The Evolution of Asset Management: Humans, Inventory and the Rise of AI

The Evolution of Asset Management: Humans, Inventory and the Rise of AI

by Jeroen Hendriks, Director at Art of Supply Chain Sdn Bhd

In the ever-evolving landscape of organisational success, the spotlight is now on asset management. This multifaceted discipline encompasses the art of meticulous planning, strategic acquisition, vigilant maintenance, and purposeful disposal of assets, all united in the common cause of propelling an organization towards its objectives. From tangible treasures like inventory and machinery to the more intangible, yet equally valuable, assets such as goodwill and human resources, the spectrum of assets is as diverse as it is vital.

People are the most important assets that a business has. They are the ones who drive innovation, create new products and services and build relationships with customers. However, inventory is also an essential asset for many businesses. Inventory includes the raw materials, work in progress, and finished goods that a business needs to operate.

In this article, we will focus on inventory and people as assets. We will discuss the importance of each asset and the best practices for managing them.

Navigating Risk through Strategic Asset Management Inventory

In the dynamic landscape of modern business, the ability to effectively manage risk is paramount to success. At the heart of this endeavour lies the management of . It’s crucial to understand that the primary purpose of inventory is not merely to store goods, but rather to mitigate risk. Put simply, if there were no risk, there would be no need for inventory.

Pre- and Post-COVID Realities

Before the COVID, the global economic landscape was characterised by decreasing risk, which in turn fuelled the engine of globalization. The period following the Cold War saw the world becoming progressively less risky, enabling businesses to expand operations across borders with relative confidence. However, the onset of the COVID pandemic accelerated a seismic shift in this paradigm. Risk, once calculable and manageable, became enigmatic, leading to inventory levels soaring to unprecedented highs. This marked a turning point in how businesses approach inventory management, emphasizing the need for adaptability and foresight in the face of uncertainty.

Post-COVID Challenges: Elevated Geopolitical, Environmental, and Social Risks

The aftermath of the pandemic has ushered in a new era characterized by heightened risks. Geopolitical tensions, environmental unpredictability, and evolving social dynamics are now significant contributors to the complex web of risks that businesses must navigate. These multifaceted challenges necessitate a reevaluation of how production and inventory are managed. It has become increasingly clear that businesses must adapt to thrive in this new environment.

Relocating Production and Inventory: A Strategic Response to Heightened Risks

In response to the amplified risks, companies are strategically relocating production and inventory to less precarious environments. This shift not only minimizes exposure to geopolitical disruptions but also insulates operations from environmental and social upheavals. By establishing operations in regions with more stable conditions, businesses can better safeguard the continuity of their supply chains.

Specific Risks in the Supply Chain

Within the intricate web of supply chain operations, several risks demand vigilant attention. Cash flow problems, spatial constraints, and less predictable demand are among the most pressing concerns. Recognizing and addressing these risks is crucial to maintaining a robust and sustainable supply chain.

Proactive Solutions for Risk Mitigation

To fortify their supply chains against the tide of uncertainty, companies must implement a multifaceted approach:

  1. Forge Strong Supplier Relationships: Establishing collaborative partnerships with suppliers fosters a sense of shared responsibility for risk management. This collaborative approach enhances the resilience of the entire supply chain.
  2. Leverage Advanced Forecasting Technologies: Incorporating artificial intelligence (AI) and other cutting-edge technologies into forecasting processes empowers companies with unparalleled insights into demand patterns and potential disruptions, enabling more informed decision-making.
  3. Diversify Supplier Base: Relying on a broader array of suppliers helps distribute risk and reduces dependency on a single source. This diversification provides a buffer against supplier-related disruptions
  4. Introduce Substitutes: Identifying and incorporating alternative materials or components can mitigate the impact of shortages or disruptions in the supply chain. Having backup options in place ensures continuity of operations.
  5. Streamline Lead Times: Reducing lead times enhances responsiveness, allowing companies to adapt swiftly to changing market conditions. Shorter lead times enable businesses to navigate uncertainties with agility.
  6. Align Contracts: Ensuring that customer and supplier contracts are well-aligned, with clear terms and contingency plans, provides a solid framework for risk management. Clarity in contracts helps mitigate disputes and facilitates smoother operations.
  7. Optimize Warehouse Systems: Maximizing warehouse efficiency and space utilization minimizes the risk associated with space constraints and enhances overall operational effectiveness. An efficiently managed warehouse is pivotal in maintaining a resilient supply chain.

In this era of heightened uncertainty, companies have the opportunity to not only weather the storm but also to emerge stronger and more resilient. Recognizing the critical role of inventory management in risk mitigation, implementing proactive strategies, and nurturing collaborative relationships are the cornerstones of success. By embracing adaptability and strategic risk management, businesses can confidently navigate the evolving landscape and position themselves for sustained growth and prosperity.

Harmony in Asset Management: Humans and AI Shaping the Future Together

Machines gradually replaced humans in complex tasks, leading to AI and Robotics. As we move forward, human roles in asset management may evolve from indispensable contributors to valued assets within businesses.

Machines: The History of Superseding Human Labor

The advent of machines revolutionized industries across the globe, catalyzing unprecedented progress and efficiency. These mechanical marvels were meticulously designed to perform tasks that were previously the exclusive domain of human hands. From weaving looms to assembly lines, machines introduced a paradigm shift in productivity, forever altering the economic landscape. Their tireless precision and tireless output made them invaluable assets to businesses seeking to maximize profits while minimizing human error.

The Limitations of Machines: Creativity, Learning, and Decision-Making

However, despite their remarkable efficacy, machines were inherently limited by their inability to replicate certain facets of human cognition. Creativity, the spark that ignites innovation and drives progress, remained firmly within the domain of human consciousness. Learning, the capacity to adapt, evolve, and acquire new skills, was an attribute that eluded even the most advanced machinery. Decision-making, a complex amalgamation of intuition, experience, and emotional intelligence, remained a quintessential human trait. It became evident that while machines were invaluable for routine tasks, they could not rival humans in the realms of creativity, learning, and nuanced decision-making.

The Emergence of AI and Robotics

Enter the era of Artificial Intelligence and Robotics – a monumental leap in technological evolution. With the ability to process vast quantities of intricate information, AI and Robotics have transcended the boundaries of conventional machinery. They are now poised to undertake complex jobs that require not only processing power but also the capacity for creativity, learning, and nuanced decision-making. Industries such as finance, healthcare, and logistics are witnessing a paradigm shift, with AI-powered algorithms and robots assuming roles that were once considered the exclusive purview of human expertise.

Advantages and Disadvantages: Humans vs. AI and Robotics

The interplay between humans and AI-powered robotics has become a pivotal topic of discussion. Each brings a unique set of strengths and weaknesses to the table, shaping the landscape of decision-making and innovation in this field.

The integration of AI and Robotics into asset management represents a paradigm shift in the way businesses operate. While machines excel in processing power and efficiency, humans retain an indispensable role in driving creativity, learning, and nuanced decision-making. The future lies in a symbiotic relationship, where humans and machines complement each other’s strengths, creating a dynamic and resilient asset management ecosystem. As we navigate this evolving landscape, it is imperative to harness the unique capabilities of both humans and AI to ensure optimal outcomes for businesses and society at large.

About the Author

Jeroen Hendriks
Director
Art of Supply Chain Sdn Bhd

Jeroen Hendriks is Director at Art of Supply Chain Sdn Bhd, a consultancy company focusing on supply chain operations, based in Malaysia.

Art of Supply Chain offers everything you need to tackle your supply chain problems right, the first time, by improving operations quality through Lean Six Sigma, managing projects effectively and efficiently, and advising customers on technological advancements to stay ahead of the competition.