How AI is Helping Improve Australian Supply Chains & Procurement Functions

July 10, 2023

Harnessing the Power of AI in Australian Supply Chains and Procurement: An In-depth Look at Service Levels, Working Capital Efficiency, and Cost Reductions

Artificial Intelligence (AI) is at the forefront of revolutionary changes across sectors and industries. Particularly in supply chains and procurement, AI is playing a pivotal role in streamlining processes, enhancing efficiency, and reducing costs. Let's delve deeper into how AI influences forecasting, Sales and Operations Planning (S&OP), spend optimisation, labour productivity, and transport optimisation, transforming the Australian business landscape.

AI: A Game Changer in Forecasting and S&OP

AI has made strides in the domain of forecasting and S&OP. By deploying machine learning algorithms, companies can analyse patterns in historical data and current market trends, making demand predictions with unprecedented accuracy. This enables organisations to streamline their production and distribution strategies, effectively reducing waste and improving service levels.

A case in point is Coca-Cola Amatil, one of the largest bottlers and distributors in Asia-Pacific. The company uses AI to refine their demand forecasting process. By analysing numerous data points including past sales data, market trends, and seasonal factors, their AI-driven model predicts sales demand with a significantly higher degree of accuracy. This has led to a 5% decrease in forecasting error, reducing inventory costs and improving service levels by ensuring products are readily available to meet consumer demand.

Optimising Spend with AI

AI has proven invaluable in optimising procurement spend. It provides procurement teams with the ability to dissect and analyse vast volumes of data, identifying cost-saving opportunities and facilitating strategic decision-making.

Consider the example of BHP, Australia's mining giant. BHP implemented AI algorithms to dissect and analyse their procurement data. The AI model processes vast data sets, revealing patterns and anomalies, identifying overpriced items, and suggesting cost-saving opportunities. The implementation of this AI solution has led to significant cost savings, while also enabling BHP to build more strategic relationships with suppliers.

Enhancing Labour Productivity with AI

Through the use of AI, businesses can significantly improve labour productivity. Predictive analytics enables businesses to forecast labour demand accurately, ensuring optimal staff allocation, reducing overhead costs, and enhancing productivity.

Woolworths, one of Australia's leading retailers, provides a stellar example of this application. Woolworths implemented an AI-driven workforce management tool to optimise employee scheduling across its stores. The system uses AI to forecast customer footfall, allowing the company to align staff allocation with customer demand effectively. This initiative led to a significant 20% reduction in labour costs, demonstrating the profound impact AI can have on operational efficiency.

AI: The Key to Transport Optimisation

AI has been instrumental in optimising transport routes and enhancing delivery efficiency. Through machine learning, AI can process and analyse large data sets encompassing traffic patterns, weather conditions, and vehicle capacity to suggest the most efficient transport routes.

Australian logistics company, Toll Group, stands as an exemplar of this application. They employ AI technology to optimise delivery routes. This system processes real-time traffic data, vehicle capacity, and delivery windows to generate the most efficient route plan. The outcome is reduced fuel consumption, shorter delivery times, and improved customer satisfaction, marking a significant reduction in transport costs.

Transformative Power of AI in Australian Supply Chains and Procurement

The transformative power of AI in supply chains and procurement is evident. As demonstrated by Coca-Cola Amatil, BHP, Woolworths, and Toll Group, AI's applications are diverse and impactful. By leveraging AI in forecasting, S&OP, spend optimisation, labour productivity, and transport optimisation, these companies have experienced enhanced service levels, improved working capital efficiency, and significant cost reductions.

Artificial Intelligence has moved beyond the realm of buzzwords and theoretical discussions. It is an active participant in the evolution of supply chains and procurement functions, facilitating a future that is more efficient, more cost-effective, and more innovative. For the Australian business landscape, the adoption and integration of AI signal a promising and transformative journey towards this future.

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