By Dr. Todd Carrico
May 2, 2017
Logistics Optimization, typically under the discipline of Operations Research (OR), has been proven to save companies millions of dollars per year by improving various aspects of logistics planning and operations. In today’s dynamic complex, data rich world, new opportunities are emerging to enable Cognitive Logistics Optimization (CLO), taking optimization to new heights through context-aware reasoning and adaptive management enabled by Artificial Intelligence (AI) enhanced optimization techniques.
Despite the power of conventional Business Intelligence (BI) and Enterprise Resource Planning (ERP) systems, the volume of information, complexity of the operating environment, and limited bandwidth of personnel, prevent managers from reacting effectively to issues in a timely manner. The Internet of Things (IoT), Data Warehouses, Big Data, and integrated enterprise systems have made access to enterprise data cheaper and faster than ever before. These advances impact logistics in three major areas of improved knowledge management: real-time position information, accurate and complete asset status information, and timely inventory and demand information. Levering cognitive technologies, CLO will manage complexity more effectively, build better logistics plans, and allow organizations to employ their resources more efficiently.
Cognitive Logistics Optimization (CLO)
CLO utilizes and brings together autonomy capabilities and cognitive computing techniques to enable and support improved situational awareness, automated planning and assessment, and adaptive logistics systems execution management. A supply chain is, in essence, a model of the planned and actual supply, manufacture, storage and distribution of goods and services for an enterprise. CLO supports organizations by providing intelligent decision support that can manage accurate models of the supply chain and generate highly detailed plans, determining the schedules, locations, and resources for all the tasks to be performed while monitoring the movements of assets and commodities. CLO captures this information in a digital living plan, which manages this information and all of its dependencies, and communicates this information to the personnel, robotics, and control systems across the enterprise. In execution, this same plan is used to monitor the various tasks and resources to ensure project or mission objectives are being met according to schedule and constraints. When deviations occur, as they always do, the system determines the impact of the deviation and can generate appropriate options for adjustments and responses, and either performs the fix or coordinates with human operators to obtain a decision. The organization determines the level at which issues and their mitigation decisions are elevated to a human operator. This rapid adjustment is called dynamic replanning.
A key concept of CLO is reasoning in context. Most optimization and planning techniques are highly algorithmic, ignoring the current operating conditions, situational factors, and context of the current logistics activities. When these elements are considered, the outcomes are more informed enabling CLO to generate sets of context-aware recommendations, to ensure the resources are employed more effectively. Environmental factors such as weather, customer relationship, inventory levels, and other elements can impact any logistics operation. Taking these factors in consideration during planning enables incorporation of subtle but cumulatively significant refinements to logistics planning and execution, improving performance and resource utilization, and being able to automatically respond to dynamic changes.
Many organizations have adopted automated data capture through RFID, IoT sensors and devices, as well as satellite/cellular tracking technologies. While timely and accurate capture of data is critical, the value of that data can only be realized if it is used effectively in a timely manner. Historical analysis using BI and other analytic techniques misses the core opportunity to change plans, schedules, and resource allocations in real-time – mitigating issues and addressing shortfalls. CLO supports reasoning over real-time event streams and data streams, processed through a complex event processing engine and AI contextual reasoning, which is then analyzed against the plan to determine if things are on track in space, time and status. CLO systems immediately detect situations where something is late, off track, or degraded, allowing for timely intervention—whether the response is automatic or guided by the logistician or managing organization. The speed of recognition and response in a CLO system thus reduces the downstream impacts on the logistics operations as well as the services and activities they support. Only through real-time data capture and processing can the true value of accurate data be realized. Conventional batch optimization, or human-focused BI tools cannot perform within critical time windows for rapid corrections of emerging problems made evident by Artificial Intelligence empowered real-time data reasoning.
Envisioning Cognitive Logistics Optimization (CLO)
So what does this CLO look like? Imagine a team of logistics specialists working behind the scenes to plan, manage, and report on your logistics operations. This team works 24x7 and has access to a vast amount of historical, open source, and analytic data which helped them reason more effectively about the context. Team members possess a superhuman ability to consume and process that data in real time. This team employs the best in optimization algorithms, artificial intelligence techniques, and statistical analysis; can learn from its operational environment; and can process massive amounts of data every second, without getting overwhelmed.
What makes this team so powerful is that they can reason, plan and execute logistics very efficiently. They can be tailored to different resources, business processes, and environments. Their reasoning, rules, and policies can be tuned to the industry and sector in which they are deployed. The best part of the concept is that this team operates in the cloud, is securely accessible anywhere from any device, and you only pay for the services and resources you need.
The CLO team described is composed of cognitive agents, a specialized class of Artificial Intelligence which emulates human reasoning, operating in the cloud. Organizations can leverage agents to enhance current systems as needed, or utilizing them exclusively for some or all of their logistics planning and operations. The cloud-based cognitive agent services are accessible through clean RESTful interfaces, and include capabilities like:
- Logistics Planning, Optimization & Plan Management
- Resource Allocation & Scheduling
- Route Planning and Management
- Inventory Planning & Management
- Demand Planning & Management
- Personnel Allocation & Scheduling
- Plan Execution Monitoring
- Sensor Data Steam Processing
- Actuator / Device Control & Tasking
Why consider CLO? With CLO, organizations can gain the power of cognitive logistics computing without significant investment in the infrastructure and maintenance costs. Organizations leverage cutting-edge artificial intelligence to improve logistics planning and execution, and will be finally able to use all that IoT and RFID data to improve real-time decision making and improved resource utilization. The reduction in supply chain costs alone allow most organizations to more than cover the costs of migrating to CLO technologies, with secondary benefits of improved customer service, reduced resource demand, right-sized inventories, and cost avoidance on problems dropping right to the bottom line.
CLO has been applied in a number of prototype logistics capabilities developed for the US Army. Two examples are described below, one on Distribution Planning and the second on Supply Chain Vendor Management.
Distribution Planning applies CLO to support optimized planning, scheduling, and routing of supplies using single- and multi-mode transportation of materials, personnel and equipment. CLO looks across organic and commercial resources, optimizing allocation and scheduling of dynamically scheduled resources like Army helicopters, and fixed schedule resources like commercial railcars. CLO factors in all the intermediate tasks like loading, inspections, border crossings, check points, and related support tasks. The underlying digital living plan identifies the schedules, routes, and resources and serves as the basis for monitoring in execution. Resource location tracking provides an event stream for tracking movements, while active and passive RFID provide the means for tracking inventory during processing. CLO also monitors the environment and infrastructure—when problems occur enroute, stakeholders are notified and alternate courses proposed. CLO can monitor hundreds of plans simultaneously, intervening and alerting when deviations occur.
The Supply Chain Vendor Management capability facilitates the management of the multiple tiers of the supply chain suppliers and consumers, understanding aspects of production, cost and risk as changes occur. The underlying knowledge graph, based on the SCOR model, links together detailed information about companies, facilities, parts, end items, contracts, production and delivery schedules, , and other details to form a comprehensive map of an industrial base supply chain. As changes in the environment occur, the knowledge graph analyzes the propagation of the impacts through the supply chain so that second and third order effects can be considered, quantified and addressed. What-if analyses allow planners to explore potential impacts of current or anticipated events, as well as the efficacy of various responses. CLO allows planners to visualize, query, filter, and analyze the supply chain in a multitude of dimensions—allowing them to evaluate production plans, perform budget allocation and production planning, as well as explore contract performance and total cost of ownership. The added visibility, control and analytic reasoning in the context of demand, budget, and production provides a powerful capability to planners and item managers.
CLO represents the next step in efficiency, visibility and control for your logistics operations. If your not already heavily using logistics optimization, CLO provides a means to leapfrog ahead and gain a competitive advantage. To learn more about CLO, and how it might improve your logistics operations, contact our solutions specialist Melvin Sassoon at (703) 506-1700 or firstname.lastname@example.org