Merck prescribes AI for supply chain complexity

Pharmaceutical company Merck is using AI to manage an increasingly complex supply chain. Merck CIO Alessandro De Luca explains how its prescriptive supply chain system works.

Merck prescribes AI for supply chain complexity

Merck KGaA is using artificial intelligence to better understand how its pharmaceutical products, including fertility and oncology drugs, traverse a network of suppliers and partners that is becoming more complex. It's the latest leg in the German company's journey from reacting to changes in the supply chain to predicting them and prescribing corrective actions, says Alessandro De Luca, CIO of Merck's health-care division.

For companies such as Merck, improving supply chain efficiency by even a single percentage point can add millions of dollars to the bottom line. And, as De Luca tells, Merck’s use of AI in the supply chain is also an example of how intelligent software can help humans make better business decisions.

AI and machine learning (ML) technology are emerging as actionable options for CIOs in industries ranging from retail to industrial manufacturing and consumer packaged goods. While some observers opine that AI will usurp jobs, the technology is augmenting human work in the short term. Spending on AI systems will reach $97.9 billion in 2023, more than two and one half times the $37.5 billion that will be spent in 2019, according to IDC

How AI augments supply chains

Supply chains are particularly rich targets for AI and ML, with companies using the technologies to ensure goods, including raw materials and products, make it to their intended destinations. AI dynamically sources and processes data from many different areas, including contracts and purchase orders, to help enterprises understand current patterns and forecast future demand.

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