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From Supply Chain to Enterprise-Wide Planning: AI-Driven Integration Trends
At the beginning of 2024, the World Economic Forum (WEF) took place as scheduled in Davos, Switzerland. This prestigious summit gathered global political and business leaders, as well as top experts, to discuss the most critical global issues of our time. This year, Artificial Intelligence (AI) was undoubtedly the most prominent topic of discussion. Whether in formal sessions or various side events, AI dominated the conversation, prompting senior executives to reassess the true potential and future challenges of this transformative technology.
According to o9 Solutions` extensive experience in the field of enterprise digital transformation and the widespread market consensus, AI is more than just a trending topic in the tech world. It is poised to become a transformative force that will profoundly change business operating models over the next three to five years. Drawing on its deep expertise, o9 Solutions has put forward three key predictions that illustrate how AI will bring about far-reaching and widespread changes, each of which will have significant implications for the future of businesses.
- The Accelerated Digitalization of Tribal Knowledge
In many large enterprises around the world, critical business knowledge still exists in the form of tribal knowledge, dispersed across various departments and lacking systematic organization and sharing. When business leaders are confronted with crucial questions such as, "Why did product X`s sales forecast in market Y fall short?" or "How can we increase the demand for product X by 10% in the third quarter, and at what cost can the supply chain meet this demand?", it is often challenging to obtain accurate answers promptly. Typically, it requires gathering experts from different fields to brainstorm solutions. However, this traditional approach is not only time-consuming and labor-intensive but also may not yield timely and precise resolutions.
For boards of directors and senior management, one of the most pressing tasks today is to accelerate the digital transformation of critical business functions and processes, converting dispersed tribal knowledge into digital knowledge models. These digital models not only aid in the preservation and dissemination of knowledge but will also become a core competitive advantage for enterprises in the future. As digital transformation progresses, competition among enterprises will increasingly depend on the quality and accuracy of these digital knowledge models.
- Sustainability and Supply Chain Transformation Will Revolve Around Multi-Tier Visibility and Collaboration
The impact of the Covid-19 pandemic has made the need for multi-tier visibility in supply chains more urgent than ever before. Companies must be able to identify risks and opportunities that lie beyond their direct control, thereby enhancing overall supply chain resilience. However, achieving this level of multi-tier visibility presents significant challenges. Suppliers are often reluctant to fully disclose detailed information about their supply chains because they lack direct incentives to provide such transparency to buyers.
Nevertheless, o9 Solutions believes that companies can better understand and manage the risks associated with key components and commodities by developing more sophisticated multi-tier supply chain knowledge models. Although this data may never achieve 100% accuracy, even an improvement of 10%, 20%, or 30% would represent a significant advancement for enterprises, effectively enhancing their ability to respond to supply chain risks.
During the pandemic, many companies established specialized teams to strengthen their understanding of the supply chain, particularly focusing on critical components. The future emphasis will be on adopting more pragmatic approaches, integrating various data sources, and building more accurate multi-tier digital supply chain models, utilizing technologies such as predictive modeling to fill data gaps and ultimately achieve more efficient supply chain management.
Moreover, Environmental, Social, and Governance (ESG) initiatives can also serve as a powerful catalyst for fostering greater collaboration between companies and their suppliers. Today, many global enterprises committed to achieving ESG goals are actively seeking to deepen their understanding of the impacts within Scope 1, Scope 2, and particularly Scope 3. Scope 3 ESG impacts primarily relate to the sustainability performance within the company`s supplier network, which remains a challenging area for many organizations.
Therefore, o9 Solutions recommends that Chief Supply Chain Officers (CSCOs) leverage ESG goals as an opportunity to enhance collaboration with suppliers through digital platforms, particularly in key areas such as demand and supply signals, bills of material, capacity, and delivery timelines. Such collaboration not only helps companies fulfill their ESG commitments but also significantly strengthens the resilience and stability of the supply chain.
- Hyperautomation and Dynamic Scenario Planning Will Radically Transform Business Decision-Making and Planning Processes
Currently, many companies still rely on manual forecasting and planning processes, which forces them to continuously adjust supply chain plans in response to rapidly changing demand and supply conditions. This operating model leads to fragmented business, supply chain, and financial planning, and creates cyclical disconnects between strategic, tactical, and operational planning.
o9 Solutions points out that by digitalizing internal tribal knowledge, companies will be able to radically transform how they analyze and manage business outcomes with the help of hyperautomation. In the future, businesses will be able to automate the comparison of plans with actual results and achieve fully automated processes in demand forecasting and operational planning, with no need for human intervention. This will significantly reduce reliance on manual operations and improve overall operational efficiency.
Additionally, dynamic simulation and scenario planning will help break down silos between business, finance, and supply chain departments within enterprises. Companies will be able to more quickly and accurately simulate various demand and supply risk scenarios and formulate more agile and forward-looking strategies based on these simulations. This will simplify and enhance the efficiency of weekly, monthly, and even annual business planning processes, ultimately boosting the company`s overall competitiveness.
In summary, based on o9 Solutions` observations at the World Economic Forum (WEF) and its advancements in AI research, it is undeniable that the global business environment is entering a critical period of transformation. Although the timeline for realizing these predictions may vary, the distinction between leaders, followers, and laggards in the future business landscape will become increasingly evident. Companies must seize this transformative opportunity to ensure they remain at the forefront of the competitive landscape.