Artificial intelligence in manufacturing is no longer an optional extra — it has become business-critical, says Nick McGrane, Managing Director at K3 SYSPRO
Prior to COVID-19, the rate of trial and the deployment of new AI solutions was slow, with businesses hesitant to fully invest. Despite the regular discussions about the benefits, businesses could still rely on their old systems. This isn’t the case anymore. A BCG whitepaper recently concluded that “AI should be regarded as central to the business model that differentiates a company,” and businesses without it will struggle to survive.
As such, manufacturers must start evaluating where AI can integrate into their processes. This isn’t just a case of implementing technology however. The first step is for businesses to assess where AI can, and should, be utilised.
Cost-effective redundancy through supply chain AI
Business supply chains have been stretched to breaking point through COVID. But automation can alleviate pressure points and boost efficiency. Most medium to large enterprises have complex and well-established supply chains, with cumbersome processes leaving little room for agility. However, this pandemic has demonstrated just how critical agility can be. With consumer and business demand dramatically shifting through the months of lockdown, businesses have needed to adapt fast to new market dynamics. Many have struggled to do so, constrained by singular supply chains.
To tackle these challenges, businesses need duplicate supply chains which can source parts and materials even when disruption occurs. It has traditionally been expensive to build these agile supply chains. However, here AI can provide a solution. Automation can offset the cost of building duplicate supply chains, as it allows manufacturers to optimise pricing through predictive maintenance and better planning.
Evolving in line with customer demand
Traditional purchasing patterns were flipped upside down by COVID-19. Essential items such as soap, sugar and bread became an intense focus for suppliers, who struggled to keep up with the consumer demand, while many luxury items never seemed to leave the shelves.
Customer demand will continue to evolve as we navigate the next few months. For example, spending habits around the holidays may look very different – this is where AI and Machine Learning (ML) solutions can help manufacturing businesses stay ahead of the market. AI and ML applications work much faster than humans in processing and analysing huge amounts of data. This means they can analyse and share new trends around consumer preferences in real-time. Ultimately, AI and ML can be used to predict future changes in consumer behaviour in ways that human researchers alone cannot. Deloitte AI powered tool Blab, mines data from over 50,000 sources such as social media platforms and news sites, and estimates what consumers will be talking about in 72 hours time, with 70 percent accuracy. This helps businesses anticipate market demand. For example, by incorporating this type of insight into its business practices, Danone was able to understand changing consumer trends and reduce its error in forecasting by 20 percent.
With the benefits provided by AI, supply chains can offer a competitive advantage during this period of uncertainty and beyond. A second peak, and perhaps even a second lockdown, may occur as quickly and unexpectedly as the first. Having AI systems set up now can help prepare businesses for that, and any other, possible scenario.
You have to do it right
While important, artificial intelligence is not a plaster to be placed over the cracks in existing supply chain and manufacturing systems. Leaders who take this near-sighted approach set themselves up for failure from the very outset.
While the benefits of integrating AI in critical operations are clear, many businesses are failing to realise the benefits of their investment in automation. In fact, 7 out of 10 companies have found minimal or no impact from their AI solutions.
To avoid this, businesses must comprehensively plan where AI will have most impact. They should also map out what they need to change in their existing processes to enable an AI solution to deliver outstanding results. Comprehensive planning, cross-functional support and executive backing are all essential in the successful rollout of these projects. Speed is important, but a well-planned and measured approach will result in more value than a rapid but rushed integration.
Empowering your ERP system
ERP systems are a central pillar of many businesses and provide an area where AI can return outstanding value from the get-go. Pre-existing processes and outdated services can all be enhanced by integrating AI with ERP.
AI-enabled ERP systems can deliver real-time analysis crunching data from a wide variety of sources. This will deliver trends and actionable insights for teams to increase their efficiency. Supply chain efficiency, decision making and demand forecasting immediately become more accurate and available — and as AI and ML continue to improve, the list of benefits will continue to grow. This allows time and resources to be focused on growth, creative thinking and customer service.
Leaders that diligently invest in AI will see their time and effort rewarded. Those that don’t risk remaining behind the curve as customer behaviour adapts in a COVID and post-COVID world. However, planning and identifying the areas that are best suited to automation will be key to success as manufacturing businesses continue to navigate uncertain times.
Nick McGrane, Managing Director at K3 SYSPRO