SCP 5G© refers to the 5th generation supply chain planning systems+ that can self-improve by automatically learning from their environment and adapt themselves to the dynamic changes that are ongoing. SCP 5G© is a quantum change from what previous generations had to offer. The ability to learn using Artificial Intelligence techniques implies the system can self-repair and self-improve, hence making decisions which are close to or better than what an expert would make; and even go further by extracting trends that may not be obvious to human beings because of the complexity of processes and the large size of data and information. Although systems may not exhibit as much “intelligence” as their human counterparts, however they have the capability to look at data and information holistically. Thus making better and more informed decisions. In many instances different people in the organization have isolated knowledge base that is not always apparent to others. Decision makers try to make good decisions on what they know. However there is a lot more that they do not know or do not even know they need to know. Hence sub-optimal decisions are not uncommon. A sales person may commit to an order, not aware of the existing capacity of the supply chain and the fact that a number of other orders are being committed at the same time by others. Or in fact the trend is changing and certain products should be phasing out in the interest of other more profitable products. Another example is balancing inventory at different points in the supply chain for every part number at every location such that desired delivery performance is attained! Systems have the capability to absorb all such information holistically to make good decisions. Using Attribute-Based Planning, SCP 5G© can detect the ongoing trends and use the available information to deduce rules and strategies. They can also learn from the actions of the users of the system. The latter is sometimes necessary because of factors beyond the available information and or emotional/subjective decisions. Examples are: “The CEO wants this order out ASAP,” or “I have a good relationship with the supplier and can call to get it 5 days sooner!”
How Intelligent Can Systems Get?
Intelligence is a moving target. How intelligent can systems get? Sky is the limit! Systems can perform math functions much faster than we can, they can beat world chess masters and they can even compose music and movies. This eBook examines what the current state of the art is as applied to #supplychainplanning challenges and how autonomous we can make them.
SUPPLY CHAIN INTELLIGENT MACHINE
The word “intelligent” is used commonly to indicate how well a software package was designed to respond to different conditions. The more conditions it is programmed to handle, then the more, so is claimed, intelligent is the software package.
One way to define intelligence is the ability to predict the outcome of different circumstances and/or construct a scenario to get the desired outcome. If all the situations are pre-defined and outcomes are pre-established then this would require less or no intelligence.
SELF-IMPROVING SUPPLY CHAINS
1st generation SCP systems were factory planning systems or APS, introduced in mid-80’s followed by supply chain planning as the next generation. More recently the 3rd generation introduced sales and operations in an integrated environment which was later improved to the 4th generation by adding financials into the equation forming the 4th generation of SCP systems.
Next Generation of Supply Chain
There are a number of AI approaches to enable smart supply chain planning systems. Such methods have been made possible by the availability of very high-speed processors and the large amount of memory to bring the thinking supply chain planning systems into the forefront of supply chain productivity.
SUPPLY CHAIN 2020
If the next 10 years bears even the same kind of growth and innovation that we have experienced in the past decade, then we are going to be witnessing an incredible era in transformation of supply chains and how the age of real-time connectivity will create virtually instant delivery of what we desire.
Many supply chain leaders think of S&OE as yet another system to be acquired or patched on to S&OP. Although this maybe a viable strategy but not a particularly efficient one.
Most supply chain practitioners believe that there is a need for a rough long term planning engine (S&OP) and yet another for plan execution (S&OE).
I find it interesting that most companies choose their supply chain planning vendor based on how nice it looks but pay very little attention as to how good the quality of plans are. Not all planning systems are created equal.
Resiliency of supply chain is the ability to withstand changes in demand and supply and the ability to respond effectively.