Supply Chain science and tech
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Supply Chain is not Logistics - Ep 166
Conor Doherty and Joannes Vermorel delve into the distinctions between supply chain and logistics, with supply chain a decision-making process and logistics a decision-execution one.
ISF2024 Panel: Demand Planning & Human Judgement in the World of AI
At the 44th International Symposium on Forecasting, Lokad's Conor Doherty and Alexey Tikhonov joined a panel discussion on "Demand Planning and the Role of Judgment in the New World of AI/ML".
Quality-Cost Dilemma in Supply Chain - Ep 160
In a dialogue with Lokad's Head of Communication, Conor Doherty, Lokad CEO Joannes Vermorel discusses the quality-cost ratio in supply chain management. Vermorel emphasizes that quality refers to decision-making, not product attributes, and that client-perceived quality may not align with optimal supply decisions due to cost. He criticizes traditional KPIs, arguing they don't reflect genuine quality. Vermorel also discusses the role of Large Language Models (LLMs) in supply chain management, noting they can lead to smarter decisions but can inflate IT budgets. He suggests the quality-cost dilemma is a meta game, requiring software engineering to solve supply chain problems and assess trade-offs.
AI Pilots in Supply Chain - Ep 159
In a dialogue between Lokad's CEO Joannes Vermorel and Head of Communication Conor Doherty, they discuss the impact of AI on supply chain management. Vermorel highlights the advancements in AI and large language models, which have revolutionized task automation. He introduces AI Pilots, a Lokad offering that automates decision-making and clerical tasks, facilitated by Lokad's proprietary programming language, Envision. Vermorel also discusses the potential of AI to automate tasks related to Master data and contrasts Lokad's approach with competitors. He predicts that AI Pilots will become the norm in supply chain management, leading to significant productivity improvements. The conversation concludes with a Q&A session.
Rethinking S&OP (The Future of Supply Chain) - Ep 158
Lokad CEO Joannes Vermorel critiques the Sales and Operation Planning (S&OP) process as outdated and inefficient for modern businesses. He argues that S&OP, designed for simpler times, struggles to keep pace with today's complex, fast-moving business environment. Vermorel criticizes the process' slow refresh rate, its reliance on meetings and spreadsheets, and its focus on unified forecasts. He suggests that large companies should eliminate their S&OP divisions, likening them to obsolete fax machines. Instead, he proposes a shift towards improving access to information, transforming S&OP teams into data lake teams.
Stocks are not in your control - Ep 157
In this LokadTV eposide, Conor Doherty interviewed Joannes Vermorel on inventory planning misconceptions. Vermorel dismantled the fallacy that stock levels are a direct lever for client satisfaction and profitability. He argued that companies should focus on serving clients profitably, not on the illusion of stock control. Vermorel criticized simplistic inventory policies like min-max, stressing that stock levels are influenced by myriad factors beyond direct control. He advocated for prioritizing quality supply chain decisions over stock level targets, which often fail to account for dynamic business realities. The conversation highlighted the need for a nuanced approach to supply chain management, emphasizing decision control over uncontrollable outcomes.
Stochastic Optimization of Supply Chain Decisions - Ep 156
In a discussion between Lokad's CEO, Joannes Vermorel, and Head of Communication, Conor Doherty, the importance of stochastic optimization and probabilistic forecasting in supply chain management is emphasized. Vermorel explains the concept of stochasticity, where the loss function is uncertain, a common occurrence in supply chain scenarios. He outlines the three ingredients of mathematical optimization':' variables, constraints, and the loss function, and explains that in stochastic optimization, the loss function is not deterministic but randomized. Vermorel also discusses the scalability issues of mathematical optimization techniques for supply chain, which have been a roadblock for four decades. He concludes by emphasizing that stochastic optimization is a crucial aspect often overlooked in supply chain textbooks.
Traditional Jobs vs AI in Supply Chain - Ep 155
In a conversation between Conor Doherty and Joannes Vermorel of Lokad, Vermorel predicts that Artificial Intelligence (AI) will lead to a mass extinction of back office white-collar jobs by 2030, much sooner than previous predictions. He attributes this to the success of Large Language Models (LLMs), which he believes will impact all back office jobs, particularly in supply chains. Vermorel argues that the goal should be complete automation for repetitive jobs, unlocking significant productivity improvements. He predicts that many companies will start removing people from these positions within months. Vermorel suggests that tasks requiring high-level human intelligence, such as strategic decisions, are still beyond the capabilities of LLMs.
RFP Madness - Ep 154
Joannes Vermorel challenges the conventional wisdom of procurement processes, questioning the necessity of RFIs, RFPs, and RFQs. He argues these documents are more habitual than essential, suggesting that procurement involves both indispensable and arbitrary steps.
The Role of Scarcity in Supply Chain
In a dialogue with Conor Doherty, Joannes Vermorel, founder of Lokad, criticizes mainstream supply chain theory for overlooking resource scarcity and alternative uses. Joannes Vermorel argues that traditional theory assumes a known future, eliminating the need for resource allocation decisions. He emphasizes the importance of time in supply chain management, stating that no resource is truly scarce given enough time. Joannes Vermorel also criticizes the mainstream view for ignoring the complexities of allocation decisions and the importance of financial assessments. He suggests that supply chain optimization should involve probabilistic forecasting and stochastic optimization, assessing all possible futures and making decisions based on expected returns.