It is undeniable that artificial intelligence (AI) is increasingly becoming an integral part of supply chain industries. It has shifted from helping to accelerate simple tasks to developing more intricate capabilities like solving complex industrial problems that were previously not possible.
The intricate systems of supply chains often make it impossible to predict the outcomes of decisions or disruptions on overall performance. Their decision-makers greatly benefit from this evolution in AI, especially from AI simulation, which combines core advanced simulation with other AI techniques to predict possible futures of an organisation and recommend optimal supply chain plans.
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“AI simulation platforms help supply chain managers to navigate a sea of complexity, giving them visibility on the impact of a decision or even on the future overall performance of the supply chain, by automatically finding the optimal trade-off to reach their multiple objectives, whether they are profitability, service levels, CO2 emission reduction and others,” Michel Morvan, Co-founder and Executive Chairman of Cosmo Tech, stated.
“It changes the way companies make decisions, define strategies and solve operational problems, especially in complex environments. Decision makers can rely on AI simulation software to anticipate all possible futures and overcome the key obstacles that considerably limit the effectiveness of their strategies and operations to improve resilience and sustainability.
“Properly assisting critical decisions is where this technology provides a competitive advantage for globalised supply chains, as everything that happens in the world can have an impact on them and everything they do has an impact on the world and their business.”
Optimal activities
AI simulation reproduces the present and future behaviour of the supply chain, including production resources, transport policies and resources, stock and flow management policies. Every impact and cascading effect of a disruption or a decision can be simulated on the supply chain, including impacts that have not been experienced before and may generate unknown scenarios. Cosmo Tech collaborates with major industry players with incredibly intricate supplier networks in the energy, automobile, aviation, and technology sectors, among others, to assist decision makers with their planning.
For instance, one of Cosmo Tech’s customers, a leading technology company, is working with thousands of suppliers and more than 50 sub-contractors. Facing demand uncertainty and the need to minimise express transport costs, this manufacturer is using AI simulation to optimise its inventory flow strategy through various transport modes. With this approach, the company reached a 15 to 20% reduction in express transport costs while maintaining service levels.
“In the automotive sector, a global tier-one manufacturer applied AI simulation to refine its sourcing approach in China, leading to a 5% increase in global profit margin. Among the cost savings they found, they were able to reduce, for example, customs and transport costs by 60%, and thus CO2 emissions. What was interesting is that the resulting strategy was the opposite of what they intuitively expected to see,” Morvan highlighted. “Technology giants trust Cosmo Tech’s solutions as a key technology in supporting their customers to optimise their supply chain strategies and planning.”
Customised approach
AI simulation platforms can model and simulate any complex system, with the flexibility to tailor simulation models to meet specific business and data modelling requirements. It offers a variety of pre-packaged models and software add-ons, alongside the capability for customers and partners to tailor or develop entirely new simulation models.
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“Cosmo Tech’s AI simulation is versatile, supporting a wide range of use cases from resilience building, inventory optimisation, production planning or asset investment planning optimisation,” Morvan explained. “Applications include different levels of the organisation, from assembly lines to the entire plant and all the way to the end-to-end supply chain.
“The flexibility and versatility of AI-simulation platforms are key for supply chain decision-makers, not only to ensure that they have a tool adapted to the complexity of their organisation but also to allow adoption and scale of these solutions. These capabilities enable Cosmo Tech’s customers to start small, with one plant for instance, and scale-up to cover their entire facility or develop other use cases identified in this phase”.
“The technology gives supply managers the visibility to prioritise, mitigate risks and invest efficiently on weak spots. These weak spots may not be a problem today but may become one in the future. It gives them the possibility to plan to procure dedicated suppliers or increase warehouse stocks for example.”
Supply chain resilience
Digitals solutions act as a navigator for supply chain management, allowing companies to identify how to navigate complexity and uncertainty to arrive at their desired destination, meaning the key performance indicators (KPIs) that they are trying to achieve.
The following KPIs are some examples of those pre-built in the AI simulation platform while specific KPIs can be added: profit, inventory levels, service levels, order fulfilment rate, order and transport, lead times, costs, production capacity, downtime, resource utilisation and CO2 emissions. Once target performance indicators are set, thousands of simulations are automatically generated, guided and optimised by AI until it reaches the optimal trade-off between the chosen KPIs.
“Supply chain managers can find the best way to reconcile objectives that may seem contradictory, addressing both profitability and sustainability performance goals. McKinsey estimated 65% to 95% of companies’ environmental impact comes from their supply chain,” Morvan said.
“In a context where uncertainty further complicates matters, simulation combined with AI is key for providing companies with better visibility into their operations and value chains and for effectively steering their sustainability efforts and the transformation of their organisations. “
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