Artificial intelligence is driving many changes in modern business. Many businesses are using AI technology to better understand their customers, identify ways to manage their finances more efficiently, and solve a number of other problems. Because AI has proven to be so valuable, 37% of companies said they already use AI technology. In reality, this number may be higher, as some companies do not realize that they may be using different forms of artificial intelligence.
Artificial intelligence is particularly helpful in managing risk. Many vendors are looking for ways to use artificial intelligence and data analytics more effectively.
For many years, artificial intelligence technology has been helping companies in different industry sectors. As ongoing economic issues create new challenges, artificial intelligence becomes even more valuable to businesses.
The benefits of adopting artificial intelligence stem from the need to manage close relationships with business stakeholders, which is a difficult task. All businesses need to develop complex relationships with a variety of suppliers and service providers to develop the products and services they offer their customers – but there is always some risk involved in preserving these relationships. Since the Russia-Ukraine conflict, the COVID-19 crisis, and other issues have exacerbated these risks, artificial intelligence has become increasingly important for companies looking to mitigate these risks.
Here are some of the risks businesses face when dealing with suppliers and what they can do to mitigate them using artificial intelligence.
Failure to deliver is one of the most common risks faced by companies in the past two years. This risk is best defined as a complete supply or service failure, which may be permanent or temporary.
There may be many localized or broad reasons for a supplier's failure to provide goods or services. For example, poor management could cause their business to collapse, eliminating their products from the supply chain. Material availability can lead to failure because suppliers are unable to manufacture products when they lack resources. Finally, unexpected or unavoidable events, such as disruptions to major trade routes or unprecedentedly severe storms, can cause catastrophic delays that shut down manufacturing or prevent trade in a region.
This is a problem that can be partially solved with artificial intelligence. Businesses can use predictive analytics tools to predict different events that may occur, and cloud-based applications can also help.
Google Cloud author Matt A.V. Chaban talked about this issue in a recent article. Hans Thalbauer, general manager of Google Cloud's supply chain and logistics business, said the company is using end-to-end data to better manage risks at different points in the supply chain to avoid failures.
Suppliers must be true to their mission and consider their reputation. Fortunately, artificial intelligence technology can make this situation easier.
There are several ways a company’s brand can be negatively impacted by members of its supply chain. If poor supplier practices lead to frequent product recalls, the businesses selling these products may be viewed by consumers as negligent and untrustworthy. Likewise, if a vendor releases information that contradicts a brand's marketing message, consumers may become confused or frustrated by the inconsistency in the partnership. As the internet sheds more light on supplier relationships and social media provides consumers with an outlet for advocacy, companies need to pay special attention to the brand reputation risks they face in their supply chains.
How can artificial intelligence help manage corporate brand reputation? Companies can leverage machine learning to drive automation and data mining tools to continue to study the representations made by members of their supply chain and their customers. This will help businesses identify issues that must be corrected.
Businesses that rely on the uniqueness of their intellectual property face risks when working with suppliers who may sell their intellectual property, counterfeit goods, or otherwise Enter the market with similar products.
Market saturation requires companies to develop some kind of unique selling proposition that provides them with a competitive advantage. Unfortunately, the power of this competitive advantage can be diminished if companies choose to work with untrustworthy suppliers. In other countries, where the rules regarding intellectual property are less stringent, suppliers may be interested in generating additional revenue by collaborating with a business's competitors to provide information about secret or special intellectual property. While the supply chain itself may not be harmed by this risk, such supplier behavior could undermine a business's strategy and cause it to fail.
Artificial intelligence technology can help suppliers improve competitive risks in a variety of ways. They can save money through automation technology, identify more cost-effective ways to transport goods, and increase value in other ways through artificial intelligence.
This risk involves unexpectedly high prices for suppliers or services. In some cases, business leaders do not provide adequate budgets for the goods and services they expect to receive from suppliers; in other cases, suppliers take advantage of the lack of contracts or "non-fixed" prices to drive up costs and remove costs from business Earn more revenue from your customers. This is one of the easiest risks to avoid, as business leaders can and should conduct due diligence to understand fair prices from suppliers in their market.
Artificial intelligence technology can also help in this regard. Machine learning tools make it easier to conduct cost-benefit analysis to identify opportunities and risks.
Although cutting corners can reduce costs, doing so can also result in products or services of poor quality that are unattractive to consumers. When considering which suppliers to work with, businesses need to find a balance between affordability and quality.
Some suppliers maintain a consistent level of high or low quality, but for others, quality rises and falls over time. Some factors that may affect quality include material and labor costs in the supplier's region, shipping time and costs, and the complexity of the product or service required. Business leaders who recognize declining quality may try to resolve the issue with their current supplier before seeking a new supplier relationship.
Fortunately, artificial intelligence can help identify these problems.
Artificial intelligence technology makes it easier for suppliers to manage their risks. Without a doubt, the best way to mitigate supplier-related risks is to use a strong supplier risk management system. The right AI tools and programs can help business leaders conduct more granular research and more accurately evaluate supplier options to develop a supply chain that is less likely to suffer from delays, failures, low quality, undue costs, and other threats. Risk management software developed for supply chain can help business leaders build and maintain strong relationships with top suppliers, which will lead to stable and profitable results for the supply chain of the future.
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