Struggling to keep pace with constantly changing customer demands and unexpected market disruptions? Today’s businesses require a supply chain that transcends mere efficiency. It needs to be intelligent, adaptable, and flexible.

Consumers expect faster deliveries, wider product availability, and constant visibility into their orders. Meanwhile, businesses grapple with global disruptions, fluctuating demand, and rising costs. In this compelling scenario, imagine a supply chain that can predict surges in demand before they happen, automatically adjust inventory levels to avoid stockouts, and even identify potential disruptions before they cause delays. This is a boon for businesses leveraging the power of Microsoft Dynamics 365 Supply Chain Management powered by advanced AI-driven functionalities. It empowers businesses with the tools and insights they need to optimize their supply chains, gain a competitive edge, and deliver exceptional customer experiences.

The Evolution of AI in Supply Chains

The journey of AI in supply chain management (SCM) began in the 1980s with “expert systems” like the inventory management assistant (IMA). While commercially limited at first, AI re-emerged in the 1990s with renewed interest. The 2000s saw a turning point as affordable computing power fueled broader AI adoption in SCM. This trend continued in the 2010s, fueled by the explosion of data generated by the Industrial Internet of Things (IIoT) and big data. As machine learning algorithms matured, they facilitated valuable use cases in areas like demand forecasting and inventory optimization.

Today, AI applications extend far beyond basic analytics. We’re on the cusp of a new era with advancements like natural language processing and generative AI. However, most companies haven’t fully explored AI’s potential, which lies in self-learning supply chains, sophisticated algorithms, and unlocking big data’s potential that drives continuous learning, analyzing vast amounts of data, uncovering hidden insights and ultimately leading to improved resilience and better decision making.

AI-powered Intelligent Supply Chains

As supply chains become more intricate, companies are turning to next-generation AI for a competitive edge. Here are some ways Microsoft empowers businesses with cutting-edge AI solutions:

• AI-powered Risk Mitigation: Unify data sources and business applications with AI to proactively identify and address disruptions across your supply chain.
  Imagine a scenario where an AI-powered news module flags potential weather disruptions impacting key suppliers. Dynamics 365 Copilot empowers users to act swiftly with contextual email outreach, collaborating with suppliers to reroute orders or identify alternative distribution centers.
  Optimized Order Fulfillment: Microsoft Dynamics 365 Intelligent Order Management (IOM) leverages AI and machine learning to optimize fulfillment decisions. With real-time data and AI, IOM can automate order fulfillment processes, including identifying the best fulfillment options and continuously improving AI models based on user feedback.
• Collaborative Demand Planning with AI: Demand forecasting, a crucial yet time-consuming process, benefits greatly from AI. While machine learning algorithms already improve forecast accuracy, the next generation of AI promises even more.
  Dynamics 365 can leverage AI to explain forecast variations and answer user queries in natural language. This empowers demand planners to analyze trends, collaborate more effectively, and adjust plans in minutes, not days.
• Mitigating Order Delivery Risks with Conversational AI: Procurement teams can leverage conversational AI to streamline supplier reviews. Imagine a scenario where Dynamics 365 Copilot analyzes order data and generates reports, suggests questions for supplier reviews, and even drafts recommendations – all through natural language interaction.
• Autonomous and Self-Regulated Supply Chains: One of the biggest challenges in managing complex supply chains is the sheer volume of disparate data and processes. AI can help bridge this gap by

1. Mapping multi-tier networks: AI can map complex supply chain networks, including external partners, for better data harmonization and decision-making.
2. Adaptive and Self-Regulated Networks: With advancements like reinforcement learning, AI can create adaptive and self-regulated networks. These networks can analyze historical trends, internal and external events, and real-time data to make optimal decisions, such as recommending a “make-and-buy” option for optimal inventory levels.

• Intelligent Process Automation: Next-generation AI can automate many repetitive tasks in SCM, freeing up human resources for higher-level strategic work. AI bots can handle tasks like reading emails for new procurement requests, logging data, solving alerts, and triggering workflows.
• Intelligent Inventory Visibility and Optimization: AI can revolutionize inventory management by balancing stock levels more accurately, reducing stockouts, and improving customer satisfaction. Imagine a scenario where AI helps identify a potential inventory depletion in a specific region. Dynamics 365 can provide insights into the root cause – for example, low supply due to scheduled factory maintenance. With AI-powered recommendations, the analyst can explore options like rebalancing inventory from other locations or using a cost-effective contract manufacturer. AI can further empower users with natural language search capabilities, allowing them to quickly locate specific inventory items or track expiration dates. Additionally, AI can streamline data analysis and reporting, freeing analysts from mundane tasks and allowing them to focus on strategic initiatives.
• Shortening Warehouse Inventory Cycle Time: Predicting which items should be placed in forward-picking locations within warehouses is a constant challenge. Traditionally, warehouses either pay for more space than needed or dedicate labor to constantly re-slotting bins.

With AI, you can analyze incoming orders and historical data to forecast demand for specific items. Combined with product dimensions and storage capacity data, AI can recommend proactive re-slotting strategies to ensure on-hand inventory is readily available for picking, minimizing warehouse cycle times.

While these examples showcase the transformative power of next-generation AI on supply chains, the potential extends far beyond. AI offers a vast landscape of opportunities to streamline operations, minimize costs, and elevate customer satisfaction. However, to fully unlock these benefits, businesses must make strategic investments in the appropriate technology and infrastructure.

Microsoft Dynamics 365 for Supply Chain Management offer a secure, composable, and extendable platform that integrates AI seamlessly across your supply chain processes and data. This allows businesses to leverage low-code/no-code automation, collaborative actions, process orchestration, and a rich set of supply chain functionalities – all within a single, user-friendly experience. By embracing next-generation AI with Microsoft Dynamics 365, you can unlock new levels of efficiency, agility, and resilience.