Beyond the Box Episode 13: AI and the future of supply chains

Summary

In the podcast 'Beyond the Box,' hosts Phil Luen and Alen Hoffman explore the transformative impact of AI on global supply chains. They discuss how AI, with its predictive capabilities, can streamline operations and unlock new efficiencies, potentially increasing process speed by 30 to 50% or even 10x. Experts like Peter Schwartz and Professor Yosi Sheffi emphasize AI's strength in handling complex systems and its role in enhancing decision-making, not replacing human involvement. The conversation also touches on the importance of human oversight and the synergy between AI and human intelligence in managing global trade networks.

Takeaways

• 🤖 AI's primary function in supply chains is prediction, which is heavily reliant on large datasets for accuracy.
• 🚀 AI can significantly boost efficiency in existing processes, with potential gains ranging from 30-50% to even 10x faster in some cases.
• 🌐 AI provides a comprehensive view of complex global systems, enabling better decision-making and new capabilities in global trade.
• 🔍 AI struggles with unpredicted events like pandemics due to the lack of historical data for training, highlighting its limitation in handling surprises.
• 📈 AI's strength lies in predicting frequent events, similar to how GPS predicts traffic, but it can be caught off guard by rare occurrences.
• 🔄 AI's integration allows for a unified operating picture, enhancing decision-making through a 'see, focus, and act' approach.
• 🚢 Digital twins and predictive modeling with AI enable port operators to simulate scenarios and optimize operations in real-time.
• 📊 AI is used for various applications in logistics, including pricing, network optimization, and financial forecasting models.
• 👤 Human involvement remains critical in AI operations, with AI serving as a tool to augment human capabilities rather than replace them.
• 🔮 The future of AI in logistics envisions a synergy between humans and machines, with AI handling heavy lifting while humans provide oversight and creativity.

Q & A

What is the main promise of AI in the context of the script?

The main promise of AI is to unlock new workflows and accelerate them through machine assistance, helping to process vast amounts of data, achieve a shared understanding, and recommend actions or automate tasks to simplify jobs.

What does Peter Schwartz, co-founder and chief science officer of Elana AI, believe AI can do for global supply chains?

Peter Schwartz believes AI can revolutionize the way complex systems in global trade are handled, making jobs easier by providing a comprehensive view of the world, focusing on important parts, and integrating and automating processes for efficiency gains and new capabilities.

Why does Professor Yosi Sheffi from MIT highlight the limitation of AI in predicting global pandemics?

Professor Yosi Sheffi highlights that AI struggles with predicting surprises like global pandemics because it requires immense amounts of training data, and such events are rare, providing insufficient data for AI to make accurate predictions.

How does AI's ability to predict frequent events compare to GPS predicting traffic jams, as mentioned in the script?

AI's ability to predict frequent events is compared to a GPS predicting traffic jams, which is generally accurate but can be thrown off by rare, unpredictable events, like sheep crossing the road in Ireland.

What is the 'C focus and act C' concept mentioned by Peter Schwartz?

The 'C focus and act C' concept refers to a unified decision-making system that integrates static, siloed product knowledge, supplier data, and systems to create a common operating picture, enabling decision support or full automation.

How does AI help in proactive and reactive management in global trade systems, according to Peter Schwartz?

AI helps in proactive and reactive management by facilitating collaboration, identifying problems, alerting to them in multi-tier value chains, and suggesting solutions, making the system more resilient and efficient.

What is a digital twin, and how does it optimize operations in ports as described by Krishan Shrestha?

A digital twin is a virtual representation of a physical entity, and in the context of ports, it uses inputs from sensors and data to create a complete digital model of the terminal. This allows for running predictive modeling and scenario planning, optimizing loading and unloading of containers, and making operations more efficient.

How does AI enhance customer outcomes in logistics, as explained by Krishan Shrestha?

AI enhances customer outcomes by providing end-to-end visibility of shipments at a container level and proactively notifying customers of potential disruptions, allowing them to make quick decisions and take actions to mitigate issues.

What is the role of humans in the AI revolution, according to Yosi Sheffi?

Yosi Sheffi believes that humans are critical in the AI revolution, as they are better at spotting structural changes and dealing with situations that are not in the training data. He emphasizes the importance of preparing the workforce and upgrading skills to work alongside AI for efficiency.

How does Peter Schwartz view the synergy between humans and AI in managing complex global networks?

Peter Schwartz sees humans and AI working in tight concert for decision support, with humans making the final decisions. He emphasizes the need for AI systems to be explainable, reliable, and unbiased, and to respect shared values within an organization.