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Podcast: Artificial Intelligence and the Supply Chain

Podcast: Artificial Intelligence and the Supply Chain

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Podcast by Dr. Wanda Curlee, Faculty Member, School of Business, American Public University and Robert Gordon, Program Director

Prior to the coronavirus pandemic, organizations used artificial intelligence (AI) to improve efficiencies like reducing inventory levels. However, these efficiencies proved to make organizations vulnerable to surges in demand.

Start a supply chain management degree at American Public University.

In this podcast, American Public University’s Dr. Wanda Curlee is joined by Dr. Robert Gordon to talk about the dynamic changes happening in the supply chain during the COVID-19 pandemic. Listen to hear why artificial intelligence must look at a much greater dataset in order to accurately predict supply chain needs in the future and to learn about innovations like blockchain that provide a better understanding of the lifecycle of products.

Read the Transcript

Dr. Wanda Curlee: Welcome to the podcast, Innovations in the Workplace. I’m your host, Wanda Curlee.

Today, we are going to be chatting about artificial intelligence and supply chain. With the COVID-19 outbreak, we have seen how the supply chain for certain products has suffered.

Today, my guest is Dr. Robert Gordon, who is a program director at American Public University System in the areas of military management, reverse logistics and government contracting acquisition. He also has many years of experience with supply chain and industry, including Disney, Crystal Cruises, Seacor, Viking Cruises, to name a few.

Robert, welcome to Innovations in the Workplace, and thank you for joining me.

Dr. Robert Gordon: Thank you, Wanda. It’s great to be here. It’s [an] exciting time as you kind of already mentioned. In supply chain, there’s a lot going on, it’s very dynamic. I think people are also getting a little bit more interested in it overall just because of the movement of goods, or in some cases, the lack of goods that have been all about during this COVID situation. I think that it’s really something that people are more tuned into, and I feel that artificial intelligence is really going to be changing the way supply chain works now and in the future.

Dr. Wanda Curlee: So do I. But we are actually recording the podcast in early July; most states are back to the new normal or some states are regressing back to what they were before because of the spikes we’re having of the coronavirus. How do you think artificial intelligence might help with predicting supply chain needs and retail and the medical community for that?

Dr. Robert Gordon: There’s a lot going on with COVID. It seems that the general thinking here is that we opened up too soon and now we’re really having a lot of cases and a lot of incidents.

Whenever you open up the beaches, it seems that people are unable to behave appropriately. However, looking forward to things kind of getting better in the near future. All this situation with COVID really has brought to light certain things that have changed within the supply chain and particularly with artificial intelligence.

To kind of start, I see the big change that’s happening is that as people started using big data and artificial intelligence, supply chains became a lot leaner, meaning there was a big push by many organizations, particularly retail organizations, and to some degree in the medical community, to run as lean and as efficient as possible.

The intent there was to reduce inventory levels, to increase turns of inventory and have less capital tied up. In essence, it really was an efficiency, but also a cost-saving measure. Because as you know, at the end of the year, you’re paying 1% on tax for your inventory, so you want to remain as lean as possible as well as to avoid any shortages.

So what has happened with artificial intelligence and big data in different systems is they have been systematically trying to eliminate waste and become more efficient and reduce the size of warehouses and really hit a very efficient just-in-time model.

And as all this has been happening, when COVID hit, the other piece that I’m seeing about supply chains is it makes us much more vulnerable. As we’ve seen with key items, less inventory is very vulnerable to surges in demand.

So as the different artificial intelligence models have created an understanding of exactly what the needs were, manufacturing was then retooling to meet those demands and to try to stabilize demand throughout the supply chain. So if the manufacturer is used to sending X per week out to all its distributors and other sales units, they aren’t prepared to suddenly have to deal with 5X, which is exactly what happened with certain commodities with COVID. Suddenly, not because of necessarily a consumption issue but a hoarding and demand issue, certain items became very vulnerable and difficult to find.

In particular, we all know about toilet paper and paper towels and sanitizing items, surgical masks; all of these things suddenly had this huge demand. Consumers suddenly started hoarding and buying more.

And so eventually, the manufacturers simply were prepared to make only X, but then suddenly they started getting orders for multiple times of that. So they had to start bringing up their manufacturing and retooling and getting to a point where they can have things moving.

Coupled with this, you have the whole COVID situation, where many of these products either had elements or were completely coming out of China. So as China was starting to emerge from their COVID situations, their manufacturing was held up and so there was simply no product to be had, which led some things in the marketplace where you saw people trying to charge more and price gouging.

All of this is because of the supply chains becoming leaner because of using that data that’s happened. In supply chain lingo, this is called the bullwhip effect. Typically, it’s a short-term situation where demand increases substantially above what it has been causing shortages, and then the situation eventually resolves itself as products get to the shelves and consumers buy and then there’s that pop in products.

For example, there was a big pop when SpaceX sent up the dragon capsule. Their zero-g elements that they had was this sparkly dinosaur.

Shortly after that was shown on TV with the launch and everyone saw it and the little story about the kids wanting it; you couldn’t find it for nothing. Because let me tell you, my wife and I started looking for one the day after it aired and basically everyone was out of it. And it was that spike in demand.

And typically, it’s a short-lived situation. With COVID, it’s been a far longer slog to get this corrected.

Now, the learning here is that it’ll be interesting to see in the future of how artificial intelligence will deal with this. I think that the way that it will have to is look at other key indicators outside of what typical demand elements are. Unless artificial intelligence is aware that a situation like COVID or a pandemic is happening, it’s not going to know to start ramping up production and increasing demand to meet the sales that come up.

Dr. Wanda Curlee: Robert, talking about these spikes and little things like the sparkly dinosaur, how can AI maybe look at events that are going on in the universe, or at least here on Earth, and try to pick out chats on social media or other things that might create a spike in demand?

Dr. Robert Gordon: I think that artificial intelligence is going to have to look at a much greater data set. Some of the things it’s going to have to look at, for example, artificial intelligence, or in supply chain, and people in general already know, okay, it’s Florida, it’s summertime, it’s going to rain a lot, and so you better have umbrellas and ponchos on hand to sell because suddenly the demand will spike.

But that’s a seasonal thing. So artificial intelligence will have to understand seasonality of goods and understand maybe even weather patterns. Because for example here in Florida, we are no stranger to the bullwhip effect, because whenever someone declares a named hurricane off the coast, everyone freaks out.

Those buys all sorts of goods because they never bothered to put together their hurricane supplies. And suddenly, everyone’s out of certain commodities such as milk, paper products, canned food.

So this is things that need to be taken into account. Artificial intelligence needs to understand not only the seasonality of goods but understand the weather patterns and understand the key elements that cause these situations to occur, such as a named hurricane suddenly starts being announced and it’s coming towards Florida. You should know that demand is going to increase and that steps should be taken.

For example, already the same thing happened with Walmart. They’re very strategic about forward positioning goods during a time of a hurricane. This is why you can find bottled water at a Walmart the day after a hurricane, while FEMA is still trying to figure out how to find a truck to take it to South Florida.

Dr. Wanda Curlee: Yeah. That’s quite interesting how Walmart has done much better than FEMA on those kinds of things. So AI has really changed supply chain quite a bit. What are some of the most innovative things that you think it’s brought to supply chain?

Dr. Robert Gordon: I think the biggest one that’s coming is blockchain. I think that the concept of blockchain, which is where you can track something throughout the life cycle of an item, is going to be very important. For example, when it comes to a supply chain and even applications with artificial intelligence—because keep in mind—you get all that data in blockchain where everyone’s adding their bits of data to understand it, but then you have to filter through it to figure out what it all means. Following every element is important and it shows total value that goes into the product and understand its history.

For example, when you buy a certain shellfish, the restaurants are required to keep the tags of these items in order to track it in the event there’s an outbreak, some kind of a disease such as hepatitis that comes from it. So using blockchain, one no longer has to keep a physical tag and then contact their distributor who then contacts the processing company and then possibly even going all the way back to the person who caught this product. It would all reside within a blockchain and so that data would be immediately available and ready for you.

So that way, immediately you would know if there was an illness outbreak on this batch one, two, three, the blockchain you could look and see everybody and everywhere that batch one, two, three went to. So this traceability and trackability is amazing and much more efficient and fast.

Because when it comes to some outbreak or disease, as we know, being faster is generally being better when you’re catching up on what things are going on and where things are happening. The same thing can apply in other industries, for example with manufacturing.

Blockchain is going to be able to track the life cycle of that product and multiple products going into that final finished product is going to be significant. So that way, you can find out exactly, well, if there was a problem with a particular chip within a computer, you’d be able to understand the batch and the lot and then be able to understand and find those out in the field.

The same thing is applicable when it comes to recalls with cars. When they find that there’s some problem, then you have this blockchain you’re going to be able to track the entire life cycle of the vehicle, ultimately going to the final consumer.

Then if it’s done correctly, every time it’s resold, it’s going to then keep adding to that blockchain. So that way, in the event of recall, you’ll actually be able to contact the actual final consumer or the owner of the vehicle.

They track it to the first owner, because I keep getting recall notices for cars that I haven’t had in years, because either they were sold, they were donated and given away.

So it makes for a much more efficient system of tracking. The same thing goes when it comes to your medical history. It could be added to a blockchain. And so as you see your different health providers, demanded you have your portable data, which will have your entire medical history that you could then control and then you can have.

As you know, whenever you go to a different doctor, you’re constantly juggling records and passing things from here and there. But a lot of times, things get missed because maybe you were ill when you were on vacation and that might not have gotten back to your general practitioner. So having that utilized is really going to be much more efficient for the medical community and particularly for the consumer.

Dr. Wanda Curlee: Blockchain is fascinating and I have been following it for years. I’ve also heard from IT specialists that blockchain is very secure because you can’t change things on it unless you have the authority.

But we’ll see. We always know that if there’s a hacker out there, they’ll probably hack into something. But you talked about… I’m sorry, were you going to say something, Robert?

Dr. Robert Gordon: Well, I was going to mention about blockchain. I do agree, it’s secure, and yes, it’s only as secure, hackers are always going to find a way.

The other piece that kind of goes with it is that the data and information that comes to blockchain, although the biggest application currently is Bitcoin and other currencies, is that recently, at least in the United States, the data can be subpoenaed and can be used by the courts in order to track or trace the actual currency exchange, particularly when it comes to the buying and selling of illegal goods. There are already some controls happening with blockchain pertaining to security as well as to how confidential the information can be.

Dr. Wanda Curlee: Excellent. We need some more secure ways of monitoring especially our health care, because we all know we want to keep that private. We don’t want others to know about it or for it to get onto the internet.

You were talking about ships and cars; I know that there’s autonomous vehicles out there and it has to do with AI. How is that changing supply chain?

Dr. Robert Gordon: Well, it’s already changing it in many ways. In fact, it’s going to be soon that we’re going to be at a point where we’re going to have pretty much a contactless product from manufacturer to consumer.

Let me explain what can happen. Obviously, automation within a manufacturing company is known; artificial intelligence can help decide how to create products based upon demand and orders and other requirements.

So that can triage what’s going to be manufactured. So then the product is manufactured in an automated factory, it will then be loaded onto autonomous trucks.

Right now with autonomous vehicles, there’s a lot of testing going on. There have been actually some autonomous trucks deliveries in the United States as a test.

However, actually the largest place that’s actually doing the most with autonomous trucks and deliveries, a mining company down in Australia. They have a fleet of already 100 autonomous trucks that are taking the product from the actual mine, take the ore, and then take it to the processing center. They already have a fleet of 100-plus trucks that are operating and completely autonomously and have been doing so for years now.

Now, people will say probably that Australia’s pretty sparse when it comes to population. And it is going out to a mine which are typically off the beaten path, but still it’s showing and proving that the concept is there.

Then it goes on the truck, whatever happens to it. But in the case of the ore, it could be processed, then the automated truck will take it to a ship.

And right now, ships are already working as autonomous vehicles as well. There’s already ship testing. I believe it’s Rolls Royce is working on some ship testing for an autonomous ship.

People think shifts are these large and complex machines, and that is very true. However, the one-person bridge has been a standard on many ships for a long time.

Now, the reason you don’t necessarily always want to operate with just one person is the redundancy and to make sure in an emergency or critical situation that someone can address that. But as artificial intelligence matures and as we get better about obeying and keeping a safe distance between ships….well, remember collisions happen only because people allow ships to get too close to one another.

On an autonomous ship interacting with other autonomous ships is not going to break that protocol. They’re not going to fall asleep. They’re not going to disregard the images on their radar. They will follow the rules and follow the sea paths as required.

There are certain efficiencies that come with it. I think when it comes to shipping and maybe even the vehicles, there’s probably going to still be a human element, but remember that human element doesn’t need to be on board. There’s already a fleet of vessels out there that are being monitored shoreside that do have a crew component on board.

But the advantage there is you can have [a] command and control center where they’re monitoring ship systems and keeping an eye on everything, and then they can offer input or take steps to correct matters while they’re there. So we may get to a point where ships are fully run by AI and a person is simply monitoring from a remote station, just in case something out of the ordinary happens. This is obviously a much more efficient system.

So the product is manufactured, put on the ship, and then it’ll go to a container yard, all are aware, the ships’ containers come in. And the Port of Los Angeles has already been using about a half dozen to 10 automated unloaders.

Essentially, what they are, these large AI cranes that are on rails, and so they take on and off the containers off of a ship. And it’s all done 24 hours a day and they will take the containers and then put them into position where they will then eventually be picked up by trucks and chassis and taken off to where they need to go.

So you can see it goes from the automated ship to the automated unloader, which then goes to the truck where at some point we’re going to get to where we will have robots and AI pick and pack items that will go out and put them on the shelves.

Now you can say that seems a little farfetched, but Amazon is really using a lot of robots, AI robots, for their pick and pack operation. Having the product being put on the shelves and then they’re being picked and packed and then sent off to be boxed and then you get it.

So the entire autonomous supply chain being run by AI is something that isn’t just a theory or something that we can imagine on the horizon. I see it in the next five, 10 years tops.

Dr. Wanda Curlee: Interesting. It’s amazing. So with all of this going on with AI, do you see supply chain managers and other people being displaced by AI or do you see other jobs being created or both?

Dr. Robert Gordon: I think it’s going to be a little bit of both. But the reality is, despite all these great innovations in technology, I’ve yet to see these mass layoffs. What I remember when organizations went from the telex to the fax, no one got laid off. When they went through the fax to email, no one got laid off.

Now we have automated ways to schedule meetings, but still people need assistance to do administrative things, maybe not call around to set up meetings, but suddenly you still have that need. I also feel that in addition, there’s always going to be that need, but people are also going to take a more managerial and leadership role.

Meaning once these administratively and mundane tasks are automated and handled by AI or potentially robots, you’re going to have a situation where people are really going to be needed for more strategic decisions and for critical thinking and for addressing things out of the ordinary. So you’re suddenly going to take a person who might have been in a more menial role to a more managerial or possibly executive type role because now you need that thinking capacity for other things.

So I see it as a little bit of both. AI will help take care of many of these mundane tasks, but at the same time, I think that people are still going to need to be available to address things that happen out of the ordinary.

Dr. Wanda Curlee: Interesting. I can see a Siri or a Google sitting on the supply chain manager’s desk and they ask them to do things. So that’ll be interesting how that will change the work environment.

Dr. Robert Gordon: Absolutely. IBM already has a product called Sterling, which is their AI assistant for supply chain. It’s pretty much happening now. Again, this is something that’s just more or less recent release and I have not met with anyone or any company that is totally rolled it out fully, but I’m monitoring that situation closely to see what happens.

Dr. Wanda Curlee: Yeah. It’ll be interesting to say what it does for supply chain. But also I know that you’re very involved with reverse logistics, can you tell us a little bit about reverse logistics and how AI might or is helping it now?

Dr. Robert Gordon: I see it as AI to some degree is helping with just the supply chain and returns, for example. But I also see that AI is going to be far better about predictive analysis when it comes to looking at large amounts of data to determine what the patterns are for example with returns or with issues.

When it comes to returns are not as self-evident, because the belief is that people only return goods when the quality is bad or it doesn’t work or it’s broken. But the more the reality is people return things because they’d find out they don’t need them or it wasn’t what they really wanted more so than the quality of the good.

The product can be working exceptionally well but if the person doesn’t have a need for it or wants it, well, then they’re not going to necessarily want to keep it. So I see AI helping out and helping people better understand exactly what they’re getting, but also to help them configure it and set it up and get it going.

Because in some cases, it’s a matter of the complexity of the setup. I’m sure you remember how computers were set up before and how things have changed over time, and the same thing with phones. Phones used to come with that beautiful book that came in the Apple iPhone that was going to tell you everything about all the features of your iPhone.

They realized that pretty much no one was reading that book. And so they’ve automated the entire process, and I see that using an AI to help you configure it to make it completely custom to your situation is going to be happening. I feel that’s going to help with the return of goods.

I also think that when it comes to people wanting to buy the right products and understand things, I see AI interacting with the bots in order to better understand what you really want, rather than now what you think you need based on your shopping and what you identify. So I really see these kinds of things as being very important in the AI world when it comes to reverse logistics.

Dr. Wanda Curlee: Oh, that’s interesting. Yeah. I was one of those that never read the book. I just kind of tried to work it and see what I could do, and then if all else failed I went to the book.

In the beginning of this podcast, you talked about the dinosaur with the glitter on the last space launch. How do you see space logistics going? I mean, that’s something nobody really talks about, so I wonder if you have any thoughts about that.

Dr. Robert Gordon: Absolutely. The big thing in space logistics right now is reusability. With the successful SpaceX launch, which has taken people up to the International Space Station, we’ve seen that they are being able to reuse their rockets and that reusability is key.

The example they like to use is: imagine the cost of a ticket from London to New York on a plane if the plane was made and only flown one way and then thrown away. So then the hundreds of passengers on board would have to carry the entire cost of the plane, and so you would expect to see a cost of millions of dollars for a ticket one-way from London to New York.

We know that’s not something that’s supportable. But that’s essentially what NASA had been doing and other space agencies for decades.

So now that reusability is happening and that rockets are being reused. The actual capsule will be reused. You’re going to see a huge change in space logistics because suddenly now things are going to be a lot cheaper to send up, and not only cheaper to send up, but also send up further.

The first step is going to be, well, now with this much cheaper way of sending up satellites, costs are going to drop. And suddenly it’s going to be a lot easier for anyone or any entity to have their own satellite.

So with those costs coming down, that will of course go on to consumers and that’s going to have the big knock on effect. And even going further, again SpaceX has been talking about going to Mars, and so going out into space to harvest different resources that are available on asteroid or possibly other planets is also going to become critical with space logistics.

So in a nutshell, I see that reusability is the key, but I think also down the road, you’re going to see inroads with artificial intelligence in the area. India has already actually created an artificial intelligent astronaut that they’re going to send up. So that person is going to be in their space vehicle that hopefully will one day go to Mars.

There’s a lot going on with AI. And when you look at the overall exploration of space and what it costs and takes to send humans further from the earth, AI and autonomous systems become a much better, cost-effective way to do things.

Plus when you think about the latency of, for example, when NASA needs to send a command to the Mars Rover, the transmission time is about six minutes. So they’ve got to anticipate six minutes in advance for what’s going to have to happen. So I can only imagine that other vehicles on other planets are going to be far more autonomous and not have to deal with that latency time delay because they can continue to do their job and do the work that they need to do without having to wait for a human command to come in.

Dr. Wanda Curlee: That’s quite interesting. I can also see other forms of technology being used.

For example, if the AI sees that something’s getting ready to break, a 3D printer might print the part needed. Would you agree with that or do you think it’s actually happened?

Dr. Robert Gordon: I would agree. I think that that’s something that again is on the near-term future.

Dr. Wanda Curlee: Yeah. It might be already happening on the International Space Station. I have no idea.

Dr. Robert Gordon: I haven’t been there, so I’m not sure.

Dr. Wanda Curlee: Neither have I, just seen a lot of pictures and a lot of videos on it. So Robert, if you had a crystal ball, and I know you’ve talked about blockchain a little bit, but how do you see AI changing supply chain maybe 10, 15, 20 years from now?

Dr. Robert Gordon: Well, I think it’s going to completely revolutionize logistics generally. You’re going to see that AI entities, for example, in your home or in your office are going to be commonplace and they’re going to communicate with other AI entities. I see that they will also coordinate and be integrated with things such as 3D printers.

So for example, there’s always a lot of concern about the carbon footprint of buying something in China, having it sent over to the United States and then eventually reaching a consumer. I see that in the future, it’s going to be intellectual property and knowledge and data that’s really going to make the big difference.

Then at that point, that data, for example when you want to buy something, you’re going to buy the blueprint or the data on that product and that then is going to be sold to you. And then it’s going to be going to your 3D printer or your AI assistant will then route it to the appropriate 3D printer, which will then create it in your house.

So I see that it will completely eliminate a lot of these international logistics of getting things to and fro from across the planet, because it’s really when you’re buying something, you want that item, but you don’t really care if it shows up on your door on an Amazon box or just comes out of a 3D printer in your house.

But to do that requires buying the data of how that item is made and then having that information be able to create it at your location.

Dr. Wanda Curlee: That will change the retail industry quite a bit I can imagine.

Dr. Robert Gordon: Absolutely. Right now, they talk about global competition, in a way, people aren’t even going through an Amazon.

Dr. Wanda Curlee: True, or printing your new house. I’ve seen that they’ve already done some printing of houses in certain areas.

Dr. Robert Gordon: Absolutely. They’ve done 3D printing of homes in a number of instances, in a number of cases. So you could certainly have your home printed that way and then have all the interior product made to order as well.

Dr. Wanda Curlee: Yeah. That would be fascinating to have that or if your refrigerator breaks or something. But I see that coming down the road too and I’m looking forward to it. I hope I am around when it does happen, because I think it’ll be sooner rather than later.

Dr. Robert Gordon: I agree.

Dr. Wanda Curlee: So Robert, thank you very much for joining me today for the episode of Innovations in the Workplace.

Dr. Robert Gordon: Thank you for having me. It was very interesting. I hope that everyone who listens to this podcast learns about these things. I feel that this is something that’s happening as we speak.

There’s a lot going on in the world in supply chain and artificial intelligence. I think that people need to understand the good and the bad and also what can be done. I think that there’s great opportunity, but at the same time, there could be some risks.

Dr. Wanda Curlee: And thank you to our listeners for joining us. You can learn more about this topic and similar issues in artificial intelligence by reviewing APU’s blog. Stay well and see you soon.

About the Speakers

Dr. Wanda Curlee is a full-time professor at American Public University. She has over 30 years of consulting and project management experience and has worked at several Fortune 500 companies. She has a Doctor of Management and Organizational Leadership and an MBA from the University of Phoenix and an M.A. and a B.A. in Spanish Studies from the University of Kentucky. Dr. Curlee has published numerous articles and several books on project management.

Dr. Robert Gordon is a Program Director of Government Contracting & Acquisition, Military Management and Reverse Logistics Management at American Public University. He earned a B.A. in History from UCLA, an MBA from the University of Phoenix, and a Doctorate of Management and Organizational Leadership from the University of Phoenix. Dr. Gordon also holds graduate certificates in Logistics Management, Project Management and Information Systems Security. He is also a certified professional coach.

Dr. Gordon has an extensive business background in various management positions in supply chain management. He has started and headed up the logistics and procurement function of three new cruise lines and his involvement with these billion-dollar projects has given him considerable international and domestic project management experience. 

Dr. Gordon has hundreds of published articles pertaining to supply chain management, strategic value-added purchasing and vendor relations, conflict in the virtual organization, and complexity. He has four books out on complexity and project management, virtual project management organizations, program management, contracting, logistics and reverse logistics.

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