Expert Insight

By Karen Butner
Global Supply Chain Management Leader

IBM Institute for Business Value

Date: May 20, 2011

Supply Chain Comment: How Watson Could help Supply Chain Management Operations

Jeopardy! Champion Can Help Supply Chain Managers Gain Meaningful Insights From Massive Amounts of Unstructured Data

Anyone watching Watson's victorious performance on Jeopardy! couldn't help but be wowed by the machine's ability to answer really difficult questions on many different subjects. And global supply chain executives-- who must simultaneously manage a myriad of issues ranging from customer demand variations to logistical constraints as part of their daily routine -- undoubtedly took note of Watson's prowess.

Watson represents a major breakthrough in using computers to answer questions posed in natural language on a virtually unlimited range of subjects. Developed by a team of IBM scientists, Watson can quickly, accurately and confidently answer complex questions using advanced analytics and scoring algorithms, all of which could bring tremendous benefits to supply chain management operations.

During its Jeopardy! matches Watson analyzed ”clues” to comprehend their meaning. Then it pored through the equivalent of roughly 200 million pages of natural language content contained in its memory (sort of like reading a million 200-page books in a couple seconds) to find the correct answer.

What Watson represents for SCM is the ability to gain meaningful insights from massive amounts of unstructured data. Watson demonstrates in dramatic fashion how advanced analytics can be applied in creative new ways, beyond traditional data warehousing or business intelligence and data mining. Watson can deliver faster, deeper insights into unstructured data (such as the burgeoning social mediasphere) and human language text. As such, it holds enormous potential to transform how computers help people accomplish tasks in business, communities and their personal lives.

In the world of SCM, Watson's speed and analytics skills could go a long way in helping executives address their current challenges. According to IBM's most recent SCM study, which surveyed and interviewed 664 supply chain management executives across 29 countries, the three biggest challenges they're wrestling with today are:

  • Volatility – global complexities, market shifts, and the resulting fluctuations in customer demand
  • Visibility -lack of access to timely, worldwide information to make in-stream decisions – fast!
  • Value - the constant pressure to create value for the enterprise through end-to-end supply chain cost efficiencies and pipeline inventory optimization

A Tremendous Asset To Supply Chain Professionals

Watson-like technology could be a tremendous asset to SCM professionals in a number of ways. Imagine Watson as:

Supply Chain Synchronizer -- SCM execs could more easily achieve the intricate synchronization of supply and demand by integrating Watson-like technology in an intelligent network. If the system could read a million books in a couple seconds, imagine how quickly it could gather information across all of the supply chain functions (planning, forecasting, scheduling, sourcing, transportation, manufacturing, distribution, inventory management, customer order fulfillment). Make-to-order would take on a whole new meaning and just-in-time deliveries would be a way of life for all industries.

It could also tap market intelligence, advanced analytics and varied customer communications and comments/sentiments from the social media sphere and be “at the ready” with answers to SCM executives’ broad-ranging queries as they try to preemptively identify potential fluctuations in consumer demand.

Product Lifecycle Lifeguard -- As product lifecycle traceability grows as a concern for many industries, imagine how easily Watson could track the information gleaned from smart devices as they tag products throughout the supply chain, as well as the containers and modes that are transporting them. Keeping its figurative finger on the pulse of RFID, GPS, sensors and actuators at all times, and blending this data stream with predictive planning and actual transactions (orders, inventory, shipments) should pose no problem for Watson. And it would be a reassuring source of information for SCM management.

Sustainability Savant -- Watson's analytics and modeling prowess could be used to evaluate inventories at all phases, from earth (raw material), to consumption, to afterlife... to achieve best inventory position and levels, while managing its effects on the environment. In addition to focusing on the distribution network, Watson could help provide advice on strategic sourcing concerns which are growing in importance as SCM managers design their networks for sustainability.

Advisor on Cost-Efficient Practices

Watson could also provide advice on cost-efficient sustainability practices. Imagine having all this computing power and resources at your fingertips as you evaluate the trade offs of the carbon footprint, energy and water usage in creating, shipping or disposing of products.

Risk Ranger -- Watson could also flex its modeling capabilities to provide SCM executives and managers with probability-adjusted risk assessments for risk avoidance. Dealing with day-to-day interruptions and disruptions is an increasing concern in today’s global marketplace. Watson could quickly assimilate important weather or newsroom developments to make recommendations for alternative sources of supply, transportation and routing.

Cost/Constraint Counselor -- Here’s where Watson could really shine. With its instantaneous ability to provide “What-If” modeling scenarios, SCM managers could tap Watson to determine optimal pipeline inventory levels, and determine whether to partner or outsource to benefit from flexibility, scale and skills. SCM executives could "converse" with Watson to quickly and easily evaluate the myriad of trade-offs of cost with other constraints. They could select the best variable cost structures to enhance their supply chain networks and create cost-efficient sustainable products and practices while hedging risks with partners.

In addition to being able to analyze tremendous amounts of data in record time, when Watson provides answers to questions it actually provides a number of answers along with a confidence ranking for each answer. Having access to this type of data will go a long way to help alleviate SCM managers’s concerns over major shifts in demand variability and the associated impact on supply, distribution, and financial streams. Not to mention, the impact on customer service.

Final Thoughts

Today’s modern supply chains are incredibly complex and the demands of business just keep getting tougher. The capability that Watson could bring to this to this no-nonsense environment would provide huge competitive advantages for SCM executives who are looking to better understand their customers, gain greater supply chain visibility and exploit global efficiencies in ways that create value for their enterprise.

Agree or disagree with with our guest contributor's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

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About the Author

Karen Butner serves as the Global Supply Chain Management Leader for the IBM Institute for Business Value. She is responsible for research and development of IBM’s thought leadership strategies, perspectives and associated collateral encompassing global supply chain management trends.

Additionally, Ms. Butner directs the development and deployment of the Supply Chain Management Global Solutions Portfolio – a collection of leading, integrated end-to-end business, technology and organizational solutions to support IBM’s broad and diversified, multi-industry client base.

She served as a major author and editor-in-chief for a book published in 2006 entitled: “Reshaping Supply Chain Management: Vision and Realty”, of which over 35,000 copies have distributed.

She has over 25 years of experience in supply chain management business practices and strategies. Her concentration has been to assist clients in the high technology, retail and consumer products, electronics, and transportation logistics industries develop strategies and improvement agendas to bring significant value in transforming their global supply chain performance.

Butner Says:

In the world of SCM, Watson's speed and analytics skills could go a long way in helping executives address their current challenges.

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