The Role of Machine Learning in Supply Chain Planning

Description

Machine learning is a type of supervised or unsupervised artificial intelligence where software has the ability to learn without being explicitly programmed. For more than a decade, companies have used the power of machine learning to improve supply chain planning efficiencies and develop optimized supply chain decisions. Automatic model switching to improve forecast accuracy is just one of many examples of the early use of machine learning to continually tune the digital supply chain and optimally leverage physical supply chain network performance.

Early results are driving the hype of machine learning applications to a fever pitch and there’s no question that machine learning is a topic that supply chain practitioners should be actively investigating. The real question is, “Are we, as a profession, ready to embrace machine learning in an unsupervised fashion”? If so, what does that mean and how do we get there?

Three areas where you can start with machine learning in your supply chain planning efforts are:

  • Forecasting: Forecast accuracy is a top challenge for many companies and a quick win application of machine learning could be the automated adoption of “Best-Fit” algorithms across your portfolio.
  • Supply Chain Optimization: Another high value opportunity of machine learning is gained by continually analyzing the state of your digital supply chain and automatically tuning planning parameters to meet customer requirements while maximizing company objectives.
  • Multi-Echelon Inventory Optimization (MEIO): Using the latest demand and supply information, machine learning can enable a continuous improvement in your company’s ability to meet a desired customer service level at the lowest inventory investment.

This eBook defines machine learning in greater details, explores its use as part of an overall supply chain planning strategy, and further recommends where and how to get started.

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