OCT ‘23
When AI came to the rescue in the face of supply chain disaster Artificial intelligence (AI) has been feted as everything from timesaver to the end of the workforce as we know it – yet few in Australian business seem to have tapped its apparently boundless potential. In our experience within the world of supply chain management, investment in understanding and utilising the current technology can reap substantial rewards. We recently worked with a food supplier encountering a crisis when their largest supplier abruptly went out of business due to a complex web of unethical operations, geopolitical conflicts, and local regulations. Unexpected disruptions can pose significant challenges to even the most successful companies. This beloved Aussie king of convenience snacks had achieved longterm success driven by brand loyalty and market growth, but their prosperity faced a daunting challenge when their largest supplier unexpectedly ceased operations overnight. The company faced the risk of running out of stock for 70 percent of their product range by week 11. Customer orders were already committed for the next six weeks, and sales forecasts projected a seasonal demand peak for the quarter, intensifying the urgency to find a viable solution. Faced with the risk of losing market share and decades of brand loyalty, the company swiftly convened a crossfunctional crisis meeting to find a solution and save their business. Leveraging the power of AI and machine learning with their newly developed supply chain optimisation platform, they evaluated multiple disruption and mitigation scenarios, considering costs, margins, revenues, service levels and risks across the extended supply chain.
The recommended scenario proved to be a sophisticated blend of all alternatives, strategically applied across various ingredients and finished goods. The solution accounted for multiple suppliers, both local and international, and considered pricing and competitor activities. Within a remarkably short time frame, the team reviewed and approved the recommended scenario. The revised sales forecast, inventory targets, production plan, purchasing plan and pricing strategy were swiftly integrated, and the company gained a significant competitive advantage over competitors who might have faltered following such a substantial supplier shutdown. This case study exemplifies the importance of leveraging AI now to be ready for times of crisis. Through the innovative use of technology, the Australian food manufacturer not only averted potential disaster but also emerged with a revised strategy that aligned with their business goals. This was only possible because they had already invested in creating an AI-driven platform to support their business functions. This successful adaptation underscores the transformative potential of AI-driven analytics in guiding businesses towards data-informed decisions, ensuring their ability to weather unforeseen challenges and thrive in an everchanging marketplace. The next disruption is just around the corner – and it doesn’t need to be as significant as a global pandemic. The world remembers it took just one ship in March 2021 to upend global supply chains, and more localised incidents can be just as impactful on a company or sector level.
The AI-driven platform performed millions of complex calculations in a matter of seconds. The team reviewed advanced analytics and adjusted business policies and parameters to refine the scenarios, ultimately leading to the identification of the optimal solution.
Professor Ben Fahimnia Chair of Supply Chain Management The University of Sydney Business School. Elton Brown Senior Consultant in Supply Chain Management
A guide for 3PLs and warehouses coming into peak shopping season How to equip your teams, optimise systems, and manage inventory for surging customer demand now, and strategies to ensure sustained success in the future. To view article, please click here. P 15
