Panel: artificial intelligence works best when supply chain partners collaborate

Companies looking to add artificial intelligence (AI) platforms to help solve logistics challenges need to collaborate with their supply chain partners or else run the risk of outpacing their suppliers' and customers' digital capabilities, according to a panel held today at the Massachusetts Institute of Technology (MIT).

Large manufacturers and retailers often have bigger information technology (IT) budgets than the firms they contract with to provide supplies, transportation, and other services, said members of the "AI in Action" industry panel at the MIT Center for Transportation & Logistics' (CTL) Crossroads 2018 event.

When better-funded firms launch AI platforms before their smaller partners are ready, they may find that partner firms lack the ability to provide real-time data such as accurate delivery times, said panel member Erez Agmoni, head of regional supply chain development for Damco International BV, the freight forwarding unit of Danish conglomerate A.P. Moller-Maersk A/S.

For example, an ocean carrier or trucking line without a digitalized supply chain network can only generate information by relying on slow interactions between human employees instead of instantaneous exchanges between computers, he said.

One way to get around the problem is for well-funded firms such as large retailers to push new technology out to their partners—such as suppliers and delivery agents—by distributing free platforms like mobile apps for smartphones, said panel member Daniel Merchan, a doctoral student pursuing a degree in engineering systems with MIT CTL. Ensuring that all partners are working with the same tools creates a "win-win" relationship and allows them all to share data and even cut costs by generating more accurate pricing and scheduling terms, Merchan said.

Another approach to supporting more collaboration is to convey to logisticians that the data they generate every day as a valuable asset, not a problem to be outsourced to the IT department, said panel member Esme Fantozzi, a general manager with Shell Oil Co., the U.S subsidiary of Anglo-American energy giant Royal Dutch Shell.

When all partner companies feel they own the shared data, they gain motivation to invest in digitalization as they begin to generate returns in areas such as equipment monitoring, predictive maintenance, and safety and performance improvements, she said.