain continuum.
Amidst the evolving landscape, the fundamental principles for suppliers and manufacturers persist: Operate efficiently, enhance agility, and optimize profitability to thrive in the prevailing economic climate.
