How Global Companies Use AI to Prevent Supply Chain Disruptions
Summary. As they strive to make their supply chains more resilient, global companies are grappling with two challenges: the difficulty in discerning potential sources and the extended time required to find, vet, and onboard new suppliers. Companies such as Walmart, Tyson Foods, Koch Industries, Maersk, Siemens, and Unilever are using AI tools to swiftly find and engage with alternative suppliers during unexpected disruptions. They are also employing AI tools to pre-qualify suppliers ahead of time. These AI tools provide buyers with enhanced information that allows them to beat their competitors in securing alternate sources of supplies.
Ever since the disruptions caused by the Covid-19 pandemic, boards of directors and CEOs have been pressuring corporate procurement leaders to de-risk supply chains. Our recent research at Walmart, Tyson Foods, Koch Industries, Maersk, Siemens, and Unilever revealed how these global companies are using advanced AI technologies to plan for and adapt to supply-chain disruptions.
These tools have a variety of applications. They can enhance large companies’ visibility into what’s happening in their supply chains, allow them to respond faster to disruptions, deepen their ties with current suppliers by expanding purchases to new items, enable them to discover and qualify new suppliers ahead of potential crises, and even automate negotiations.
Companies that move quickly to adopt these AI tools stand to gain an advantage. “When there is a supply-chain crisis, the key to being competitive is to be faster at finding alternative suppliers than everyone else because everyone’s looking to do the same thing,” Maggie Brommer, head of procurement for Unilever’s Prestige Products, told us.
Here are details on how the global companies we studied are using AI in procurement.
Finding Alternative Suppliers
Unilever uses an AI application and service provided by German-based start-up Scoutbee to find alternative supply sources on short notice. The software generates a list of potential new suppliers by scraping websites for data on suppliers’ finances, customer ratings, sustainability scorecards, diversity scores, intellectual property information such as patents and design awards, customs documents from U.S. Customs to validate international trading experiences, and real-time alerts from social media and news feeds that can be set by the user to include for example financial reports and major hires or terminations. After the software generates a list of potential suppliers, the process becomes manual. Corporate buyers then instruct Scoutbee’s staff to request more information from specific buyers on the list.
Unilever, which has promised to purchase €2 billion annually from diverse businesses worldwide by 2025, also uses the technology to find such suppliers in the United States. Lullit Jezequel, Unilever’s procurement manager for sustainability and partnerships, says many of the diverse suppliers identified by the AI tool are small or medium-sized businesses (SMEs). “Sometimes what we’re searching for isn’t definable by a keyword,” she told us. “This tool does a deep search to find pitch decks and the types of clients they service to better understand their capabilities. Improving supplier diversity supports supply-base diversification and introduces suppliers that can fill holes and step up during disruptions.”
Siemens also uses Scoutbee to quickly find alternative supply sources — like when it faced a shortage of Surlyn, a highly specialized ionomer resin created by DuPont used in the packaging of medical diagnostic products. Because Surlyn is a patented product, there were no alternative manufacturing suppliers. Scoutbee searched import and shipping documents and within days generated a list of 150 Surlyn distributors. Siemens corporate buyers quickly pruned the choices, and Scoutbee’s staff then found several distributors on the shortlist with inventory available for Siemens to purchase.
