Expanding Generative AI’s Role in Supply Chain Resilience


6 Reasons Why Microsoft is a Leader in Supply Chain Optimization

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It doesn’t matter if you’re a retailer or brand CPG company, a manufacturer or a distributor, supply chain challenges and complexities continue to disrupt the way companies sell products and services. With ongoing volatility, generative AI (genAI) is proving to be an agile copilot and assistant, providing immediate value for companies, without having to undertake costly transformation initiatives.

Supply chains are a prime area for the application of genAI, due to the vast amounts of critical business data and processes involved. AI can analyze data from dozens of sources, including production information, IoT sensors, transportation routes, and even social media. It builds on prediction models to better understand causes and effects in the value chain to help you identify potential risks and disruptions so you can make better decisions to mitigate risks, develop contingency plans, and improve overall resilience.

Check out our new eBook: You’ll learn how AI-infused solutions and tools like Microsoft Copilot and Microsoft Dynamics 365 for Supply Chain Management are empowering businesses in the consumer-packaged goods, retail, and manufacturing industries to navigate the complexities of the modern supply chain.

Copilot Kickstarts Efficiency

With the rise of genAI, Microsoft Copilot has incredible capabilities that stand to reinvent nearly every business process. It’s being increasingly used in the value chain because it can take much of the guesswork out of weighing the costs and benefits of the variables; it can identify patterns and call out changes that might escape a human’s attention, such as a subtle variation that could turn out to be a highly profitable piece of information.

Consider the new Copilot in Dynamics 365 Supply Chain Management (SCM) and the scenarios where it could be used to efficiently retrieve company data through conversation-based interactions:

  • Show me all orders which were not delivered on-time and in-full (OTIF) in the last 30 days
  • Estimate how much of our order backlog is impacted by these late deliveries
  • Suggest three questions that will help the supplier dig into the root cause of the issue
  • Write a short recommendation requesting the supplier participate in our monthly supplier review until OTIF is above 97 percent

Then armed with this data, supply chain teams could take actions based on insights while in the flow of work. It helps promote productivity and better collaboration among internal, cross-functional employees as well as external stakeholders across the value chain.

Demand Forecasting and Planning Get a Boost

Demand planning and forecasting is another area where AI  can provide great awareness. The new demand planning capability in Dynamics 365 SCM helps organizations better predict demand using AI and machine learning models. The models automatically select the best algorithms and parameters, and planners can fine-tune the constraints based on their business needs.

By tailoring inputs, users can plan with confidence simulating the impacts of changing the forecast models before they are applied. They can also plug in their own machine-learning models that may be custom-built for their business needs. With these options, planners have an increased level of trust and can rely on the forecast, knowing how it’s generated.

Predictive Maintenance Becomes Manageable

To keep operations running smoothly, businesses need to maximize the uptime of equipment and act fast to prevent damaging failures. By fitting equipment and other assets with automatic electronic sensors built with AI’s IoT technology, companies can increase uptime, throughput, quality, and proactively manage operations with a real-time view.

Because genAI excels at analyzing images, videos, and sensor data in real-time, it can also be used as a great quality control tool in manufacturing sector to detect anomalies, defects, or deviations from expected standards. For example, you might use AI-powered vision systems to inspect products for defects. When the AI system identifies a defect, it could automatically flag the product for review or removal from the production line, reducing the need for manual inspections.

Dynamics 365 SCM’s Sensor Data Intelligence is a tool based on Internet of Things (IoT) that analyzes signals from machines and equipment on the production floor. It’s an updated, renamed version of an older SCM feature that tracks the efficiency of machine assets by using sensor data to track machine downtime and maintenance needs, and suggest options for mitigating potential delays. The tool can also compare actual cycle time to planned cycle time, and notify supervisors when production isn’t on schedule.

Optimizing Inventory is More Transparent

Smart supply chain leaders know their customers expect them to forecast demand and secure inventory in anticipation of that demand. To do so, planners need data insights from multiple sources, both internal and external. Here’s a great genAI opportunity.

For example, with Copilot in Dynamics SCM, users can use natural language to inquire about inventory stock levels or best available products just like chatting with a colleague. As simple as typing “Find all the 18-inch tires in my store.”

GenAI could also be applied to analyze incoming orders (or look further upstream in the supply chain) to forecast demand better. Based on this analysis, combined with data like physical product dimensions and the storage capacity of bin locations, genAI can make recommendations for inventory reorganization, allowing plans to be proactively set in motion to ensure that on-hand inventory is available at the time of picking.

Procurement Gets a Helping Hand

The latest addition to the Copilot support for procurement is the “Confirmed Purchase Orders with Changes” workspace, a comprehensive set of features that helps users efficiently manage and assess changes to purchase orders on a large scale. Then, procurement managers can efficiently focus their attention on high-impact changes, thoroughly assessing their effects on downstream orders, and directly communicating with vendors to address any potential issues.

The workspace focus on changes that have been made to purchase orders that are already confirmed. This could be a result of any process resulting in a date or quantity change to a confirmed purchase order or line. To understand the impact, you can see low, high and impact to downstream orders—it’s gen AI summarizing the data for you. You can also send email to the vendor notifying them that it’s not OK—the system will generate email for you, but of course you want to review.  AI can even fill in context of the PO and your requirements in the email, so the vendor can see your anomalies.

See a test drive:  Hitachi Solutions demoed the new Dynamics 365 procurement workspace in our recent webinar, “Supply Chain Innovations & AI.” You can watch it on-demand here. We also provide practical applications of AI— what you can do today to get started.

How do you Envision the Future State of your Supply Chain?

Microsoft and Hitachi Solutions are uniquely positioned to deliver AI in supply chain, by integrating built-in Copilot capabilities across our solutions and delivering a secure, composable, extendable, and interoperable platform. With low-code/no-code automation, collaborative actions, process orchestration, and rich supply chain functional capabilities in a single experience, we can help you create a tailored ecosystem and confidently apply AI to deliver new value.

As the Microsoft Finance and Supply Chain and Customer Service/Field Service Partner of the Year, Hitachi Solutions brings deep industry, technology, and advisory expertise to create integrated solutions leveraging Microsoft Dynamics 365 Supply Chain Management, Azure, Teams, and Power Platform. With those tools, we build the smart solutions manufacturers, retailers, distributors, and CPG companies around the world need to fuel growth and profitability, retain customers, and meet current and emerging needs.

Contact us Today!