Finding The Right AI Partner For Your Supply Chain
Avoid the ‘Trough of Disillusionment’ to Find Real Value
I recently attended the Gartner Supply Chain Symposium in Orlando, where it is always great to chat and network with leading minds in the supply chain industry.
At the symposium, Tom Enright, Gartner’s VP Analyst of its supply chain practice, advocated for CSCOs to continue the momentum gained during the pandemic to further advance corporate influence. Enright asked business leaders to strive for ‘multi-value contributions’ across the enterprise with the objective of delivering organizational advancements in strategy and execution, sourcing and procurement, logistics and fulfillment, technology and sustainability.
Additionally, Pierfrancesco Manenti, VP Analyst at Gartner, pointed out supply chain advancement will come from investments in generative AI and machine learning to build an AI-powered autonomous supply chain. Automation, augmentation, and autonomy will be the pillars of this transformation over the next decade.
AI and the Supply Chain
As one can imagine, AI dominated the conversation in these sessions and the hallways.
Unsurprisingly, the AI influence was also seen in the number of conference exhibitors who claimed multi-faceted AI capabilities in their products addressing organizations’ supply chain processes. It wasn’t just a few, but an entire cavalry of vendors.
When I put myself in a tech buyer’s shoes, I can’t imagine how hard it would be to navigate the noise of vendors claiming to have AI capabilities. With so many products suddenly available and so many new vendor promises, many feel we are on our way to the Trough of Disillusionment.
Trough of Disillusionment
Gartner is recognized for pioneering the “trough of disillusionment” concept for the last three decades, an integral part of the Gartner Hype Cycle. This phase marks the decline in interest surrounding a technology following its initial hype. And this is characterized by inflated expectations resulting from marketing ahead of reality. The trough emerges as experiments and implementations fall short of delivering anticipated or ‘promised’ results. If certain technology experiments and implementations fail, business interest will rapidly correct. I recently spoke with a leading Gartner Analyst for asset management, EAM and APS addressing this concern. She spoke to the rush of companies that spun up supply chain projects to test AI in the form of generalized models, which led to a lack of outcomes generated for the business. This has inserted skepticism and mistrust of AI between IT and Operations teams when it really is a great example of why purpose-built AI can connect the dots for many different parts and is ultimately the future of supply chain technology.
AI and the Importance of Proven Outcomes
As we all know, organizations can’t afford to pass up on AI, so it’s more important than ever to partner with AI providers who have completed the years of work required to offer a proven solution.
I cannot stress this enough: real progress for AI in supply chains and MRO materials doesn’t happen via PowerPoint presentations or phone calls with investors; it happens through multiple conversations and in-depth problem-solving, working hand-in-hand with the biggest companies operating and optimizing their global supply chains. This is where long-term value takes shape.
Previously, in this column, I’ve shown how organizations can gain valuable insights from their data by leveraging AI to optimize their MRO management and improve in these specific areas:
- Demand forecasting to help companies with production planning and inventory management;
- Predictive maintenance using data from sensors and equipment logs to predict potential equipment failures or maintenance needs, which reduces downtime and optimizes maintenance schedules;
- Inventory optimization to assess demand patterns, lead times, criticality, and other factors. This helps to optimize inventory levels, minimize stockouts, and avoid overstocking while ensuring the correct stock levels are always accounted for.
One large U.S. power company that provides gas and electric services to residential and commercial properties grew significantly due to mergers and acquisitions. However, these also left the company with multiple systems, data challenges, and a need for more visibility into materials. Working with a purpose-built AI MRO solutions provider helped it achieve a singular view of all its inventory, harmonize its inventory data, identify duplicate materials, and modernize its older stocking policies.
Having this singular view of MRO inventory across business units enabled further optimization opportunities. These verified demand signals help align Procurement and Sourcing to the right data and allow to secure availability of supply with strategic suppliers to reduce risk and save millions of dollars quickly. The resulting economies of scale and nearly $30 million in verified savings across inventory, procurement and risk are a testament to the power of purpose-built AI.
The High Stakes of Supply Chain AI
One of the speakers at the conference noted that organizations are investing in supply chain technology for three expected benefits:
- For new business models and competitive advantage
- For enhanced efficiency and productivity, and
- For better decision-making outcomes, resilience and agility.
But it’s much more than that. AI technology for MRO (Maintenance, Repairs, Operations) management should be purpose-built for a critical function of your business.
It can revolutionize how organizations operate by transforming MRO inventory optimization to optimizing demand forecasting. It can eliminate traditional data cleanses, lay the foundation for autonomous procurement and enhance internal and external collaboration. That’s why company executives must move diligently when evaluating AI providers.
The challenge for these tech buyers is to sift the wheat from the chaff. Identify the purpose-built AI solutions to improve critical functions in processes and continue to provide value for the early adopters and new customers who come on board.
Adopting AI capabilities from a trusted, seasoned provider will be a crucial differentiator for organizations that look to inject real value into their business. For example, a large pulp and paper company used this solution to analyze its historical maintenance data more efficiently to identify patterns and trends in equipment failure rates.
This work allowed the company to manage supply risk more efficiently while achieving a 15%+ working capital optimization in the first year. Plus, costly data cleansing and categorization were no longer prerequisites for optimizing inventory, spend, and risk outcomes.
Finding the Right Partner
It is worth taking action now to transform and optimize your MRO Materials and supply chain operations using AI. Adopting capabilities with the right partner becomes a strategic differentiator.
The right partner can help your organization avoid the ‘Trough of Disillusionment,’ delivering results, not just industry buzzwords. Qualified vendors must constantly sprint to meet customers’ ever-changing needs. However, a poorly chosen AI solution can disrupt operations, erode trust, and lead to financial losses. A proven partner working with your company is essential to analyzing and optimizing critical data and materials components in your supply chain.
One of the first steps is to conduct a deep market analysis to identify the right partners for your business goals. Look for providers that can inject real value into your business that delivers quickly and scales across your business. This could include comparing vendors using a scoring system and evaluating overall reviews, metrics, and other criteria such as customer proof points, references, and use cases. Another facet of this process is examining the vendor’s level of technology acumen. Expert tech providers will likely have processes to help your company conduct real-time monitoring and analysis while automating buying processes and onboarding suppliers.
A solid working relationship with your MRO optimization provider is necessary for a successful AI-driven supply chain. How is communication with different providers? Are there opportunities to further existing relationships in broader parts of the business?
So, supply chain leaders should take a step back from the noise of the recent conference. Undoubtedly, you’ll be fielding vendor follow-up calls for the rest of the month. Be diligent. Look instead to a vendor with a proven track record, purpose-built solutions, and commitment to continuous value. It may be the best takeaway from your face-to-face meetings this year.
Paul Noble,
Founder & CSO of Verusen