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AI Powered Enterprise Decisioning on Display at LLamaCon EMEA 2019

By Dr. Madhav Durbha  November 15, 2019

“Decisioning in today’s world is about allocating scarce resources under uncertainty,” said Caspar Berry, a professional poker player and risk expert during his keynote at the just concluded LLamaCon EMEA 2019 held in the historic city of Prague. With that statement, he had the full attention of a roomful of 225 supply chain professionals representing 80 countries and 25 companies! In a world where change is the new constant, uncertainty and risk are the new norms. This is a theme echoed by Slimane Allab, General Manager of LLamasoft EMEA who during his keynote spoke of a company which had a 60 million British pounds impact on its bottom line in preparation for Brexit. This is considering Brexit has not even happened yet!

This just the tip of the iceberg. After investing billions into planning and execution systems in the last two decades, organizations are caught flatfooted in the face of change, said Slimane. Planning and execution systems have a role to play in an enterprise landscape as they help run the business. Ripping and replacing them will not be practical. However, there is an increasing need among organizations for a digital platform that can help drive decisions, optimize and orchestrate policies governing the supply chain. In this context, Slimane elaborated on LLamasoft’s evolution from its roots as a simulation and network design company into an enterprise decisioning company. Vikram Srinivasan, LLamasoft’s Sr.Director of Product Management summed up our product strategy as “Enable decision making that is smart, fast, and available to people throughout the entire organization in a single platform”. An ambitious goal for sure! However, this transformation is already underway (with proof points highlighted during the conference) and is built on the solid foundation of LLamasoft’s expertise in supply chain design.

Let me get to some major takeaways from the event.

1. Zero waste world through creative partnering: Marianne Richeux and Pepa Alvarado of CHEP, a Brambles company, leader in high quality pallets and containers. CHEP’s supply chain is inherently circular as its assets are reusable and shareable. The typical life of a CHEP’s pallet is about 18 years. What this means is that CHEP recovers pallets from its customer sites, bringing them back to a facility to inspect, repair, and reuse. CHEP, in support of it’s Zero Waste World initiative, is engaging in collaborative partnerships with several premier brands, wherein service capabilities are being enabled at/near customer sites to inspect and repair pallets. CHEP is factoring this into its transportation optimization so it can reduce the number of empty miles travelled. This also reduces energy consumption at CHEP’s service centers.

Along the similar lines of using technology to make the world a better place, Moses Muputisi of Global fund shared the work they are doing in underserved parts of the world to eradicate TB, Malaria, and Aids as epidemics. They are optimizing their networks and flows of commodities to bring lifesaving therapies and supplies to those in need of them, reducing waste and product expiry in the process, while being cost-efficient. Their efforts saved 32 million lives to date. Quite an inspiring story. It was a moment of pride for us LLamas at the conference to have played a small part in such a noble mission!

2. A move from IBP to Optimized IBP: Gian Paolo Gandini of Belcorp, a leading global cosmetics company, shared how they are optimizing their Integrated Business Planning (IBP) process. The company is standardizing on SAP IBP for S&OP, master planning, and long term capacity planning. However, Belcorp is augmenting SAP IBP with LLamasoft’s platform with Network Optimization, Inventory Optimization, and Strategic Sourcing Optimization. The company is making needle-moving decisions by identifying savings through changing the glass bottles network and understanding the impact on cost to serve. In the context of sourcing optimization, Gian Paolo shared how they built highly personalized apps with LLamasoft’s platform and deployed them to sourcing professionals as part of their operational workflow.

Richard Mak of Ikea shared how his team is democratizing the sourcing decisions through deploying algorithmic decisioning to several hundred users across the organization. This is helping them drive optimal sourcing, accounting for complex tradeoffs while delivering a fast, efficient and scalable tool to drive decisions around adjusting supplier mix, where to place future volumes, and identify the effectiveness of new supplier base.

3. The transformative power of AI and lowered cost of predictions: Sandra Moran, Chief Marketing Officer of LLamasoft shared the details of the recent acquisition of Opex Analytics which significantly expands the company’s capabilities in AI-powered analytics and enterprise decisioning beyond supply chain. Mike Watson, cofounder of Opex in his keynote, shared his views on the birth of analytics in general with the runaway of success of Thomas Davenport’s 2007 book Competing on Analytics: The New Science of Winning and the current state in light of the emergence of AI. Mike spoke of how Opex is solving real-world problems such as charge back reductions in CPG companies by detecting and predicting service failures, and reverse engineering of Amazon’s ordering logic which can be hard to predict for suppliers. Did I mention Mike is an adjunct professor at Northwestern University? He even mentioned “Random forest quantile regression” in his keynote. Don’t ask me what it is! But it sure sounded cool when he said it. Math is cool after all!

Mike shared that, as the cost of prediction comes down, as it happens with AI, organizations can unlock significant value. The example he gave was an AI algorithm Opex developed which reads through invoices connecting to related order data among others, to catch errors. If a human were to go chasing after every invoicing error of, say, US$25 value, it will cost more to catch errors than the savings this can generate. However, AI can be far more efficient in tasks such as this as the cost of prediction using AI is lower by several orders of magnitude. For all the talk about AI replacing human jobs, this made me reflect that, in this case it is not disintermediating humans. Instead, AI is adding value alongside humans. In his closing keynote, Kevin Overdulve of Deloitte Consulting spoke about how AI is increasing the demand for Cloud computing engineers, cybersecurity experts, UX designers, and of course, data scientists.

Further augmenting the case for AI, Vikram Srinivasan, in his presentation on demand modeling spoke about LLamasoft packaging AI to augment traditional time series forecasting techniques by bringing in external causal data which is increasing forecast accuracy by 15-20% when compared to traditional forecasting techniques.

4. Keys to a successful digital supply chain journey: Carlos Valderrama, SVP of Customer Success at LLamasoft hosted an interactive panel consisting of Richard Mak of IKEA, Jorge Motje of our partner Miebach, Mike Watson of Opex, and Chris Warren of AB InBev. Carlos kept the discussion very engaging and even drew the audience in through an interactive poll. Between the polls and the discussion, here are some takeaways.

  1. Carlos asked the panel to write down just one word that comes to their mind that describes “digital transformation”. The panelists each wrote “Integration”, “Scale”, “Agility”, and “Innovation”. In the interactive poll, majority of the audience wrote “Visibility”, “Speed”, and “Transparency” as the top 3 words. That is 7 different views! Quite a diverse pool indeed. Perhaps digital transformation should be about all of them!
  2. When asked which of these elements is most critical for digitalization among People, Process, Technology, and Strategy, 69% of the audience picked “People” as the most important. It is not that the other three are not important. It is just that people make the other three happen!
  3. The role of a “translator of algorithmic recommendations into business use” will be in high demand in the future. They are the change agents who can make analytics happen as they understand both sides – advanced analytics and business application of the same!
  4. When asked which organizations are implementing AI, 22% of the audience said “Yes”. 54% said “Not right now. But exploring”. No doubt this mix will evolve and will do so rather quickly in favor of AI.
  5. Organizations should take a portfolio approach to AI initiatives rather than betting the house on a single use case. Winners will emerge from such a portfolio approach wherein they can significantly offset the losing propositions in terms of value unlock.

There were so many more engaging sessions that I could have sat in. But I don’t have my digital twin! I had the great pleasure of meeting with 55 of our partners in attendance. A big thanks to these partners who play a significant role in the success of our customers and us!

Sandra Moran, LLamasoft’s Chief Marketing Officer kept the proceedings going injecting great energy, serving as an emcee for the event. So prepared was Sandra that she even had energy shots infused with caffeine and vitamins ready for the morning of the last day of the conference for all the attendees. Of course, it was a good precaution after the previous night’s wonderful Dinner Cruise on the scenic Vltava River for all the attendees, a party that continued late into the night. I was about to take my dose of the shot. But then held back. With such exciting and wonderful content, why would I risk falling asleep!

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