Artificial Intelligence (AI) and Supply Chain Management – An

Assessment of the Present and Future Role Played by AI in Supply

Chain Process: A case of IBM Corporation in the US

Submitted in partial fulfilment of the requirements for the award of

Degree in Bachelor of Business Administration (Finance &
International Business) Of
CHRIST (Deemed to be University)
By

Vimach Shiny Rodrigues

Reg. No. 1923673

SCHOOL OF BUSINESS STUDIES AND MANAGEMENT

CHRIST (Deemed to be University)
BANNERGHATTA ROAD CAMPUS
BENGALURU

September 2022
 Abstract

The purpose of this study was to identify the current and future plausible AI approaches that
can enhance both the study and application of SCM, aimed at addressing the current scientific
gap of AI in SCM. This study investigates four areas in order to effectively leverage the
potential benefits of AI for SCM: (1) the most widely used AI approaches and their application
in SCM, (2) present AI-enhanced SCM subfields, (3) the applicability of the explored
approaches through an industry-driven example IBM corporation; and (4) the future prospects
for subfields with strong potential for AI. For this, a structured literature review was conducted
to show the methods of AI and their applicability in solving problems of SCM. Then, the
industry-driven applications were explored, for which purpose, IBM was considered. Based on
these results, indications of potential for future research in the domain were derived.

Keywords: Artificial intelligence, Supply Chain Management, IBM, Machine Learning,

Procurement, Sourcing, Warehouse Management.
Table of Contents

Abstract .......................................................................................................................... 2

Introduction .................................................................................................................... 6

Theoretical Framework .................................................................................................... 6

AI-enhanced supply chain management ................................................................................... 6

Pre-requisites for AI in SCM ...................................................................................................... 8

Advantages of employing AI in SCM ......................................................................................... 8

Applications of AI in SCM ......................................................................................................... 9

AI in Transportation and Fleet Management .............................................................................................. 10

AI in Supply Chain Planning ......................................................................................................................... 10

AI in Procurement........................................................................................................................................ 11

AI in Warehouse Management.................................................................................................................... 12

Components of AI: ................................................................................................................. 12

Application of AI in Supply Chain Management across industries: ........................................... 14

Achieving efficiency through AI: ................................................................................................................ 15

Stages in digitalization of SC practices towards integration of AI – the current state ................ 15

IBM Supply chain An overview ........................................................................................16

Digital transformation ............................................................................................................ 17

Data platform ........................................................................................................................ 17

Blockchain ............................................................................................................................. 18

Track and Trace IoT ................................................................................................................ 18

Augmented intelligence ......................................................................................................... 19

 IBMs three main advisor systems: ............................................................................................................. 19

Intelligent workflows ............................................................................................................. 21

Quantum computing .............................................................................................................. 21

Collaborative robots .............................................................................................................. 21

IBM Maximo Visual Inspection .................................................................................................................... 22

Future prospects for AI in SCM ............................................................................................... 22

IBM – Recognition and awards received for its Supply Chain transformation ........................... 23

Examples of AI in SCM ............................................................................................................ 23

Problem Statement ................................................................................................................ 24

Objectives of the study ...................................................................................................24

Research questions .........................................................................................................25

Limitations of the Study ..................................................................................................26

Scope of the Literature Covered ......................................................................................28

 Chapter – 1

INTRODUCTION
Introduction

Over the years, the world has been advancing toward a digital future, with Industry 4.0
technologies regarded as the way of the future (Kumar, Ramachandran, & Kumar, 2021).
Artificial intelligence (AI) is one of the most notable of these technologies (including
blockchain, IoT, cloud computing, and others) (Dirican, 2015). AI is defined as the ability of
computers to communicate with, and emulate, human skills (Schutzer, 1990). AI helps ensure
a greater accuracy, speed, and input volume. AI is not a new subject or academic field of study.
However, technological advances have only recently demonstrated that AI has a wide range of
applications, making headlines by adapting processes in a variety of areas, including supply
chain management (SCM).

AI was invented to construct idealistic "thinking machines" capable of learning, mimicking,

and replacing human intelligence. And since the late 1970s, AI has shown great promise in
enhancing the human decision-making processes and their subsequent productivity in a variety
of business efforts due to its ability to learning business phenomena, recognizing business
patterns, seeking information to intelligently analyze data and output the same.

Theoretical Framework

AI-enhanced supply chain management

A well-functioning supply chain is the foundation of almost every industry. A highly precise
estimate on demand, paired with efficient replenishment procedures, is critical for achieving a
close match between supply and demand. This is especially important in just-in-time
manufacturing environments, where short cycle times and having just the appropriate quantity
of inventory are vital for gaining a competitive advantage. Currently, it is very hard to achieve
a supply chain that operates at peak efficiency at all times. This is due to immense internal and
external complexity. Internal influences include new product releases, distribution network
development, and short-term marketing in a B2C scenario. External variables include the
presence of excessive seasonality, long-tail commodities and changes in media coverage or
customer perception. Traditional forecasting and restocking systems are overwhelmed by the
volume of data generated by IoT devices, for example, and the sheer quantity of affecting
factors. As a result, Just-In-Time (JIT) production frequently relies on an SC that is extremely
efficient under normal circumstances but sacrifices flexibility, implying the inability to respond
rapidly and effectively to upstream or downstream changes.

Supply chain leaders across the world are beginning to recognize machine-learning (ML) based
technologies' ability to improve optimize replenishment and forecasting accuracy.
The goal is to lessen the bullwhip impact while increasing flexibility. An AI-powered SC
optimization not only focuses on performance in a certain specific context, but it also is
capacitated adapt to changes in distribution network or product mix caused by unforeseen
events. Furthermore, future technologies will target the full value chain, from the raw material
supplier to the final client. Supervised learning systems, such as those based on the Bayesian
networks, not only employ past sales data and SC configuration, but also rely on near real-time
data, such as prices, advertising campaigns, or local weather forecasts.

AI enables firms to improve their supply chain forecasting and product design. Forecasting
demand accurately is one method to put AI's capacity to assimilate different data and
automatically respond to new knowledge to good use. It can detect trends and patterns that can
be exploited.
Businesses utilize this technique in a variety of means, including demand projections in order
to stock only the particular quantities of certain products they sell, thus minimizing waste, and
anticipating near accurate sales patterns to estimate and order more soon-to-be-popular thing.

Furthermore, by focusing on individual stock points, data granularity can be increased to far
greater levels than previously. The goal is to create a completely automated, self-adjusting
supply chain decision-making system. Demand surges are correctly predicted, and material
flow routes and amounts are automatically modified. Some businesses have initiated tests for
their own internal systems to enable AI-based predictive forecasting and restocking.
Established players such as Blue Yonder advocate AI solutions to optimize forecasting and
replenishment while also modifying pricing.

• AI integrates relevant external and internal data to achieve a highly accurate demand
forecasting
 • An improved forecasting accuracy ensures lower inventory levels across the supply
chain thus reducing carrying costs
• Material flow routes and volumes are dynamically modified on the basis of real-time
data such as weather
• Reduction in lost sales owing to product unavailability as a result of forecasting error
reduction

Pre-requisites for AI in SCM

1. Constant access to information on multiple levels

2. Sustenance of shopper-driven objectives
3. The dynamic approach for calculating the cost of development
4. Incessant, identity-erudition and identity-checked process
5. Devices that interact dynamically and are easily accessible
6. Possibility of operator-artificial intelligence collaboration

Advantages of employing AI in SCM

Supply chain operations generate a large volume of data (structured and unstructured) in
businesses on a regular basis, which is frequently underutilized.
Given that most AI technology used in SCM comprises of sensing, learning
and processing components, the following are some advantages of the use of AI in SCM:
 Applications of AI in businesses at various
levels

Strategic and tactical levels
— More efficient use of optimization
technologies in tasks such as
business planning for corporations
— Better supply chain configuration
(identifying primary participants,
geographic distribution, main
transportation systems, etc.), risk
analysis and demand
forecasting, among others
Operational level
— Optimization and increased dynamicity in transport
route traceability (both within the organisation and in its
inbound and outbound material flows)
— Improved product/process quality control and
inventory management, for example, by the use of novel
ways of object detection/recognition of visual patterns
— More precise demand management as a result of the
ongoing application of Machine Learning algorithms
— Improved monitoring and visibility of supply chain
processes, allowing for much more dynamic decision
making and optimization
— Improved scheduling and control on the shop floor,
allowing for more dynamic, broad, and optimised
operations management
— Improved predictive asset management, improving
asset utilisation and preventing supply chain disruptions
caused by the shutdown of machines and equipment

Applications of AI in SCM

AI now enables more effective data exploitation and utilisation.AI has a range of applications
across the SCM value chain but for the purpose of this study, the range was limited to a relevant
few as below (Brown, 2020):

Transportation and Fleet Management Procurement

Applications of AI in SC
practices

Supply Chain Planning Warehouse Management

AI in Transportation and Fleet Management

The global TMS (Transportation Management Systems) market has been estimated to grow at
a 14.5% CAGR over the next five years, nearly doubling to USD 4.3 billion by 2025 from USD
2.5 billion in 2019. These systems' evolution mirrors the exponential growth curve of data
sources such as IoT sensors, RFID, GPS, barcodes and actuators.

A digital TMS facilitates advanced functions such as dynamic routing and automation round
the transportation lifecycle, thus allowing organizations to enhance their transportation
performance in real-time. An intelligent TMS powered by AI can practically automate every
process in the transportation value chain, beginning with the tendering of load. Indeed, smart
systems that integrate advanced analytics through embedded intelligence may manage 25% or
more of the load tenders automatically and hence automate related processes such as booking,
approval, notifications and routing.

AI in Supply Chain Planning

Digital supply chain planning (SCP) is crucial to the success of digital supply chains in any
industry. In a 2019 research note on SC planning, (Gartner, 2019) described a progressive
model that facilitates companies to enhance the timeliness and quality of their planning
initiatives while also ensuring that their technology initiatives are aligned with the digital
maturity of their SC processes.
 • According to the Gartner model, SCP at stage 1 maturity companies involves
Stage 1 a high degree of manual planning using basic tools such as spreadsheets
and models supported by low-quality data.

• Companies in stage 2 must still deal with poor data quality and a distinct
planning process comprising various models aligned with different supply
chain roles.
• Companies, on the other hand, already have a tremendous chance to
Stage 2 utilise the power of algorithmic tools and methodologies to achieve
considerable gains, even in a function-level planning process.
• For example, machine learning can be used to self-correct master data. It
can also be coupled with functional planning automation to increase
planning model quality and automate prediction in the planning process.

• By the time we reach stage 3, firms will have the opportunity to move to a
fully algorithmic SCP paradigm, which will radically revolutionise their
approach to supply chain planning. In this case, the SCP process makes
considerable use of a variety of data types and sources, with the ability to
add additional datasets at any time.
• The company can also build a fully evolved digital supply chain twin, which
Stage 3
is a near-real-time digital copy of the physical supply chain that can be
used to replicate interactions and linkages.
• There is also a high level of prediction and prescription automation;
function-level planning has evolved into an end-to-end process, with up to
95% of planning decisions made autonomously; and supply chain planners
are increasingly more involved in managing algorithms and databases.

AI in Procurement

According to (Berman, 2019) ‘s latest supply chain projections, by the end of the year, at least
half of all the large scale manufacturers will have automated their spend and supplier data
analysis, resulting in a ~15% increase in procurement productivity.

Sourcing bots now use ML to automate and comprehend a company's sourcing process, as well
as the interface with external systems to trigger actions in accordance with and based on a
variety of inputs. Contract analytics tools automate onboarding and identification of
equipments, using Natural Language Processing (NLP) to detect policies, and using a latent
semantic indexing (LSI) engine to locate specific data points. Intelligent supplier information
management systems provide novel approaches to combining supplier data and thus extracting
important insights. AI is used in supplier risk management solutions to identify gaps and asses
company's supply and to prescribe particular measures to reduce their exposure to risk.

ML is helping to speed up accounts payable procedures, detect fraud, and ensure compliance.
AI-powered spend analysis tools automate expenditure classification, data extraction and
vendor matching, simultaneously providing sophisticated spend analytics output to improvise
supplier relationships, increase performance and profitability, thereof. And, with
conversational interfaces that facilitate frictionless interactions between supplier systems and
procurement, AI-powered chatbots are expediting procurement conversations.

AI in Warehouse Management

Traditionally, warehouse management systems (WMS) did not have any advanced intelligence
beyond certain fundamental descriptive analytics. WMS capabilities, are however slowly but
steadily evolving to accommodate intelligent warehouse of the future. According to (Gartner,
2022), by the year 2024, at least 50% of all of the WMS offerings will feature embedded ML
capabilities.

An intelligent WMS's capabilities go well beyond fundamental inventory management to optimise

all of the basic and routine warehouse management activities. For instance, after products are
scanned at the warehouse entry points, algorithms can autonomously establish optimal worker
paths and stocking places. AI approaches such as reinforcement learning and neural networks are
also assisting warehouse robots in learning how to deal with the diversity and complexity of these
dynamic situations.

Components of AI1:

1
Limited to select components relevant to the study
 •Since most businesses rely on internal data to maintain demand-supply balances,
it's difficult for them to predict how external events will affect their supply chains
Natural
Language •NLP is an artificial intelligence (AI) technology that recognises unstructured
human language and converts voice or text conversations into normalised data
that can be analysed

•Since they execute visual activities that would ordinarily need human labour,
visual AI solutions provide a more "human-like" approach to overcoming supply
chain management difficulties
Computer •Computer vision systems for inventory management, sorting and collection
Vision systems, warehouse visual inspection - defect and anomaly detection, equipment
detection, and movement analysis can assist discover problems and optimise
processes by employing image and video analysis

•Virtual assistants (also known as virtual reps, chat-bots or intelligent agents) are
customer relationship management software tools that seek to simulate the
interaction of online human service professionals
Virtual Agents
•VAs are also adept in responding to routine enquiries from procurement
personnel, business unit representatives, suppliers, and other customers,
providing benefits over traditional telephone-based support approaches

•Smart robostics in SC include a range of AI enhanced bots from warehouse

robots, autonomous mobile robots (AMR), rack-climbing pick-and-put-away
robots, to cobots
Smart
Robotics •Autonomous robots drive SC innovation and value via collaborative robots or
cobots. Cobots can automate certain tasks in the SC process, such as locating and
picking items, assisting employees, tracking inventory levels, moving heavy
objects, packing boxes and taking care of a variety of other operational tasks

•Autonomous mobile robots deployed in warehouses, autonomous trucks, drones

for efficiencies in inventory management and picking orders, autonomous
delivery bots and cars deployed for last mile deliveries
Autonomous
Vehicles •Helps achieve SC efficiency via IoT-enabled drone-based application, integrated
truck delivery approach, autonomous underground vehicles, electric trams,
microbuses, automated robotic buses, electric volvo buses, automated rovers,
google self-driving waymos and smart trucks
Application of AI in Supply Chain Management across industries:

Industry Applications Applicability of AI technologies

Natural language Computer vision Virtual agents Smart robotics Autonomous vehicles
Retail Anticipate demand patterns while optimizing, Moderate Moderate Moderate High High
provides immediate assistance with virtual
agents, completion of last-mile
delivery by drones, automation of in-store
checkout and automating supplier contracting
and negotiation
Electric Improvise supply and demand forecasting Low Moderate Moderate High High
utilities through evaluations on the reliability of
integrated generation assets and thus
automating the demand-side response
Manufacturing Automation of supplier evaluation, product Low Moderate Low High High
design yield, forecast part requirements and
optimize flight planning and fleet & route
allocation
Health care Predict diseases, identification of high-risk Low High Moderate Moderate Low
patient groups, launch preventive therapies
and personalize learning
Education Anticipation of job market demand, Moderate Moderate Moderate Low Low
identification of new performance drivers to
assess students and assist graduates in
highlighting their strengths
Achieving efficiency through AI:

Delegating AI the task of analyzing the massive amount of data involved in demand
forecasting, marketing, and quantity prediction, all of which require the analysis of the past
and the prediction for the future, thereof. (Otogawa, Isobe, Kentaro, & Kyozu, 2018)

Stages in digitalization of SC practices towards integration of AI – the

current state

In collaboration with the Warwick Manufacturing Group (WMG), supply chain specialist JDA
(now Blue Yonder) conducted a Supply Chain Digital Readiness research that defined digital
readiness across four major categories (JDA, 2018).

Departmental efficiency is managed using general-purpose tools such as

•Functional spreadsheets or ERP. Meanwhile, planning is also compartmentalized, with
optimisation functional plans pooled via spreadsheets in S&OP. At this stage, tech helps
•Transactional companies generate end-to-end visibility that encompasses, where possible,
Visibility •Fragmented customers and suppliers.
•S & OP

•Corporate
profitability After having established end-to-end connectivity, the next phase is to actively
drive the supply chain toward corporate objectives. Integrated Business Planning
•Business Strategy
(IBP) facilitates cross-departmental collaboration and cascades company goals.
•Linked It ideally enables scenario modelling so that producers can be ready to respond
Predictive •IBP advanced profitably to business contingencies.
segmentation

•Competitive At this stage, manufacturers require a new type of intelligence to compete in

advantage the market as every choice is data-driven, consumers have high expectations, and
•Real-time visibility & supply chains are longer than delivery expectations. Machine learning,
control here tirelessly analyses the data lake, filtering away noise in order to find patterns
•Connected that link cause and effect. When applicable, AI can then help decisions on supply
Prescriptive chain configuration. This in-depth network awareness allows manufacturers to
•Digital control tower
stay ahead of the competition by transforming their supply chain from predictive
AI
to prescriptive, resulting in intelligent, system-wide execution.

This stage represents a self-learning supply chain. Digital Control Towers

•Transformational
detect the signal pattern that ML predicts would cause an issue or opportunity in
•Self learning the ecosystem. AI has indicated that there is an optimal supply chain response
•Networked in anticipation of future events. Where applicable, the system can take
Autonomous •Cognitive necessary actions to optimise concerns and opportunities to ensure the supply
chain responds as effectively as possible.
(JDA, 2018) results indicate that more than a third (35%) of the companies in the research were
remained at stage one. End-to-end data visibility remained the primary objective, SC activities
were still supported by certain basic ERP systems, and they heavily relied on rudimentary
analytical tools like spreadsheets, mostly for reporting.

Just over half ~52% qualified for stage two, which means that there was minimal deployment
of specialist SCM solutions, some process automation, and use of analytics tools to drive cost
optimization initiatives.

Only over 13% of the companies qualify for stage 3 of digital preparedness access based on
their capabilities for dynamic end-to-end supply chain optimization, utilization of sophisticated
analytics including AI, and real-time visibility across the IoT and the SC ecosystem. Level 3
readiness, is expected to more than treble ~31% by 2023. Just under 10% of the firms surveyed
are likely to develop stage three of self-learning autonomous capabilities during the next five
years.

IBM Supply chain An overview

IBM operates a complex and global SC network with manufacturing facilities strategically
placed across 170+ countries, facilitating hundreds of thousands of customer deliveries and
providing service maintenance, thereof. IBM has supply chain personnel in over 40 countries
(IBM, 2022). To address the growing demand for configurable products, IBM's supply chain
employs a hybrid strategy of build-to-plan and build-to-order. In addition, IBM collaborates
with hundreds of suppliers through its global, multi-tier supplier network.

IBM developed the world's first cognitive supply chain, leveraging on its already existing SC
experience with AI, cloud, data fabric, IoT, edge computing, and among other technologies.
The new approach fulfils 100% of orders and has saved the corporation USD 160 million to
date (IBM, 2022).

The IBM SC transformation journey is aimed on developing a cognitive SC that embraces an

agile culture of innovation, investing in the engagement and growth of their team members,
focused on the needs and successes of their clients, and leveraging exponential technologies to
deliver a greater value. They believe in the integration of technologies to provide individuals
with actionable insights to help them make quick decisions.

The IBM transformation includes a committed and motivated IBM SC workers who apply
these emerging technologies to operations with both agility and speed in order to realize the
aim of exponential innovation. IBM is thus devoted to the principle of innovation anywhere
and applies everywhere the very data insights to improvise on the processes, people, and
technology, from piloting new technologies to creating a more cognitive SC, automating key
activities, and using a multi-source, resilient SC.

Digital transformation

The best of supply chains are those with the highest of resiliency, a focus on the right skills
and expertise, new methods of working and the ability to adapt to and overcome any kind of
disruption with quick reaction times. IBM SC technology provides a better human experience
by embracing technological developments, reinventing how work is done to optimize value
transformation, and driving the optimal course of action with efficiency and speed. Traditional
SCs are founded on well-defined and structured processes. When it comes to
robustness, workflows must be fluid and adaptable to changing dynamics.

Stages of adopting IoT for SC throughout the value chain – IBM:

(IBM, 2017)

Infuse with cognitive

Refining models with
cognitive machine learning
Advance to analytics and utilising other
Gaining insights from the cognitive functions to
data by building models, improvise AI engagement
Visualise the patterns predicting future events using speech, image, video
and recommending to diagnose complex
Visualising data into
solutions accordingly problems
meaningful
Gather the data dashboards/charts to see
Instrumenting patterns
equipments/assets to
collect data and compile
the sae with the existing
data

Data platform
The IBM digital SC transformation is centered on three parallel workstreams that have
effectively transitioned IBM from a harmonized to a transparent SC network to the current
cognitive SC network. The company began by integrating and harmonizing the worldwide a
data and processes in global IT transactional systems (like ERP, shop floor control, order
management, and among others), which it then normalized and adapted the same in accordance
with its users' needs. Transparency of information across the supply chain with a single point
of truth was a critical step in preparing for analytics and cognitive growth. The IBM platform
is based on an Enterprise Container Orchestration Platform and the IBM Hybrid Cloud,
which are built with Red Hat OpenShift. This method increased both the scalability and
availability of IBM products, thus allowing for a flexible migration without affecting mission-
critical applications or their time-to-value. Then, utilizing blockchain and track and trace IoT
smart sensors, IBM expanded beyond its internal data into SC networks.

Blockchain

Visibility beyond IBM data is of crucial importance for coordination on end-to-end operations,
however security has frequently been an impediment to free exchange of data. Blockchain
fosters confidence across the SC network by providing traceability and security to suppliers
and various logistics providers across the value chain for crucial logistics data. Customs
Declaration, powered by the IBM Blockchain, facilitates exchange of customs and shipping
documents, as well as the in-transit information, across its network of suppliers, carriers, and
brokers in order to digitize the data and improve compliance and make efficient the cycle time
through customs, whilst simultaneously providing insights into logistics tracking and the
estimated time of arrival.

Track and Trace IoT

IBM employs Track and Trace IoT smart sensors to track shipments and any in-transit delays
or problems. These sensors are attached to incoming and outgoing shipments and offer real-
time data on GPS location, tilt, temperature and humidity, while simultaneously alerting when
conditions are out of forbearance. These insights provide a near real-time update on client
deliveries whilst also lowering the risk of damage and loss.
With the convergence of IT, operation technology (OT) and the IoT is emerging as a new,
novel alternative for smart manufacturing. The integration of IoT with AI-based technologies
such as big data, analytics, and cognitive manufacturing saves time, labor, expenses,
maintenance, and the required upkeep, thereof. IoT sensors are embedded into the storage racks
at the company facility in Vac, Hungary, allowing real-time data regarding machine storage
and retrieval to be exchanged. For occupancy trends, IoT data and machine settings are studied.
The derived insights are utilized to help technicians make decisions on the best storage layout.

Augmented intelligence

It is of vital importance for the SC decision-making process to have real-time access to

inventory, forecast, supply, order, and engineering data throughout all the manufacturing
geographies and functions. IBM SC advisors leverage platforms powered by IBM Watson and
cognitive AI capabilities to give quick data insights that IBM global SC professionals may use
to monitor and assess global and local supply and demand information through the part
numbers and component details.

IBMs three main advisor systems:

• Cognitive Supply Chain Advisor 360 (CSCA360):

A control tower that provides a real-time assistant and advisor to supply chain
specialists, and multitier suppliers got recommendations about order improvements,
inventory levels, and more.
CSCA360 unifies data and insights across all supply chain domains by drawing on a
data platform comprising structured and unstructured data within the supply chain and
beyond to multitier suppliers, logistics providers, carriers, and IoT Smart sensors.

Even inexperienced users can easily ask questions in all supply chain domains, such as
engineering, inventory, planning, order management, supply assurance, and global
logistics, using a natural language interface as below:
o Task: Identification of parts via part number to fetch information on orders,
forecasts, inventory, alternates, commits, buyers and suppliers
Command: “Show me the part number detail for P/N 1234567"
o Task: Fetching details on a specific customer order
 Command: “Where is order number xyz?”
o Task: Identification of changes
Command: “How did the day-to-day order load change for Poughkeepsie site”
or “Which orders are delayed?”

In addition, automatic notifications are created for transportation delays or out-of-

tolerance health indicators for individual shipments.
With a shortage in global parts, CSCA360 can immediately detect location disruptions
by requesting, "Show me all tier 1 suppliers with MFG locations in Japan" or "Show
me all the MFG locations for component P/N 1234567." By clicking on suppliers or
part codes, users can see the supply and demand position to assess potential shortages,
recommendations to address shortages, associated implications to client orders, where
the components are used, and future demand. One can even look into other supply
sources amongst the available distributors.

• IBM Test Advisor:

IBM Test Advisor is a cognitive programme that generates repair recommendations

with confidence levels based on past test results. Structured and unstructured data is
turned into meaningful solution suggestions for engineers and technicians using
machine learning technologies. With reduced test times, IBM Test Advisor decreases
repair time, reduces misdiagnoses, and increases manufacturing efficiency. It increases
both the skills learning curve and overall product quality by applying system-assisted
teaching and gathering feedback.

• IBM Quality Advisor:

IBM Quality Advisor employs business analytics to intelligently regulate end-to-end

supply chain quality data and predict failure rates, as well as to offer steps to mitigate
or improve the impact of failure rates. IBM Quality Advisor learns continuously with
input from domain experts using IBM Watson Human Computer Interaction (HCI)
learning capabilities. IBM Quality Advisor, which is designed for both data scientists
and non-data scientists, enables the management of the growing complexity of the
supply chain while reducing costs and achieving significant productivity benefits.
Intelligent workflows

Intelligent workflows leverage data platforms and AI-powered advisers to enable greater
transformation plays with radical process changes. They cause more cultural and organizational
shifts, allowing them to traverse domains without manual hand-offs. Collaboration is essential,
but it must also be digital in order to be properly leveraged across the enterprise. Processes in
intelligent workflows are fluid and react to the situation rather than running left to right. They
are backed up by crucial data aspects to allow for quick decision making.

With the use of AI-driven workflows, IBM enables SC professionals to transition from doing
repetitive tasks to becoming workflow managers by delegating them to the "digital workers."
The combination of SC expertise driving orchestration and a digital worker assisting with
automation reduces time-to-value by allowing faster decisions to be made.

IBM's Continuous Intelligent Planning framework is ideal for intelligent processes. Building
continuous collaborative workflows that integrate supply and demand planning with fulfilment
enables faster reactions to supply positions. Intelligent workflows digitalize current SC links
to provide a new perspective on demand sensing and conditioning. Lead times in the electronics
industry are increasing, and there are greater supply bottlenecks than in the past. Through the
rapid flow of information, intelligent workflows allows businesses to bring the "ends" of an
SC together considerably much swiftly.

Quantum computing

As the era of quantum advantage arrives closer, there are already higher chances for quantum
computing to being integrated with the existing advanced technologies to exert a significant
impact on science and industrial growth. In two use cases, IBM Supply Chain had collaborated
with IBM Quantum to demonstrate the value of supply chain. Combining conventional models
with quantum algorithms clearly demonstrates the significant potential benefits that quantum
computing brings to supply chains in both use cases (logistics optimization and service
component demand forecasting).

Collaborative robots
Manual jobs are frequently automated with robotics. Combining artificial intelligence (AI) with
a collaborative robot (cobot) advances robotics. Processor sockets are inspected for physical
damage before being inserted in the server at the IBM facility in Guadalajara, Mexico, which
needs high precision and repeatability. By combining cobots with MVI, we increased
automation capability.

IBM Maximo Visual Inspection

IBM Maximo Visual Inspection (MVI) is an AI-powered computer vision solution that
uses deep learning models to detect manufacturing quality issues. MVI is incorporated
into all IBM manufacturing facilities to detect problems at scale with high precision.
IBM operations saw up to 5x efficiency gains and a 20% reduction in false positives
when implementing MVI for specific applications.
MVI is installed on network edge assembly lines in IBM plants in Canada, Hungary,
Mexico, and the United States, and it is controlled via IBM Hybrid Cloud and IBM
Edge Application Manager. This solution enables AI models and edge devices to be
handled from a centralized location via the cloud via an automated process that cuts
software maintenance expenses by 20%. To avoid the challenges associated with
bandwidth and latency when executing inference in a data centre, AI models are
deployed to edge devices for inference.

Manual jobs are often automated with robotics. Combining artificial intelligence (AI) with a
collaborative robot (cobot) enhances robotics. Processor sockets are inspected for physical
damage before being inserted in the server at the IBM facility in Guadalajara, Mexico, which
necessitates high precision and repeatability. By integrating cobots with MVI, IBM
has increased its automation capability.

Future prospects for AI in SCM (Meticulous Research, 2019):

• The AI in the SC market is expected to grow at a CAGR of 45.3% to reach ~$21.8

billion by the year 2027, with Asia-Pacific expected to record the fastest CAGR
throughout the forecast period in consideration
• Promising govt policies and initiatives in developing countries are driving the global
AI in SC market growth. For instance, the Govt of Québec spent ~$60 million in 2018
 to fund the AI-Powered Supply Chains Supercluster (SCALE.AI). The govt. of Canada
made similar commitments in 2018, investing over $230 million in the AI-Powered
SCs Supercluster.

IBM – Recognition and awards received for its Supply Chain

transformation:

Year Recognition Promoter

2018 Manufacturer of the Year Award Frost and Sullivan's
Manufacturing
Leadership Summit
2019 High Tech Supply Chain Innovator Award Gartner

2019 Engineering and Production Technology Manufacturing

2019 Supply Chain Leadership Leadership Council
2019 Visionary Leadership
2020 Talent Management Leadership
2019, 2021 Artificial Intelligence and Analytics Leadership

2020, 2021 Collaborative Innovation Leadership

2020, 2021 Digital Transformation Leadership

2020, 2021 Enterprise Integration and Technology Leadership

2020, 2021 Next Generation Leadership

Examples of AI in SCM:

• Eastman Kodak structured experienced order pickers' thought processes and then
designed a rule-based expert system to choose the ideal order-picking path in a
warehouse (Allen & Helferich, 1990)
• (Min & Yu, 2008) proposed an agent-based forecasting system that had the capability
to predict the end customer demand through information exchange among multiple SC
partners and learn from past forecasting experience in an effort to synchronise a series
 of interrelated but different stages of joint demand planning and forecasting processes
in the SC

Problem Statement

The problem scope is classified according to the three-level decision-making hierarchy:

Long-term executive-level strategic decisions such as capital

investment, strategic alliances and facility location

Tactical decisions concerning intermediate-term, mid-level issues

such as collaborative demand planning, inventory planning and
supplier selection

Operational decisions concerning routine, short-term challenges

like as order picking, vehicle routing and cycle counting

Objectives of the study

• Identify the most often employed AI techniques in SCM

• Identify the AI sub-fields that are most appropriate for SC applications, and then characterise
the very sub-fields in terms of their utility for enhancing SC efficiency
• Determine the applicability of AI techniques that could be employed in SCM
• Synthesize the existing literature on the applications of AI to SCM in terms of practical
consequences and technical qualities
• Identify the SC subfields and tasks that have already been improved by AI
• Establish a hierarchical taxonomy for current AI literature and classify it based on SCM
application domains, problem scope, and approach
• Summarize AI research trends and suggest unexplored potential SCM application areas
• Identify subfields and tasks that have a strong potential for AI development
• Discuss the prospects for future outlook of existing AI literature as well as undeveloped AI
research ideas pertinent to SCM

Research questions

RQ1: What techniques of AI are applied to what tasks from the SCM domain?

The above question focuses on both technical elements and the realm of identified real-time
application cases. The ultimate result will be an overview of the approaches that are used to
solve various SCM tasks. This research question will be addressed through a structured
literature review focused on scientific literature. Apart from research, industry-related AI
applications are also of relevance to provide a broader picture of AI application areas in SCM.
Particularly interesting is whether industry is interested in the same themes as the research, i.e.,
may benefit from scientific developments, or whether the research does not entirely satisfy the
demand for relevance. As a result, the second research question will be answered using white
papers released by firms, consultancies, or industry-related research bodies, thus synthesising
numeric data to arrive at the extent of applicability of AI in SC practices with specific focus on
IBM:

RQ2: To what extent do corporate interests mirror the primary research domains in AI
application in SCM practices?

Future research directions can be inferred from the responses to these two questions, i.e., an
overview of how research and industry employ AI in SCM, to answer the third research
question:

RQ3: What are the future research opportunities in the domain of AI for SCM?
By answering all of the aforementioned three research questions, the study would contribute to
AI for SCM research. It would provide researchers with synopses of both scientific and
industry-related interests, while simultaneously providing possible future research alternatives,
in order to expedite scientific research and support relevant studies that also satisfy the industry
needs.
Limitations of the Study

• The complexity of AI technology: It evolves swiftly, therefore complete evaluation of

AI is extremely challenging. This study focuses solely on AI technology connected to
SCM processes
• Company size: This study focuses solely on the SC practises of the IBM corporation,
as a result, general reasoning leads to the conclusion that large-scale businesses have
the capacity to design and investigate the most recent SCM solutions, which might not
be the case with small and medium size enterprises
• Inductive investigation: The study does not analyse all conceivable solutions to the
research questions, but rather makes a generalisation on the plausible
 Chapter – 2

REVIEW OF LITERATURE
Scope of the Literature Covered

Characteristic Category of Description

Literature
Goal Investigative / The goal of this Literature Review (LR) is to
exploratory studies on discover existing AI applications in the SCM
practices / applications domain.
of AI in SCM

Focus Integration The aim of this LR is to summarize the identified

(Generalization) applications and in effect, to provide an overview
of existing research and explore industrial
applications
Perspective Neutral representation The LR attempts to analyse and present the
identified literature on a neutral basis in order to
provide an objective overview of the existing
research and deduce the same to the relevant bits

Coverage Representative Since there is no complete list of accessible AI

approaches, this LR cannot claim to be
exhaustive. Instead, it strives to present a large
enough sample to include all existing literature.

Organization Methodologically The results are provided in categories based on the

AI approaches used and the SCM tasks addressed.

Audience General scholars The LR is aimed towards a broader readership

rather than AI or SCM specialists, considering
the amount of detail with which results are
presented; for example, the features of AI
approaches will not be detailed in a scientific
sense
Empirical research studies of AI in SCM

Literature Scope of problem Methodology Implementation Key contributions Limitations Findings

status