Is AI Really more profound than fire or electricity ? A Supply Chain Perspective

If you follow trends and news in the AI world, specifically those recently coming out of Davos, you may have read about this:

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I interviewed for a Podcast recently where the interviewer asked me a question – “From a Supply Chain lens- Do you tend to agree with this statement from Google’s CEO ?”. An excerpt of my answer can be found on my video channel on YouTube but this post will covers my detailed opinion. The podcast will be published next month.

Were Fire and Electricity really profound ?

Well…there is not much documentation about how humans reacted when Fire was discovered 😁 But here is my take on electricity.

The discovery of electricity and the ability to harness its power , both in its generation and transmission of power, and the ability to use it, had enormous effects in virtually every direction. It was a time of great change, complexity, chaos and vast disagreements.

In business and factories, there was a  spectrum of companies operating with electricity being used in vastly different ways. Some businesses changed nothing, stubbornly refusing to see any benefits. Others made tiny changes, alterations at the periphery  of what was done before. Yet, others made large changes, embracing the potential of what was possible.

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From an Industrial adoption perspective, the world of business did not adopt electricity for a long time. By 1899, some 18 years after the introduction of the Edison Central; Generating station, still only 5 percent of the power used in factories was electrically supplied.

The gist is – It tool almost half a century for Electrical motors to become the new normal in factories (it happened after the Group drives became industrialized and electric motors became cheap). Yet, no organization became defunct because they did not switch to Electrical drives soon.

Though an important landmark in technical progress of Humanity, Electricity was not maybe profound but not Disruptive

And this brings us to the crux of Sunder’s statement – AI is more disruptive

What Sunder meant is that unlike Electricity – Organizations do not have the bandwidth to ponder about whether they need to leverage AI or wait to see if how things will play out. Unfortunately, that is the trend that we keep on seeing these days – Senior executives are still on the fence about whether to make large scale commitments in AI enabled enterprise projects.

Why AI is not like previous tech hype cycles

Senior executives have sen many hype cycles over their careers spanning decades. Most of the technologies in these hype cycles were much like electricity (Think about TMS, SCND etc.)- if you adapted late, you may end up losing some operational efficiencies, but it did not allowed your competitor to develop a capability that would have altered the competition in their favor forever.

While there are numerous advanced analytics benefits that AI offers in the Supply Chain world, on data generated by existing processes and methodologies, that is not what is the “Profound” part.

AI is profound since it can allow you to develop new solutions, services and operating models

Unlike electricity, AI and associated Industry 4.0 technologies allow you to create new business models altogether- whether it is Blockchain and 3D printing enabled manufacturing or creating new IIoT enabled Smart products or services. Leveraging Smart Warehouse planning algorithms can allow some high volume companies to eliminate 20% of their warehouse network footprint, giving them an opportunity to work with a completely new type of Supply Chain Network configuration. The gist is:

Once your competitor develops the capabilities like those mentioned above, their competitive advantage will grow exponentially (the typical growth pattern of disruptive tech and models) thereby creating a scenario where you may never be able to catch up.

So AI is definitely profound in terms of capabilities that it can generate. These capabilities will not get developed overnight but then you also can’t get to the point where it provides new capability overnight as well. What this means is that you need to start your journey with fundamental AI capabilities to get to a point where you can transform them into capability building tools.


 

Views my Own.

 

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