How AI and Automation Can Benefit the Supply Chain

How AI and Automation Can Benefit the Supply Chain

Logistics Tech Outlook | Friday, June 11, 2021

The supply chain ecosystem has always been a people business, and they are moving toward a world where humans and machines collaborate to improve the capabilities of both. 

FREMONT, CA: Automation and artificial intelligence (AI) technologies are rapidly advancing, which can drastically disrupt supply chain positions. While AI and automation can increase the productivity of some supply chain workers, they can also replace the employment of others, and they will almost certainly modify all jobs to some extent. Experts and analysts divide the impact of these advancements into two categories: functions being replaced or augmented due to AI and automation.

The Substitute Effect of AI and Automation

AI and automation have progressed at such a breakneck pace that computers and robots will someday outperform humans in various tasks. In areas like warehousing (robots), transportation (self-driving trucks), and supply chain planning and execution with automated forecasting, exceptional handling, and restocking, the workers will risk obsolescence due to labor substitution.

A study on the effects of robots on manufacturing employment opportunities indicated significant reductions in both employment and wages. According to the study, one additional robot replaced around 3.3 workers, lowering salaries by about 0.4 percent.

The Complement Effect of AI and Automation

The more positive viewpoint is that technology expands opportunities for workers who aren't directly competing with it. Thus, even though technology reduces employment for specific forms of work, the complementary effect's "creative destruction" might create new demands and opportunities.

Views on the Effects of AI and Automation

A pessimistic perspective of the interaction of these two phenomena is that AI and automation will grow at such a quick pace that robots will eventually outperform humans in most tasks. As a result, businesses will use them as their "default option." As a result, just a few well-paid individuals will remain employed, while the majority will struggle to find work or would be trapped in low-wage positions.

A fundamentally positive viewpoint holds that AI and robotics will boost productivity and economic growth while freeing people from monotonous, tedious, and unproductive tasks. New employment will be developed, including those that will always require a human touch and require enhanced social, collaborative, and creative abilities.

Supply Chain Professionals Need to Reinvent Themselves

Irrespective of the influence of AI and automation on supply chains, it is apparent that technology is producing massive disruption. As a result, professionals will have to redefine themselves if they want to survive and grow.

The influence of another fundamental trend, increased customer expectations, must also drive this redesigning of supply chain jobs. Customers demand items and services to arrive in their hands faster, with a more personalized experience, and at a lower cost. This means more personalized products and services, shorter order fulfillment periods, and speedier delivery. This will need an entirely new approach to supply chain architecture, design, and management across more extensive ecosystems and new technologies, jobs, and skillsets.

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