AI is growing both in the breadth of applications to supply chain management and the number of food and beverage companies utilizing it for everything from supply chain forecasting to customer visibility.<\/p>\n
In 2020, demand for AI software is expected to grow by 154%<\/a> over last year. AI software is being utilized in dozens of industries: healthcare, travel, retail, financial services, and others. And, since both food tech and logistics and transportation are two of the top industries for AI application<\/a>, it\u2019s no wonder that food and beverage companies have so many potential use cases for this technology.<\/p>\n The supply chain<\/a> is the network of companies and systems that come together during the process of creating a product, up until it is sold. Suppliers deliver source materials to the manufacturers, who produce the products that are sold to consumers. But the supply chain doesn\u2019t just consistent of the suppliers\u2019 ingredients.<\/p>\n It\u2019s more complex than that. The supply chain consists of:<\/p>\n Supply chain management coordinates all of these different activities, sources, and communications. It\u2019s not just about procuring and tracking ingredients, but also about improved communication with suppliers.<\/p>\n There\u2019s a lot at stake with supply chain management. The top food recalls of 2019 were for between thirty thousand and 11 million pounds of food each<\/a>, with Tyson having one of the largest recalls in recent history. Aside from food quality and safety, there\u2019s the risk of arbitration and consumer boycotts when promises aren\u2019t kept. One Iowa grain farmer was successfully prosecuted for organic fraud<\/a>.<\/p>\n Even when no intentional foul play is at hand, it\u2019s still essential for food and beverage companies to protect themselves against claims and lower their risk levels.<\/p>\n While logistics, predictive analytics, and visibility remain some of the top use cases for AI in supply chain management, there are others as well. Let\u2019s explore all of the key areas.<\/p>\n One of the top applications is supply chain planning. AI improves supply chain planning<\/a> by helping food and beverage companies to forecast demand against product supply and ingredient orders. The AI platform can take inputs from supply chain management professionals to develop algorithms that inform procurement decisions.<\/p>\n Delivery of ingredients to the appropriate manufacturing facilities can also be optimized, as AI allows for highly specific predictions around when and where resources are needed.<\/p>\n AI algorithms can also help forecast demand on warehouse resources and analyze inventory against shipments going out and new product coming in. While SCM leaders have worked for decades to master their predictive models, AI can help add an additional layer of accuracy to decisions making around when to move product and how to make use of warehouse space.<\/p>\n In a far-off (or not so far-off) future, we could see the size of procurement teams shrink<\/a> as the use of automation grows. Procurement teams may be focused more on finding the right vendors and establishing vendor connections than decisions to get what\u2019s needed from short supply chains.<\/p>\n That job could go to bots. Already, procurement bots can place orders with suppliers based on technical rules and automations. However, this is an AI application that hasn\u2019t seen much traction yet, as most companies are still striving to make use of AI for improved demand forecasting and supply chain management\u2014not yet talking to suppliers.<\/p>\n Quality assurance is an enormously important application of AI in supply chain management, as companies are able to mitigate the risk of consumer illness when a product or ingredient is known to be contaminated, while protecting products that are known to be unaffected.<\/p>\n Cornell University and IBM are partnering up to utilize AI to learn how to better protect the global food supply, so that when some amount of product is contaminated, thousands or millions of pounds don\u2019t have to needlessly go to waste.<\/p>\n According to their announcement<\/a>, \u201cFoodborne disease outbreaks and food spoilage are an ongoing global dilemma. With the application of metagenomics and analytics to food safety<\/a>, the partnership aims to minimize the chance that hazardous food will reach consumers, prevent food fraud and reduce spoilage.\u201d<\/p>\n Food and beverage manufacturers are utilizing AI through better predictions of what food has been contaminated, to make sure that these products don\u2019t reach consumers.<\/p>\n While many experienced professionals in the food and beverage industry<\/a> can assume that AI might be able to help with demand forecasting, not very many people could guess about this next AI application: removing language barriers.<\/p>\n Language barriers can be a huge problem when communicating with suppliers over product specs, agreements, certifications, and other nitty gritty details. This later creates a potential risk for auditing and compliance issues. Maybe in your view, the supplier agreed to something that they actually didn\u2019t agree to. Or you interpreted their explanation in a different way.<\/p>\n AI technology for supply chain management<\/a> and procurement can alleviate the risk of foreign communication by reading foreign language data on your behalf and translating it into data that can be understood and utilized.<\/p>\n Driverless vehicles<\/a> are already being tested at some warehouses and manufacturing facilities. This will undoubtedly grow. Driverless vehicles not only reduce the cost of manual labor, but they can also increase fulfillment efficiency while making a warehouse more environmentally friendly, which is especially useful when offsetting or lowering emissions is a company goal.<\/p>\n Tesla is working on a driverless semi-truck that has the potential to revolution warehousing, logistics, distribution, and transportation in every physical product industry \u2013 not just food and beverage.<\/p>\nWhy food and beverage companies are turning to AI to improve supply chain management<\/h2>\n
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How AI aids supply management<\/h2>\n
Supply chain planning and demand forecasting<\/h3>\n
Warehouse and inventory management<\/h3>\n
Automated procurement<\/h3>\n
Quality assurance and protecting global food supply<\/h3>\n
Remove language barriers that threaten auditing and compliance<\/h3>\n
Driverless vehicles and other logistics optimizations<\/h3>\n