© CalcuQuote Business | September 01, 2020
Decisions, choices and options during a crisis – maybe it's time to hand it over
When COVID-19 fully developed into a global pandemic, it became clear that unpredictability is the main heel (wrench in the cogs) of a tightly run supply chain. Is it time to hand over the supply chain management to an emotionless AI that does not listen to “gut feelings”?
Chintan Sutaria © CalcuQuoteChintan Sutaria, founder and president of CalcuQuote, got involved in the EMS industry from a very young age through his family's business. Working for a business, however, was not enough and in 2014 he founded CalcuQuote, a quoting and supply chain software company with the aim of “moving the EMS industry forward”. The goal – or rather the promise – is that CalcuQuote improves the speed, accuracy and efficiency of the quoting and supply chain process by optimising the operation and by implementing sustainable digital solutions. So, in light of the current situation and the effects that it has had on the global supply chain, Evertiq reached out to Chintan Sutaria to pick is brain on on AI’s place within the supply chain. Mr. Sutaria actually summed up the future of Supply Chain Management and AI’s place within it ‘in a nutshell kind of way’; “enhanced predictability and the ability to respond to change more efficiently.” That is the text book example of what we want and expect AI to do for us in this context, and the current pandemic, as pointed out by Mr. Sutaria, has given us a perfect example to why we need to consider this solution more carefully. “From our experience with AI/Machine Learning, the algorithms are able to identify trends and insights sometimes better than humans can, providing an extremely valuable resource for planning and decision-making. The COVID-19 pandemic demonstrated the huge impact of unpredictability when it caused a brief interruption in the Chinese supply chain and has underscored the need for improved prediction methods. AI’s ability to spot disruptive events further in advance and better predict their effect will become increasingly important and give companies using AI a competitive edge,” Chintan Sutaria explains. However, as Mr. Sutaria says, having advanced notice isn’t useful if you can’t then respond to the disruptions quickly and effectively. “AI’s offer additional, critical insight into the supply chain. The future of the supply chain is digital connectedness and full transparency so you can know the status of your supply chain and what options exist in as close to real-time as possible. To realize the full benefits of AI and this greater visibility into the procurement process, companies need to have tools in place to enable better decision-making and execute on those decisions.” Real-time data analysis is often brought up as the saviour in times such as these. Companies tackling the market with a digital approach are usually faster adapting their strategies to changes occurring during a crisis. But this current pandemic isn’t the first global crisis we’ve seen – and yet applying digital solutions and AI based supply chain tools are still not all that common, Mr. Sutaria has a few ideas as to why. “AI technology has been gaining in popularity over the last several years and is often first introduced for problems that are easier to solve and have a high impact. In electronics manufacturing, the first logical area for improvement was within the factory floor, where you can collect and control all of the data yourself and receive meaningful feedback as you adjust your strategy,” Mr. Sutaria explains. “Applying AI to the supply chain at large, however, introduces more uncontrolled variables to address, including data accuracy, willingness to make data available, investment in creating connected systems and external factors affecting supply chain quality. At the end of the day, it will truly require the entire industry to invest in the digital transformation of the supply chain. And, until a certain number of companies focus attention on data transparency and enabling AI, the solutions won’t have enough support to work,” he continues. It seems that the industry keeps bringing forth systems, platforms and applications that will bring us closer to true Industry 4.0, but that we need a “good crisis” to have the courage to actually go forward and implement these new technologies, the question is; why is that? Like Mr. Sutaria says, any industry like electronics manufacturing, where you need high reliability and consistent, documented processes is slow to adopt new technologies. The freedom to experiment and fail along the way to making big-step innovations is limited. “There’s also a question of affordability for a significant portion of the industry. In EMS, most companies are fairly small without the flexibility to devote a significant amount toward a research and development budget. Therefore, they often follow the lead and recommendation of more established industry peers,” the Mr. Sutaria says. “But, that calculation changes when external risk factors change. When dealing with an uncertain environment or a survivability threat, people are more willing to try new things and to try them more quickly than they would under normal circumstances. As the saying goes, ‘necessity is the mother of invention’.” I wanted to get Chintan’s – and CalcuQuote’s – take on the concept of “just-in-time” as it has gotten quite a lot of criticism during the pandemic. Will the industry’s relationship to inventory change when we get out on the other side of all of this? The logic behind the ‘just-in-time’ approach is rather clear, as Chintan explains. It was developed because margins in manufacturing don’t support a lot of waste or excess in the supply chain, pretty straight forward. But, as Mr. Sutaria says; “The problem with this traditional strategy is that you can become complacent pretty easily.” “With digital connectedness, you can still maintain higher levels of inventory without them being on your own shelf. For example, if you’re monitoring the current availability of ‘Part A’ from your own inventory, then you’d only replenish inventory as needed. But, if you had visibility into the entire supply chain’s stock of ‘Part A’, then you’d also trigger an order of safety stock when you detect a depletion of that part across all sources.” While a big part of our industry has been heavily affected by the pandemic, certain parts of it are rapidly picking up speed. Medical equipment manufacturers are seeing demand like never before while manufacturers relying on the automotive industry took a heavy blow. But companies such as CalcuQuote, software companies and enablers of manufacturing, their times have been really interesting. “We’re very fortunate to have seen an uptick in business throughout the COVID-19 pandemic. This is partially because we had customers who were interested in our software, but needed more bandwidth to introduce change into their supply chain processes,” Mr Sutaria explains. “Also, as a significant portion of the workforce started working remotely, we’ve seen increased interest in our online quoting platform. EMS companies, in light of the new way of working, are looking for a secure way to give customers the ability to complete self-service quotes.” Which brings me back to a previous point; decisions, choices and options during a crisis – maybe it’s time to hand it over to something a bit more sophisticated.
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