Blue Yonder: Value of AI-Powered Cognitive Demand Planning
The EV automotive transition is underway, with leading manufacturers from Porsche to Toyota to General Motors refining their lineup and technologies.
The journey to a sustainable future has been a bumpy one, with a myriad of challenges. Some of the most prominent challenges are faced by automotive demand planning teams, according to Salim Shaikh, Corporate Vice President of Industry Strategy at Blue Yonder. In his blog 'Automakers, it's Time to Check Under the Hood of Your Demand Planning Solution' he elaborates further.
"It’s difficult to get the product mix right — across EVs, ICEs and hybrids — by channel and region," he says.
"To add to this complexity, today’s consumers are demanding and craving product customisation. As smart features, electric powertrains and hybrid models continue to emerge, and as new options constantly become available, this trend is expected to grow."
The growth in choice makes it difficult for automakers to predict which configurations will align with market demand.
Often this results in the overproduction of specific vehicles and options, which are then left to sit unsold in warehouses and at dealerships before being sold for unprofitable discounts.
"In addition, consumer preferences and demand vary greatly across global markets," Salim continues.
"Getting the mix wrong can lead to excessive, aging inventory on the one hand and missed sales opportunities on the other. OEMs that can accurately assess consumer needs and adapt their supply chains accordingly will be the ones to remain profitable."
Additionally, automotive manufacturers must invest in new plants, technologies and delivery channels to support diverse consumer needs and models, according to Salim. There's no guarantee such investments will pay off.
Investments which are being made as these manufacturers continue to navigate the long-term consequences caused by the global chip shortage.
"While the global chip shortage is firmly in the rearview mirror, automakers still face supply shortages, in part due to the large component inventories needed to simultaneously produce EVs, ICEs and hybrid models," Salim explains.
"When production is stalled because of parts shortages, manufacturers lose margins, sales and customer loyalty."
So, what is needed to tackle these shortages and ensure that investment pays off? Comprehensive supply chain planning, and the ability to predict demand across all models, channels and resources.
What do automotive manufacturers currently have? Outdated solutions that aren't up to scratch, according to Salim.
For a solution to be up to scratch in todays automotive landscape it needs to 'run on all cylinders', integrating industry 4.0 technologies like AI.
Blue Yonder's Cognitive Demand Planning solution highlights the importance of this.
The importance of AI to demand forecasting
"To keep pace with all the changes in the marketplace, while also identifying and managing disruptions, automotive planners need an advanced solution, enabled by artificial intelligence," says Salim.
"The ideal solution would go beyond human cognition and manual analysis, to ingest large volumes of near real-time demand data — as well as consider key economic data like the consumer price index (CPI), inflation, the gross domestic product (GDP), interest rates, fuel prices and housing starts.
"Then it would leverage advanced data science and predictive analytics to arrive at accurate demand forecasts. The resulting forecasts would also be dynamic, not static, in nature to stay aligned with actual market needs even as conditions shift."
Salim goes on to say that the ideal solution would manage complexity across all regions, channels and models to ensure products are in the right place at the right time.
"The ideal solution would not only leverage advanced artificial intelligence (AI) and data science, but also machine learning (ML), cloud computing and predictive analytics to compress the time horizon between planning and decisions from days to minutes," he adds.
"In defining forecasts, it would run hundreds of what-if simulations quickly, to understand and predict the impact of real-world demand-driving variables. This powerful solution would autonomously make optimal recommendations, enabling an unprecedented level of decision-making speed, responsiveness and agility."
Blue Yonder's Cognitive Demand Planning fits this description.
Powered by AI, the innovative planning solution has three key functionalities that help automotive manufacturers better predict and respond to changing market demand
The three key features of Blue Yonder Cognitive Demand Planning
1. Superior scenario planning
With Blue Yonder's solution, demand planning teams can digitally embed, improve and track assumptions, identifying the variables that shape demand outcomes.
Using AI multiple scenarios can be created, tested and run, helping teams arrive at actionable plans faster and more effectively. This fosters continuous planning and updates, compressing typical daily or weekly cycles to mere minutes.
2. Real-time data analysis
By using advanced ML and statistical models, Blue Yonder's Cognitive Demand Planning allows automotive manufacturers to accurately forecast demand across a diversity of regions, products and channels.
As conditions change, these forecasts can be dynamically adjusted. The solution takes into account a myriad of demand-driving variables and causal factors like inflation, interest rates, GDP and fuel prices to produce accurate forecasts and collate demand and risk assumptions.
3. Planning all in once place
This innovative solution replaces siloed decision processes and tools with collaborative, comprehensive planning and scenario modeling.
By enhancing supply chain visibility production and demand is aligned across global markets, with users leveraging a single, shared and up-to-date data model.
Automotive manufacturers who use Blue Yonder Cognitive Demand Planning therefore have access to the most accurate information available to make superior decisions.
Blue Yonder asserts that it's time for demand planners to make a change.
As EV's transform mobility, AI-enabled Cognitive Demand Planning is restructuring forecasting and automotive manufacturers must embrace both changes.
Leading automotive manufacturers are already leveraging solutions like Blue Yonder's to staggering effect, leading to better investments and product mixes across operations.
Superior demand forecasting translates into increased revenue and customer satisfaction, bringing automakers closer to the people and trends who determine the future of the industry.
This is a sizeable asset in an age of marked uncertainty, opportunity and challenge.
“ Automotive supply chains face significant challenges due to shifting customer preferences, inventory shortages and higher costs due to new technology investments, driving the need for more comprehensive, agile demand planning,” says Charlotte Diener, Marketing Director at Blue Yonder.
“Blue Yonder’s Cognitive Demand Planning uses AI and ML to deliver advanced analytics, real-time simulation, and integrated collaboration, helping predict demand, optimise product placement and manage uncertainty.”
For automotive manufacturers seeking to manage that uncertainty and maximise results, Blue Yonder may have just the solution.
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