In cooperation with the company riskmethods, we have conducted a study on the use of machine learning in supply chain risk management. The results have been resented for the first time at the 56th BME Symposium on DIGITAL Purchasing and Logistics during the session “New ways in supply chain risk management: don’t be afraid of artificial intelligence! From analog to selflearning risk monitoring in the supply chain”.
We have shown how an automated SCRM system helps the company to create transparency in supply networks, and which potential success factors are compatible with the use of artificial intelligence in SCRM. Finally, I presented the study results.
In recent months, many companies have learned and adapted, and now can react faster to supply chain disruptions via preparation and extensive information provision. However, the results of the study on the use of machine learning in supply chain risk management show that 50% of respondents are still caught unprepared by a risk event, which can lead to financial and reputational damage as well as delays. 42% of respondents do not know the financial impact of a damaging event. Consequently, these companies are at high risk, as losses in the millions of dollars are not uncommon.
Only about half of the companies have a high or very high degree of risk
transparency for their own production facilities and direct suppliers (Tier-1). Subsuppliers (tier-2 or tier-n) are only monitored in a handful of cases, and, as such, SCRM only covers a small part of the supply chain. This increases the risk of production downtime, rising transportation costs, and the costly development of alternative procurement sources. One finding of the survey: looking at direct suppliers is no longer sufficient to identify critical nodes in the supply chain early enough to effectively implement preventative measures.
Consequently, the respondents see significant potential for improvement in their risk management, especially with regard to supply chain transparency and risk identification methods. For more than 80% of respondents, the early identification of risks is an added value which helps to initiate countermeasures in time and thus avoid disruptions in the supply chain. In many cases, this preventative time advantage can be achieved by automating risk identification (alerting), which generates analyzable real-time data from supply networks. Here, self-learning systems can offer significant contributions.
The study (in German language only) can be downloaded here.