As we move into 2019 it is easy to see that this is going to be a challenging year as there is more volatility than normal because of the geopolitical climate we are in. From the trade war with China, tariff increases, and a less stable US economy on top of the standard sources of risks – natural disasters, labor disputes, etc. – 2019 is going looking to bring new challenges to supply chains and procurement teams. According to the article “Global Volatility & AI: How It Will Affect Your Supply Chain” by Rajesh Kalidindi, these additional risks are going to lead to several changes in how a procurement department and supply chain are run.
Firstly, you are going to see a shift towards scenario planning from procurement, or in other words “What If” analyses are going to be in higher demand for helping make procurement decisions that mitigate the impact of these growing risks. Next, you are going to see a shift in procurement priorities from straightforward, consistent cost reduction to ensuring continuous supply and limiting price increases – especially as tariffs, wages, and interest rates continue to rise. In order to help achieve these changes, organizations will begin to rely on predictive and AI-enabled technologies to fill the gaps in their current capabilities and what is being asked of them. This is the first step I moving towards AI-led business. Those who already have this technology in place with begin using it in conjunction with product design to provide new insights into New Product Introduction (NPI) that will enable companies to optimize the life cycle of their products by addressing supply risks from the get-go. All of these changes will lead to a need for new procurement and supply chain employees with greater digital literacy. All of this will lead to changes in the way supply chains and procurement departments look, and it all starts with the increased market volatility being seen in 2019.
- How long until we see the majority of supply chains using AI-enabled technology?
- With the onset of AI-led business, how will the role of a procurement officer change in a company?
What will happen to those companies that are behind the trend of predictive and AI-enabled technologies? Will they become insignificant or still have a role to play in the market?