Issac Asimov’s three laws of robotics state: A robot may not injure a human being or, through inaction, allow a human being to come to harm. A robot must obey orders given it by human beings except where such orders would conflict with the First Law. A robot must protect its own existence as long as such protection does not conflict with the First or Second Law. The perception of artificial intelligence, including some companies and individuals in procurement and supply chain management, is a world where robots build products, check them for quality, pick them for dispatch and deliver them to your door. Asimov’s ‘I, Robot; becomes ‘I, Supply Chain’.

However this supply chain utopia is not the point of AI. Artificial intelligence is the theory and development of computer systems that have some of the qualities that the human mind has, such as the ability to solve problems, make decisions, and learn. A robot is a machine capable of carrying out a complex series of actions automatically, especially one programmable by a computer. In other words, an extension of AI.

Suffice to say that artificial intelligence in the supply chain is focused on the development of systems that can collate, analyse and learn from data regarding demand requirements, supply chain nodes and linkages along with supply capabilities to create solutions to optimise the supply chain without the intervention of humans.

Using AI to Predict Supplier Performance

Some companies are already using AI for procurement and supply to predict how long a delivery will take to get to the customer. That includes deciding which individual to use to dispatch the delivery. The development of artificial intelligence could see procurement departments making use of AI to predict the performance of suppliers and provide solutions to underperformance before they happen. Procurement AI could also predict the development of supply markets and make purchasing decision that would reduce or mitigate risks.

Traditionally the procurement department would delegate procurement decisions for routine items and focus on analysing leverage or critical supplies.  The advantage for procurement includes the opportunity to allow the  AI to take over some of the strategic sourcing decisions and provide the human side of the relationship once the decision had been made.

Imagine an artificial intelligence that would have predicted the financial crash or Brexit. Imagine an artificial intelligence that would not allow fraud or bribery because it has a built in moral code. Imagine an  artificial intelligence that makes procurement decisions based on ethical sourcing. These issues could be taken out of the procurement departments hands and handed over to the AI to choose the supplier and police their conduct.

We can see why the worldwide spend on ICT within industry runs into billions. Manufacturing supply chains and retail supply chains already see the competitive advantage ICT gives them, and they are eager to leverage the opportunities AI will give them. Linking this to the robotics engaged in completing basic supply chain tasks will lead to the learning supply chain; constantly checking itself, constantly making improvements and constantly adding value. The need for human intervention and human error will be terminated.

Approaching Artificial Intelligence With Caution

This should be a good thing. However Google’s DeepMind programme may raise some questions regarding the effectiveness of AI in the supply chain. The DeepMind team ran a series of tests to see if their AI would collaborate or compete; an important focus for procurement and supply relationships.

One of the tests involved 40 million rounds of playing a game called Gathering. It found that when there was enough resources the AI would work collaboratively. But as resources became scarce the AI became aggressive and knocked out the other party with which it had built a co-operative relationship. Not good news for supply chain partners in the real world.

Perhaps we need some new laws governing artificial intelligence: AI may not harm a supply chain partner or, through inaction, allow a supply chain partner to come to harm. AI must obey orders given it by supply chain partners except where such orders would conflict with the First Law. AI must protect its own existence as long as such protection does not conflict with the First or Second Law.

If you are interested in finding out more about the use of AI in supply chains, you may be interested in a CIPS Diploma in Procurement and Supply. For more information about procurement courses from The Oxford College of Procurement and Supply, simply get in touch with one of our course advisors on +44 (0)1865 515255 or email cipsenquiries@oxfordpeg.com.