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AI-Powered Strategies for Supply Chain Risk Management

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While AI has taken the centerpiece across business strategy in organizations worldwide, what’s striking from one of the top 10 key takeaways as per the Artificial Intelligence Index Report 2023 published by Stanford University, is that for the first time in the last decade, year-over-year private investment in AI decreased.

As per the report, global AI private investment was $91.9 billion in 2022, which represented a 26.7% decrease since 2021. There has been a decrease in the total number of AI-related funding events as well as the number of newly funded AI companies.

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At the same time, the report further highlights that organizations that have adopted AI have realized meaningful cost decreases and revenue increases.

The Artificial Intelligence Index Report 2023 further summarizes that the three most adopted AI use cases in 2022 were service operations optimization (24%), new AI-based products (20%), and customer segmentation (19%).

Despite the challenges in terms of investments, regulations, and potential misuse of AI, today, it is essential for organizations to include AI strategy as a core part of their organizational business strategy.

Moreover, it is also imperative to link the AI strategy to business outcomes and deliver these outcomes through successful implementations, which would fuel further investments in AI.

Based on McKinsey’s Global Survey on AI 2022, the function that most respondents saw decreases in cost because of AI adoption was Supply Chain Management (SCM) (52%).

Identifying SCM use cases for prototyping, and consequently scaling up to meet the needs of the enterprise has shown momentum in recent years. One such growth area happens to be Supply Chain Risk Management (SCRM).

SCRM is a growing field of study aimed at ensuring business continuity and contributing to business performance. SCRM is still evolving, and researchers in the past have proposed multiple definitions of SCRM.

One frequently cited definition of SCRM covers four constructs, namely, (a) supply chain risk sources, (b) risk consequences, (c) risk drivers, and (d) risk mitigation.

Due to the after-effects of COVID-19, increasing complexity in supply chain processes, trade barriers, and growth of just-in-time processes, SCRM has become essential to ensure business continuity and operational performance of organizations.

However, many organizations do not invest or focus on SCRM. SCRM has the potential to enable early and proactive identification of supply chain risks along with predicting the causes of such risks, leading to reduced disruptions and financial losses.

Proactive supply chain strategies help to build resilient supply chains. AI can play an important role in SCRM by proactively identifying, assessing, mitigating, and responding to supply chain disruptions. AI techniques like computer vision, deep learning, natural language processing, and other machine learning techniques including the capabilities of Generative AI, have fuelled AI adoption.

AI has the potential to proactively identify risk in supply chains and provide insights for effective risk response. Some of the applications of AI are autonomous drones, factory automation, cybersecurity, finance, and hazardous environments.

Furthermore, past research involving AI in SCRM has forecasted the level of integration required with the supply chain to minimize risks and AI techniques to analyze risk exposure in supply chains using what-if analysis and stress testing.

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At the same time, there is a need to study architectural paradigms for the implementation of AI at an enterprise scale. To ensure that AI in the supply chain risk can be used in practice at an organization, a suitable information systems architecture is a necessity. Another critical aspect is to study the deployment of the AI models for prediction either in a batch or online mode enabling decision-making.

New use cases involving audio and video streaming, human gestures, and integration of AI with other fields like robots, drones, edge computing, augmented reality, and others need to be studied in detail and new architectural paradigms evolved.

However, business leaders need to be aware of the factors influencing AI adoption. Recent research studies have used the Technology–Organization–Environment (TOE) framework to study AI adoption processes.

In a study conducted across select industries in India, namely, manufacturing, wholesale trade, retail trade, and transportation, the research identified that AI adoption in SCRM is influenced by integrated data management, complexity, talent, organizational agility, and disruption impact.

Moreover, AI routinization or usage in SCRM was influenced by complexity, cost of ownership, top management support, enterprise risk management alignment, disruption impact, regulatory uncertainty, and AI implementation in SCRM.

For business leaders to justify and secure funding opportunities for AI, an integrated approach is the need of the hour. Driving business outcomes, identifying relevant business use cases, building for scale, addressing data quality challenges, and adopting sustainable practices are key elements of focus AI leaders should bring forth that benefit organizations and humankind in general.

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Dr Sadia Riaz
Dr Sadia Riaz
DR SADIA RIAZ, MBA, PHD (INFORMATION SYSTEMS & DESIGN), Associate Professor S P Jain London School of Management, Programme Director Bachelor of Business Administration SP Jain London School of Management.

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COP28 UAE: SANY Promotes Green Manufacturing Transformation, Takes Concrete Action to Tackle Climate Challenges

CHANGSHA, China, Nov. 23, 2023 /PRNewswire/ -- SANY Group, ("SANY"), a globally leading enterprise of the high-end equipment manufacturing industry, is accentuating advancing sustainable development and the green manufacturing transformation of the heavy machinery industry, ahead of the COP28 UAE, that is set to take place from November 30 to December 12 in Dubai. The theme of the 13-day program this year is "Actionism," calling for people to rise to meet the climate change challenges.

The COP28 will center on four major paradigm shifts – namely accelerating the transition from fossil fuels, agreeing on climate finance shifts, emphasizing the role of people and nature in climate action, and ensuring the summit is an inclusive event that women, indigenous people, local communities, youth, countries and more can all be a part of.

SANY is responding actively and positively to the summit's agenda with concrete actions to promote the transformation of green manufacturing, bringing sustainable solutions to the industries of mining, construction, wind power, and more.

Taking green actions to build a sustainable future

SANY is vigorously expanding the use of green energy (renewables such as solar and wind) in production processes to reduce the reliance on traditional energy sources, lower carbon emissions, and support climate change actions. It has adopted multiple initiatives, especially in accelerating the R&D and application of wind energy, hydrogen, and electrification solutions, and achieved significant results.

SANY's subsidiary SANY Renewable Energy has been investing in and constructing wind farms to boost the proportion of wind power in the energy structure, through intelligent upgrades in manufacturing and creating intelligent workshops. By doing this, SANY Renewable Energy has reduced the overall unit energy consumption and carbon emissions by 15 percent compared to pre-upgrade.

In 2022, SANY has added more than 3,000 energy metering connections. SANY built China's first intelligent mixing station park and invested 3.22 million yuan in photovoltaic construction that will produce 900,000 kWh of power annually. The park will cut 887 tons of carbon emission, 242 tons of dust emissions, 26.7 tons of sulfide, and 13.4 tons of nitric oxide to achieve synergetic development of intelligent manufacturing and environmental conservation.

A total of 11 subsidiaries of SANY have installed photovoltaic power generation equipment, with clean energy usage amounting to 16.013 million kWh.

SANY is actively engaged in the R&D of hydrogen fuel cell technology to improve battery efficiency, reduce cost, and boost the production and storage capabilities, while expanding the applications of hydrogen energy.

Innovation-driven climate action tackles industry bottlenecks

Through establishing a green supply chain, SANY adopts renewable materials and environmentally friendly technologies to reduce resource waste and improve the sustainability of the supply chain.

SANY continues to improve the long-term mechanism for pollution prevention and control, strengthen the control of waste emissions including water, gas, and other hazardous substances, and be cautious of business and operation actions that could damage the ecological environment. In 2022, the group's wastewater and gas emissions met the standard rate of 100 percent, with a 100 percent compliance rate for hazardous waste disposal.

The group is also pushing for using environment-friendly materials to minimize pollution, so that the carbon reduction throughout the product life cycle also includes materials. In 2022, its VOCs emission density was 0.0011 tons per million revenue, a 39.71 percent reduction from the base year.

Meanwhile, the continuous upgrade of production techniques and processes, promotion of energy conservation technologies, and advancement of low-carbon technology development are not only playing key roles in improving production efficiency, but also reducing carbon footprint and aims to reach the "dual-carbon" goals.

Calling for the public's participation

SANY has been carrying out training programs and campaigns centered on environmental protection for employees, while further raising community engagement in terms of green, low-carbon, community-friendly, and educational innovation agendas. In 2022, the company employees completed 687.4 hours of volunteer work, and SANY invested 9.75 million yuan in the year to support 15 public welfare projects.

SANY Construction Industry is leading the green technology application in urban infrastructure construction to accelerate the sustainable development of cities and building intelligent cities, green transportation systems, and energy-conserving architectures to reduce energy consumption, improving urban environment quality and people's livelihoods.

In terms of biodiversity and sustainable development, SANY emphasizes the conservation of soil, ocean, crops, and animals to create a better future, and advocates a circular economy to decrease the waste of resources.

In the context of increasingly severe issues of global climate change, SANY, as a leader in the green industry, is committed to promoting sustainable development and actively joining global efforts to address climate change through comprehensive initiatives such as green supply chains, green energy, and carbon emission reduction.

For more information about SANY Group, please visit www.sanyglobal.com or follow us on Facebook or YouTube.

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