Supply Chain World - Fall 2017 - 22

S&OP INNOVATION SUMMIT

Access to big data will allow AI to
anticipate supply chain risks and
recommend solutions before a
disruption occurs.

Weather
One of the greatest risks to supply chains
is the weather. Weather has an impact
on everything from farming to transportation, causing spikes in demand for
specific products that must be anticipated and supplied for and unplanned
downtime that is extremely expensive.
Heat waves and drought in Russia in
2010, for example, resulted in economic
losses of $15 billion. In a recent survey of
supply chain professionals by the U.K.
Met Office, however, just 16 percent said
they use commercial weather data. The
results they achieve are persuasive, with
57 percent of those that use paid-for
data saying they had better sales forecast
accuracy, 51 percent that they had better
on-shelf availability and 43 percent that
they had reduced waste.
Last year, IBM acquired The Weather
22

Supply Chain World FALL 2017

Company to make the best use of this
data, applying cognitive technology to it
for optimal forecasting. Together, IBM
and The Weather Company developed
Deep Thunder, a hyper-local forecasting
tool for business customers. Deep Thunder processes more than 100 terabytes
of third-party weather and location data
a day taken from hundreds of weather
stations, combining this with real-time
news information streamed from social
feeds and news reports, as well as historical weather data. They then apply forecasting models and machine learning
algorithms from its Watson program to
the data sets to discover insights.
These systems produce far more
reliable weather forecasts, including the
kind of location-specific information
about impacts of storms, hurricanes and
typhoons that is vital for supply chains

to know. IBM sends the information to
its own supply chain managers, as well
as enterprises which they can leverage
to better anticipate extreme weather.
Machine learning not only identifies
patterns that indicate risk, it can also
recommend mitigating actions by examining previous responses to similar situations and identifying which were most
successful. The rise of AI is enabling a
future in which a supply chain will be a
dynamic organism able to adapt rapidly
to a constantly changing environment,
identifying risks and offering solutions
to deal with them in near real-time,
which will lead to a more efficient, safer,
cost-effective supply chain.
James Ovenden is a senior editor at Innovation

Enterprise. He is a former supply chain manager and has
written for a number of leading tech publications.



Table of Contents for the Digital Edition of Supply Chain World - Fall 2017

Contents
Supply Chain World - Fall 2017 - Cover1
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