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Artificial intelligence is key to supply chain ‘war rooms’

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Images of container ships failing to unload cargo at various ports around the world, which went viral late last year, are still fresh in mind.

The lack of sufficient cargo workers, especially at the port, coupled with a shortage of truckers, has severely hampered supply chains, as most products cannot be transported from ports to warehouses to reach retailers. and consumers, according to a report published by CNBC. .

As soon as the supply chains began to recover from the effects of the Corona pandemic, they suffered another blow that put them back in the crisis cycle, which is Russia’s war against Ukraine and the subsequent sanctions by the West on the Russian bear, which also sanctions. imposed.

And the recent sanctions imposed on Russia have caused a clear return to crises in this highly interconnected global network. In addition to the war, it also caused closures and restrictions in the world’s largest port centers.

Automation and artificial intelligence

Industry experts say supply chain disruptions may be felt for another year, making the deployment of automation and AI solutions even more important.

Oil and gas prices have soared since Russia began sending troops to Ukraine late last month. The average price of a gallon of regular gasoline was around $4.33 in the United States, down from $2.83 a year ago, reflecting the extent of the jump in fuel prices around the world. world.

But the energy shock is not the only problem: everything from wheat, barley and sunflower oil to iron, steel and aluminum is being disrupted, affecting the price of many products around the world.

Digital solutions, and AI-powered automation in particular, could provide the business with a more complex and meaningful set of risk alerts, including the geopolitical implications that now have such an impact.

Adjusting for “geopolitical risk depends on listening a lot to open data and news sources and very quick analysis of sentiment coming from certain regions of the world,” says John Piatek, vice president of consulting and head of consumer goods and retail practices at GEP. . This will give companies better capabilities for scenario and contingency planning instead of the “war room” type of planning that is happening now.

Europe News Basket

Ukraine, for example, is the “breadbasket of Europe” and for many countries in the world, especially in the field of homelessness, and the Russian invasion has seriously damaged the food supply chain around the world.

According to research from GEP, a provider of supply chains and purchasing programs to many Fortune 500 companies, prices for wheat and soybeans have hit nine-year highs, while corn and other grains are also rising.

A look at a commodity like sunflower oil shows just how fragmented the supply chain is right now and why consumer packaged goods companies are in such a panic, the report says.

Products like sunflower oil used in potato chips and many other snacks together account for around 65% of its exports, and Ukraine and Russia together account for around 65% of its exports. looting in places like Turkey, which is a major importer of sunflower oil, and prices have already doubled.

This disruption of raw materials like iron, steel, nickel and palladium has a similar effect on other industries. Russia accounts for about 20% of world iron and steel exports. The supply of copper, a key component in electric car batteries, was also disrupted, forcing companies to look to Chile and Australia as alternatives to Russia.

Digital solutions needed

As a result, the report says, sudden interruptions in the flow of many products require companies to have a better view of their supply chains.

The problem is that most large companies haven’t invested in digital solutions like artificial intelligence and machine learning for their supply chains, says Julian Trent, vice president of business development for Europe at GEP.

As for Piatek: “Many of today’s supply chain activities are manual, outdated and error-prone.”

He added: “There are more efficient and effective ways of working and automation is needed to support that. I think there will be an increase in investments in AI and machine learning as a result of the pandemic and the Russian invasion.”

Another driver for increased investments in supply chain technology is the growing variety of risk factors that companies face. “If you compare the different risk indicators a company uses today versus five years ago, they are very different,” Trent says, noting that many companies look primarily at financial risk on a global scale.

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