Saturday, January 28

Distribution network design: Why consider it in your supply chain?


Until a few years ago, the external factors that affected companies were unpredictable, which is why any economic turbulence took managers by surprise. In addition to the above, the decisions to face them are often bureaucratic and slow, making businesses vulnerable. However, today, this situation has fortunately changed thanks to analysis tools that are based on the use of Artificial Intelligence (AI).

According to the study “Sizing the prize: What is the real value of Artificial Intelligence for your business and how can you capitalize on it?”prepared by the consulting firm PwC, this tool could contribute 16 trillion dollars to the global Gross Domestic Product (GDP) by 2030, of which some 7 trillion will come from increased productivity of companies, while 9 trillion from side effects Of consumption.

In turn, according to the same firm, the confidence of entrepreneurs in AI-based applications is such that 20% of business leaders in the United States confirm that they will implement this type of tool in their companies; while 48% of them believe that this technology will help them increase their turnover.

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And it is that this tool helps the directors of the companies to make better decisions; while in the case of supply chains, it contributes to making a distribution network design based on predictive information, with which different plans are available that allow the design of dynamic networks, in addition to mitigating the risks of the different supply and production points.

In this regard, the KPMG study “CEO Outlook 2021: Connectivity, focus on people and leadership with purpose”, ensures that 56% of managers surveyed globally see supply chains as one of the areas of greatest risk for growth in the next three years; while in the case of Mexico, this figure reaches 60%. Therefore, having these types of tools is crucial.

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daily operation

During day-to-day supply chains, unexpected obstacles are a common affair; That is why it is important that, based on the available data obtained by the use of AI, flexible routes can be created that give resilience to the operation of all the links. Above all, in the event of common variables of limitations, restrictions in transport capacity or high fuel costs.

In addition to the above, this technology helps predict how demand will behave with different variables such as variations in market behavior and inventory profiling. At the same time, AI allows to have, in perspective, the visibility and the capacity of a continuous design of the supply chain networks.

Value added

If what you are looking for is to have a resilient supply chain that has the possibility of anticipating contingencies, what you should do is pay attention to three key concepts:

  • Maintain control of operating expenses, for which it is important to carry out simple processes that help improve response times at a lower cost.
  • Promote the standardization of processes, since this facilitates the automation of daily work, which has a favorable impact on associated costs and response times.
  • Work on improving the visibility of the data, with which you will be able to have accessible, timely and reliable information, which facilitates making better decisions and favoring a rapid response at a lower cost.

From the foregoing, we can summarize that a widespread adoption of AI in your company and supply chains directly provides you with substantial value to improve your productivity, decision making, customer satisfaction, in addition to promoting innovation of its products and services, compared to a company that only does segmented adoption.

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With all these advantages, it is easy to understand why AI and its distribution network design is a technology that will become increasingly important for companies and their supply chains. Knowing its operation and advantages will provide your company with the ability to meet the needs and requirements that the market demands.

By Rafael Vasquez l Regional Vice President, Value Services Coupa



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