AI can reduce the impact of black swan events like COVID-19 on your supply chain
COVID-19 (coronavirus) has been dominating the news this month.
While the public has largely been focused on how it will impact global health, at Noodle.ai we’re also thinking about the impact a pandemic or other “black swan” event can have on the global supply chain. We talk often about the many ways AI can help the world reduce waste – machine learning can also assist companies looking to prepare for–and quickly recover from–unexpected global events.
What do we mean when we say a pandemic like this is a “black swan” event? These are large-scale events that take people by surprise, have an outsized impact on the world around them, and then get rationalized with hindsight bias. The black swan theory was coined by Nassim Nicholas Taleb and can be used to describe a variety of events, including the advent of the personal computer and the internet.
What does all of this have to do with supply chains? Mark Essle, Suketu Gandhi, John Song, and Jian Xu explored some possible impacts in the MIT Technology Review recently, suggesting that we shift our mindset to one where we acknowledge that we live and work in a world where change is the only constant. It’s hard for humans and legacy systems to operate in an ever-shifting world, but artificial intelligence gives you a strategic advantage in situations where parameters are constantly variable and outside influences on your supply chain are ever shifting.
You can see a real-life, small-scale example of shifting supply chain volatility from COVID-19 panic in the availability of N95 rated disposable masks. As the public buys stores out of these masks, not only are prices being driven higher, hospital staff (the very people tasked with helping patients during this difficult time) are having a harder and harder time filling their own orders for the N95 masks. This is a clear case where a mask supplier with a robust AI implementation would be able to use data from both inside their company and outside the company to ensure their inventory was not only adequate for meeting volatile demand but also shipped out to the correct locations.
In Harvard Business Review at the end of February, Pierre Haren and David Simchi-Levi predicted that global supply chain disruption would begin to occur at scale in mid-March. Indeed, we are starting to see financial impact on manufacturing grow from a combination of quarantine (both voluntary and involuntary, depending on location), implementation of social distancing behavior among the labor force, and market volatility and panic.
MIT Technology Review shared this about the consumer goods industry:
Many of the articles written about the impact of this black swan event are focused on the location of suppliers in quarantined countries, like China or Italy. We want to shift your focus from location and logistics to visibility. Specifically, to making your own supply chain more transparent throughout. Companies that have already implemented AI will have a leg up on companies who have been slow to adopt this technology. Why? Because they will have months, or even years, worth of data already parsed in their systems, allowing them to make smart decisions, often ahead of the curve, faster, instead of being stuck in reactive mode with a legacy ERP alone. A rules-based system simply can’t keep up with a supply chain that will need to be managed as if constant disruption is the norm, and not the exception.
How can Noodle.ai help you prepare for the next black swan event? Simple.
First, we don’t make you toss out your entire legacy system and start over. You can get started with us while still using the legacy ERP system you’ve invested so much time and money in, whether that is SAP or another vendor. That significantly decreases your time from decision to implementation.
Second, our patent-pending Deep Probabalistic Decision Machines technology drives more robust, accurate predictions. More accurate and timely predictions allow you to stay on top of rapid-fire decision making in a crisis, preventing inventory and logistics issues during critical business events.
Last, but not least, our deep bench of data scientists are constantly innovating on your behalf. In fact, 33% of our data scientists have Ph.Ds and several of them are multiple patent holders. That’s quite a bit of brain power focused on solving your biggest challenges.
Do you want to get ahead of the next black swan event? We can help. Drop us a line here.