MHI CEO John Paxton put it succinctly when summing up the MHI 2024 Annual Industry Report on Wednesday at the industry association’s Modex trade show in Atlanta: “AI is the word of the year.” While you could quibble that artificial intelligence (AI) is actually two words, the general sentiment behind Paxton’s assessment is correct; every recent discussion about supply chain technology eventually wends its way around to the promise and challenges of implementing AI.
The 1,700 manufacturing and supply chain leaders who took part in the survey that formed the basis for the report certainly agreed: 84% of survey respondents said they plan to adopt artificial intelligence technologies within the next five years.
The biggest potential areas of application for AI in the supply chain according to respondents are: logistics, shipping, and transportation (34%); supplier selection/due diligence (33%); inventory management (27%); customer behavior tracking (24%); contracts (24%); pricing (23%); and demand forecasting (19%).
As an example of a potential application for AI in transportation, Matt Hough, Chief Information Officer of Cintas shared during a panel discussion following the release of the report that his company uses AI for dynamically routing its trucks. This effort has allowed the company—which supplies uniforms and cleaning and safety supplies to other business—to create better customer density on those routes. As a result, they were able to handle a major increase in their business while only adding three trucks.
A huge challenge to implementing AI, however, is making sure the integration of AI and human is done well. The panelists acknowledged that there can be a lot of fear around the use of AI and robots both on the floor and in the back office.
“If your workforce is not bought in and are not going to embrace the technology that you are bringing into your facility and supply chain, it’s going to fail,” said Chaneta Sullivan, director, Facility Development and Safety, Chick-fil-A Supply. “Because they’re going to think you’re trying to replace them."
A good way to approach a technology and automation implementation, said Sullivan, is to begin with using technology to respond to any complaints or gripes that your employees have about their job. Use the automation to specifically respond to something that is challenging about their job and make it better. You need to make sure your people understand how the technology is going to improve their life and work environment, she said.
On a more general level, the report showed that investment in supply chain automation and technology continues to be strong. Last year ‘s report showed significant investment in supply chain technology as companies tried to shore up their supply chains in the wake of the disruptions wrought by the pandemic. Some wondered if that interest would cool in light of higher interest rates and growing costs. The 2024 report, however, showed that 55% of supply chain leaders are increasing their supply chain technology and innovation investments with 88% saying they are planning to spend over $1 million. Forty-two percent plan to spend over $10 million.
A copy of the report, which was produced by both MHI and the consulting company Deloitte, can be downloaded from MHI’s website.
