The COO’s Guide to AI: Efficiency, Cost Savings, and Competitive Growth

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As a COO, you have the power to transform your supply chain from end to end. Think about the issues that keep you up at night: delays, high costs, inefficiencies, stockouts… These common challenges that disrupt your operations could be minimized!

According to the GEODIS Supply Chain Worldwide Survey, supply chain productivity is currently the third most important strategic priority for companies. The reason is simple: 79% of companies with efficient supply chains report revenue growth above the industry average. Additionally, companies with optimized supply chains reduce production costs by 15%, cut dormant stock by 50%, and have cash cycles three times faster. In fact, AI-powered supply chains are now 67% more efficient than those without.

So, shouldn’t all manufacturing companies already be using available technology to optimize their supply chains? Believe it or not, 67.4% of supply chain managers still rely on Excel spreadsheets for operations management.

What are we talking about?

What is supply chain optimization?

Supply chain optimization involves improving production flow to increase efficiency and reduce costs, focusing on supplier management, inventory, and logistics.

Why is this crucial?

• Logistics costs make up 25% to 45% of a company’s total costs, depending on the industry. Optimizing these can have a direct and significant impact on profitability.
• Supply chain disruptions are a financial burden costing organizations an average of $184 million USD per year globally. In Canada, over $10 billion in sales were lost due to these interruptions.

With these figures in mind, as a COO, it’s essential to consider the technologies available to your company. AI-powered inventory and operations optimization tools will undoubtedly be among the most adopted technologies in the next five years.

Case Study:

How AI Transformed Planning for a Manufacturing Company

Take the example of a manufacturing company specializing in the design, manufacturing, and installation of custom cabinets for kitchens and bathrooms. To keep operations flowing in the highly variable construction industry, two employees previously dedicated full-time hours to planning using Excel files.

Imagine reducing planning time from 50 hours to 12 hours per week thanks to AI…

Since implementing AI in planning, operations are optimally scheduled based on various milestones: the timing for on-site measurements, production, delivery, and installation. With the same workforce, the company increased its operational capacity, enabling it to accept and complete 5% more projects each month.

No matter the industry, countless opportunities exist to apply AI in processes, from planning to customer service, manufacturing to transportation.

Vooban’s Perspective:

Two Priorities for an Efficient Supply Chain in 2024

Enhance Visibility

Imagine an apparel company receiving a massive order right before the holidays. Without clear inventory and delivery timeline visibility, it risks missing sales opportunities or, conversely, spending enormous amounts to store excess stock.

Flip Design now uses AI to predict demand and anticipate sales up to 12 months in advance, accounting for seasonal changes. Thanks to this technology, they’ve optimized inventory levels, reducing storage costs and potential losses. AI enables them to maximize sales while minimizing expenses.

Reduce Costs

Logistics companies often face high transportation costs due to the geographic dispersion of clients and inefficient routes. Without route optimization, expenses can quickly spiral.

One of our clients integrated AI to optimize delivery routes and anticipate short- and long-term demand. The result: more precise planning, a more efficient supply chain, and significant operational cost reduction. This company improved forecast accuracy by 80%, allowing them to handle 10 million packages per year while minimizing expenses and accepting more clients.

Think Big, Start Small, Go Fast

By focusing on improving visibility and reducing costs, companies can not only survive but thrive in an increasingly complex and uncertain environment.

It’s important to start now and stop waiting. These priorities aren’t just trends; they’re necessities. A DHL study revealed that companies with agile supply chains are 60% more likely to overcome major disruptions.

Are you ready to take the leap? Contact us today to explore how AI can revolutionize your supply chain.