Cosmo Tech

SUPPLY CHAIN EXECUTIVE FORUM
Key Learnings

Risk and Opportunity Awareness in Supply Chain Management with AI and Simulation

Reading time: 5 minutes

At our recent supply chain forum, you told stories about the challenges you face, shared your experiences or the action levers you would use to move forward. This document offers a summary of our exchanges as a way to thank you for your presence and for your contribution to the richness of the discussions.

In line with the confidentiality we established together for this event, this summary is shared only with participants and the few registered attendees who were unable to join us.

THE FORUM

Supply chains can be the key to unlocking incredible value, but also the location of many challenges. Managing risks and uncertainties, improving resilience, moving from a reactive to a proactive approach with digital transformation as a major enabler are undoubtedly some of the top concerns of manufacturers in all sectors.

On April 3, 2024, Cosmo Tech gathered supply chain and digital transformation executives from eleven large organizations for a half-day workshop on the theme of Enhancing risk and opportunity awareness in supply chain management with AI & Simulation.

Leaders from ABB, Accenture, DHL, Forvia, John Deere, Microsoft, Mondelēz International, Pernod Ricard, Saint Gobain, Sanofi and Cosmo Tech shared experiences, testimonials, case studies and took advantage of the opportunity to speak freely and share perspectives on risk-management and supply chain practice, efficiency, resilience, sustainability, artificial intelligence (AI) and simulation. 

COMPREHENSIVE VISIBILITY AND FOCUSED RISK MANAGEMENT FOR SUPPLY CHAIN RESILIENCE

Achieving Visibility to Build a resilient supply chain was a must for many participants.  

“To improve the resilience of the supply chain, the ability to focus mitigating action, where it’s going to have the biggest impact in terms of de-risking your supply chain is key. In order to do that, creating visibility is essential” underlined Stéphane Crosnier, Global Lead for Supply Chain Resilience at Accenture. He explained the role of AI and simulation in creating the visibility around vulnerabilities of the supply chain, simulating not just the direct impacts but also the cascading effects that ripple through the supply chain. Crosnier gave in-depth details and examples on the approach, using digital twin and simulation, proceeding a bit like planning according to different horizons and problems to solve, at the operational, tactical and strategic level. 

“N-Tier visibility isn’t just a goal. It’s a necessity for managing today’s complex supply chain ecosystems.”  said Ariel Ramphul, Industrial Adviser working in the manufacturing and mobility team in EMEA at Microsoft. He explained how technology and European Union programs make it possible to tackle this challenge today. At an industry or at a consortium level, data spaces and frameworks like the Eclipse Dataspace Components (EDC) help industries to share data between them in a decentralized and secured way, gathering by this means OEMs, MROs, tier 1, 2 and 3 supplier data. Ramphul added that “the automotive and energy sectors have started to leverage these “standards” to make the overall supply chain more efficient and resilient”. 

For Didier Jourdan, Associate Vice President – Global Supply Chain at Sanofi, prioritizing risks to focus efforts is part of the challenge. “You need to be resilient on the risk you want to tackle because you cannot be resilient on everything. So you need to identify the risk and then build resiliency to address the one you selected first.”

FROM REACTIVE TO PROACTIVE MANAGEMENT – DISCUSSIONS ON USE CASES AND RISKS

Opening the session of case study examples that combine AI and Simulation, Zvonimir Zaja, Head of Global Supply Chain & Logistics at Forvia, presented the key learnings and successful results from a case study, supported by the Cosmo Tech platform and implemented by the  Forvia Interior Business Group. The starting point of this use case was to respond to the challenge of increased demand uncertainty, which is now the new norm for the automotive sector, with the objective of simultaneously reducing inventory cost and maintaining service levels. “When loading a demand which is far from reality, you recognize it along the supply chain, especially on the cost of cash of inventories, but also on resources. With demand uncertainty, the challenge is not to get the best customer forecast to organize production and supply accordingly. [To make the best decisions,] it is about knowing, with simulation, what will be the impact of uncertainty on performance” explained Zaja.

Alena Shevchenko, Senior Director Strategic Programs at DHL, offered an example of how AI and Simulation can not only help DHL teams to better understand and optimize the complex structure of their warehouse network and inventory allocation, but also to discuss these topics with customers and support DHL recommendations. She detailed questions they can answer with an AI-Simulation use case built with Cosmo Tech and currently being tested: What happens when we move that warehouse and how does it impact the whole network? But more than that, what is the optimal number of warehouses and where shall they be located? What is the amount of the inventory that we shall keep in this warehouse to reduce the working capital for the customer? [] What is the impact on costs, SLA, CO2…? [] We can bring facts that justify what we recommend, as many customers also treat us as consultants, not just as someone with whom you outsource the function and do the job, but someone who can recommend how to do this better.

After discussing these two examples in greater depth, participants exchanged views on the risks they should be focusing on, and on which levels and processes of their organization.

Iwan Le Mée, Manager Sourcing Logistics, Western Europe at Mondelēz International, highlighted three critical risks in the fast-moving consumer goods (FMCG) sector: demand volatility as the primary risk, geopolitical risks, major supply chain disruptions and IT Vulnerability. While Le Mée discussed the relevance of these proactive risk-management approaches for Business Contingency Plans and Romain Ropitault, Principal Product Manager at Cosmo Tech for S&OP process, Vanessa Zhou, Global LLP SC Insights and Customer Solutions Lead at DHL, elaborated on the existing challenges to implementing it on tactical and operational levels.

DIGITAL MATURITY, ADOPTION AND STANDARDIZATION

Stephane Crosnier shared insights from an Accenture survey conducted on 1200 companies, highlighting the level of investment in digital transformation. On average, companies allocate between 1.5% and 2% of their revenue on digital capabilities and similar investment is directed towards automation (such as physical automation at plants, robotics). And most participants recognized their company’s digital transformation journey in one of two distinct ways explained by Crosnier. He described the first group of companies that have started their digital journeys. They have selected specific platforms and partners, and they are using it to enable use cases that address the supply chain. The second group is not there yet. They start with a huge problem to solve, bring in a specific technology, show the value and  the impact. And then begin their journey.

Ariel Ramphul and Michel Morvan, Co-Founder and Executive Chairman of Cosmo Tech, both pointed out that companies have made a lot of effort in collecting or organizing data and that they are now moving towards investment to get “return on data”.“Now what we see more and more, is about [investment in] analytics, prediction, and automation. This is where I think we are all heading today. There’s so much data and getting the insight is still a challenge for many of our customers,” added Ramphul.

Discussions around change management, adoption and standardization revealed a common recognition of the challenges and necessities in these areas among the workshop participants.

Zvonimir Zaja highlighted the benefits of Forvia’s framework and standardized processes which allow them to replicate more easily what is done in one plant across other plants. Despite this standardization, he noted that introducing AI and Simulation tools still requires onboarding people into the process that is already standardized. Alena Shevchenko added that technology can also help to implement the change step by step. “It helps to create visibility into how different actually the processes are and serves as a catalyst of change in a certain way, to drive this change”.

During the afternoon, other topics were covered and discussed with all participants. In particular Generative AI during the introduction by Franck Poulain, ISV & Startup Senior Director at Microsoft, and by Michel Morvan explaining how AI, simulation and Gen AI can be combined. Sustainability strategies were shared by participants, and capabilities of AI Simulation to take into account CO2 emission Kpis were highlighted. Discussions were also sparked by François Rousseau, President of ABB France, Emmanuel Campos, Industrial Strategy Designer at John Deere,  Liza Korobko, Global Product Development Manager – Data Analytics, Supply Chain, PMP at DHL, Mickael Nunes, Lead Data Scientist at Pernod Ricard, and Philippe Boutonnet, Supply Chain Excellence Director at Saint Gobain. The event concluded with the opportunity for the participants to network with each other and to discover Cosmo Tech AI-Simulation demos.