And The Key is Still Automation, NOT AI!

A recent article over on Global Trade Magazine on Why Execution Capacity Is Becoming the Next Competitive Advantage in Supply Chain gets a number of things right.

1. Procurement and Supply Chain leaders are constantly being asked to do more with less, and, yes, this has been going on for years (and, to be precise, decades).

2. They are managing larger supplier ecosystems, responding to geopolitical disruptions, navigating inflationary pressures, adapting to shifting tariffs, and controlling costs across increasingly complex global operations. At the same time, executive teams expect procurement organizations to move faster, identify new savings opportunities, and strengthen business resilience.

3. The challenge is capacity.

Most enterprises already have capable procurement teams, well-defined sourcing strategies, and clear objectives. What they often lack is the bandwidth to execute those strategies consistently across thousands of suppliers, transactions, and commercial opportunities.

With one supply chain catastrophe after another of the man-made and natural variety (port strikes, border closings, tariffs, wars, strait and canal closings, factory fires, droughts, wild fires, volcanic eruptions, earthquakes, tsunamis, mine collapses, etc.), the constant uncertainty in your supply chain and underlying costs, and supply lines disappearing without warning, execution gaps are becoming increasingly visible, disruptive, and costly.

In order to manage these turbulent times, your organization needs alternate suppliers, alternate supply lanes, the ability to re-allocate orders daily, the ability to re-route shipments in real-time, and the ability to optimize your suppliers, supply lanes, order allocations, and shipment routings. And, most importantly, the ability to identify, and manage, these (alternate) suppliers, supply lanes, re-allocations, and re-routings across all products that must be sourced globally! In other words, execution capability across the Procurement and Supply Chain organizations.

But, as the article notes, in an average organization, only so many new suppliers can be identified, existing supplier relationships can be optimized, products can be strategically sourced, orders can be re-allocated, and shipments re-directed.

This is because, while most organizations have invested heavy in classic analytics, supplier intelligence, sourcing platforms, and risk management tools, they have simply invested in visibility, not execution!

According to the article, the answer is to go from “AI Assistance to AI Execution”. But that’s not the answer. It’s not “AI Assistance to AI Execution”. It’s “Tech Assistance to Tech Execution”, whatever form that tech may be … and for the most part, it’s classic automation, which, we’re sad to say, has existed for over a decade, and been largely ignored for that time.

Let’s take each of these requirements one by one:

Supplier Discovery: when the organization needs to source, or re-source, a product, the tool automatically searches the supplier network for all suppliers that supply a similar product and then weights them on key dimensions of product similarity and organizational supplier scoring criteria for suppliers in that category (based on information on the supplier in the network)

Supplier Optimization: for a product/category, automatically run analyses that identify the right mix of current and potentially new suppliers based upon a combined ability to supply the organization’s demand with enough “slush” to allow for a supplier becoming unavailable due to supplier issues, supply chain issues, or other issues without adding unnecessary bloat to the supply base. (Considering that organizations typically spend 80% or more with 20% of suppliers, most organizations have too many suppliers but not enough for key products or materials.) This mix will be automatically optimized with the right automation solutions.

Order (Re) Allocation: re-run forecasts weekly/daily, re-allocate orders based on stock-levels, probabilistic forecast predictions, current and expected lead-times, expected supplier/lane availability, contractual commitments, etc. and choose a balanced solution that will satisfy all the probable outcomes (using optimization, not random AI predictions)

Real-time Re-routing: for every multi-modal lane, re-routings can happen at every waypoint (where modes shift, cross-docking at warehouses/FTZs is utilized, or where stops occur); re-run the models based on supply chain updates daily and if carriers/routes for segments are expected to become unavailable, costs become too high, or delivery times would stretch out too long (or could be stretched out to lower costs), possibly issue re-routing orders

Required Data: Automation can automatically pull/push data on a daily/real-time basis

When you consider that modern AI falls into Gen-AI which is literally “make stuff up”, you can’t depend on it for critical supply chains where one mistake can be catastrophic. But, fortunately, there are systems out there that do all of the above reliably on classic RPA, optimization, and analytics. (And have been for about a decade.) Plus, with the recent SaaS price compression as a result of the AI Hype wave, it’s all very affordable.

So if you want to succeed, get these systems. They’ll allow you to manage all suppliers, all items, and all lanes. You’ll be able to execute on your strategy, provided you can come up with a strategy that is adaptive enough in today’s global economy.