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By Samuel Greengard
The groups, including the Intelligent Tech & Trade Initiative (ITTI) and Canada’s SCALE.AI, aim to address supply chain technology, business, and regulatory challenges by promoting AI adoption and creating skilled jobs that accelerate the use of AI-powered technologies throughout global supply chains.1
AI tools take aim at supply chain management innovation by imbuing computing systems with capabilities that aid in the detection of problems and identify more efficient business processes, helping global supply chain managers wring out inefficiencies and extract greater value from their businesses. The use of AI in supply chains is making companies “swifter, cleverer and leaner,” and could bring companies an additional $25 billion in supply chain gains over the next decade, according to The Economist.2
AI aids in global supply chain management in a number of ways. It can improve fleet management, warehouse administration, logistics processes, and freight brokering. AI can also incorporate virtual assistants and apps that simplify analytics and improve decision making. The power of AI resides in the fact that it can discover patterns in data, use algorithms to recognize and better understand events, and tap image recognition, voice recognition, gestures and similar tools to simplify input and interfaces.
Consulting firm McKinsey & Company has dubbed AI the “transformational technology of our digital age.”3 The ability to predict hyper-regional demand trends via real-time data typically increases sales by 0.25 percent to 0.75 percent, and can help lower waste and spoilage amounting to an additional 0.5 percent.4 McKinsey also found that AI can improve forecasting accuracy by 10 to 20 percent, which typically translates into a 5 percent reduction in costs.5
According to a report from Research and Markets, the use of AI in global supply chain management – including subsets of AI such as machine learning and deep learning – is expected to reach $10.1 billion by 2025, up from $730.6 million in 2018.6 Yet according to Gartner, developing a framework for harnessing AI to address supply chain issues is a barrier to adoption. Gartner noted that most organizations lack requisite AI skills and expertise, and therefore may not be fully equipped to deal with the challenge.7
Enter industry consortiums and trade groups like ITTI and SCALE.IT. ITTI, with representatives from institutions and companies such as ICC (International Chamber of Commerce), IBM, Gearbulk, the United Nations Conference on Trade and Development (UNCTAD), and Columbia University, was created at the World Trade Organization Public Forum 2017. ITTI believes that “blockchain and AI will boost trade growth,” and is working to share knowledge and promote methods that lead to more robust and proactive supply chains.8 In addition, the initiative focuses on AI tasks such as predicting customer behavior, calculating the fastest and cheapest shipping routes, and understanding customer cancellation patterns.
Similarly, Canada’s SCALE.AI “supercluster” initiative “is an industry-led consortium whose mission is to shape a new global supply chain platform, bolster Canada's leadership in artificial intelligence (AI), and accelerate industry adoption of enabling technologies through collaborative and incremental projects,” according to Hélène Desmarais, CEO of a Montreal-based start-up incubator and co-chair of SCALE.AI.9
The initiative has attracted a CAD$950 million ($724 million) investment from the Canadian federal government to launch an innovation Superclusters project, stating “these clusters are engines of innovation that support the development and growth of globally competitive Canadian companies.”10 The objective is to create an “innovation hotbed” that can “energize the economy” and act as an engine of growth. “Comparatively, these innovation hotbeds have stronger connections, a long-term competitive advantage, global brand recognition, and an outsized positive impact on job creation and economic growth,” according to the Canadian government statement.11
Meanwhile, industry, research, academia and the European Commission have joined together to launch the Robotics Public-Private Partnership in Horizon 2020 initiative in the European Union. The robotics and AI initiative aims to strengthen the competitive position of European industry and foster scientific learning and research.12
Use cases for AI in global supply chain management continue to grow, but developing AI-enabled supply chains can prove daunting. To do so, organizations may wish to consider skills issues, pilot projects, and collaboration with partners.13 Consequently, new trade groups and consortiums promoting research, development, best practices, and adoption of AI in supply chains are taking shape. The goal of these groups is to help companies achieve a competitive edge via their supply chains in an increasingly challenging digital world.
Samuel Greengard is a veteran journalist who has contributed to many business and technology publications. He is also the author of two books: The Internet of Things (MIT Press, 2015) and the AARP Crash Course in Finding the Work You Love: The Essential Guide to Reinventing Your Life (Sterling, 2008).
1. “Building ITTI,” Intelligent Tech & Trade Initiative; http://itti-global.org/wp-content/uploads/2017/12/ICC_DP_ITTI-2.pdf
2. “How AI is spreading throughout the supply chain,” The Economist; https://www.economist.com/special-report/2018/03/31/how-ai-is-spreading-throughout-the-supply-chain
3. “Notes from the AI Frontier: Applications and Value of Deep Learning,” McKinsey Global Institute; https://www.mckinsey.com/featured-insights/artificial-intelligence/notes-from-the-ai-frontier-applications-and-value-of-deep-learning
6. “Artificial Intelligence in Supply Chain Market by Offering, Technology, Application (Fleet Management, Supply Chain Planning, Warehouse Management, Virtual Assistant, Freight Brokerage), End-User Industry, and Geography - Global Forecast to 2025,” Research and Markets; https://www.researchandmarkets.com/research/fw43nc/global_artificial
7. “Gartner Predictions for the Future of Supply Chain Operations in 2018,” Gartner; https://www.gartner.com/smarterwithgartner/gartner-predictions-for-the-future-of-supply-chain-operations-in-2018/
8. “ICC Brasil Launches Intelligent Tech & Trade Initiative at WTO Public Forum,” International Chamber of Commerce; http://www.prnewswire.com/news-releases/icc-brasil-launches-intelligent-tech--trade-initiative-at-wto-public-forum-300524306.html
9. “NEXT Canada Joins SCALE.AI AI-Powered Supply Chain Supercluster,” NEXT Canada; https://www.newswire.ca/news-releases/next-canada-joins-scaleai-ai-powered-supply-chain-supercluster-674184153.html
10. “Superclusters in Canada,”Government of Canada; https://www.canada.ca/en/innovation-science-economic-development/programs/small-business-financing-growth/innovation-superclusters/superclusters.html
12. “Robotics Public-Private Partnership in Horizon 2020,” European Commission; https://ec.europa.eu/digital-single-market/en/robotics-public-private-partnership-horizon-2020
13. “Gartner Predictions for the Future of Supply Chain Operations in 2018,” Gartner; https://www.gartner.com/smarterwithgartner/gartner-predictions-for-the-future-of-supply-chain-operations-in-2018/