Supply and demand are two of the most critical aspects of building or growing any type of business. If you don’t have enough supply to meet demand, you lose business. If you have too much supply without the appropriate demand, you lose money. From manufacturing to distribution to retail to even energy and power, every sector of every industry rises and falls on these two critical elements. Here are 3 ways supply chains can be improved by machine learning:
- Analyzes historical patterns and future events
The demand for a particular product or service is generally dependent on dozens, if not hundreds of different factors. In the past, one of the biggest indicators businesses from manufacturers to retailers had to determine future supply was past demand. Conversely, however, even previous demand could be influenced by a wide range of factors. For instance, a new competitor could be coming on the market or a previous year’s demand could have been influenced by a single non-recurring event. Machine learning is capable of factoring in an astounding array of past and present variables to predict future demand.
- The IoT is delivering more insight than ever before, which can be analyzed with machine learning
Millions of smart thermostats are now delivering detailed data about energy consumption directly to providers. This allows providers to better assess how much energy they need to provide on days of the year when temperatures reach certain peaks. Appliances can notify manufacturers when they are in need of replacement parts or even when the entire appliance may need to be replaced. As the construction industry also goes digital, appliance manufacturers will also be able to factor in construction rates to determine likely appliance demand for new construction.
- Better scheduling of deliverables
When parts are delivered too early, they have to be maintained and stored, which makes them vulnerable and increases costs. When they are delivered too late, they can hold up production. Machine learning can help industries up and down the supply chain better communicate to get the right goods to the right business at the right time. When a shipment is headed for one business that has a sudden hold-up and can no longer use the goods, they can quickly be diverted to another business that has an immediate need for them.