Robert Kugel's Analyst Perspectives

Oracle announced significant updates to its Fusion Cloud Supply Chain & Manufacturing (SCM) software at the recently held Oracle Cloud World. The application suite includes procurement, inventory management, warehouse management, order management and transportation management. SCM tasks are mostly small-scale and repetitive, yet the processes they support are far from simple. They involve the intricate choreography of often complex activities that require the accurate communication and transmission of bucketloads of data. Far from static, supply chain managers must constantly adjust to changing market conditions and prices, as well as adapt to unforecastable disruptions. There is a lot of manual effort involved, and historically users have had to contend with applications sporting “w” (user-unfriendly) interfaces and fragmented systems. For these reasons, SCM is a corporate function ripe for applying artificial intelligence (AI) and generative AI (GenAI) to achieve significant improvements in productivity. Supply chain management is also an area where ISG Research finds a high propensity for enterprises to spend on AI, coming in second behind sales performance management in terms of an average acceptable price per seat increase.

The key product enhancement announcements for Oracle’s Fusion Cloud Supply Chain Management include:

• User experience enhancements that simplify layouts, improve visibility and accelerate supply chain processes.
• A Production Supervisor Workbench that provides real-time views and analysis of work orders, as well as GenAI-powered end-of-shift reporting designed to improve productivity while accurately communicating hand-offs to enhance manufacturing performance.
• A Maintenance Supervisor Workbench that can resolve maintenance issues faster by offering a single view for scheduling and real-time alerts on critical issues as they develop, to achieve greater agility.
• New order management capabilities designed to achieve productivity gains by streamlining creation and retrieval of orders, including the ability to perform mass actions, employ AI-powered order acknowledgements and change history notes. By automating routine inventory tasks, enterprises can dynamically adjust safety stock levels based on real-time data and demand variability.
• Product Lifecycle Management (PLM) enhancements designed to accelerate product development with updated search capabilities, a new item catalog page and improved supplier and component visibility.

Like most SCM software providers, AI and GenAI have a prominent place on Oracle’s product roadmap because of the technology’s potential to improve performance and lower costs. For example, in demand planning, predictive analytics can be applied to use historical sales data, market trends and seasonal patterns to predict future demand with greater accuracy and reduced bias. Accuracy can be improved significantly by incorporating external data such as GDP, industry data (for example, building permits or class 8 truck sales) and leading indicators. Predictive analytics also can be used to signal when forecasts or forecast components diverge from plan, allowing enterprises to react to changing circumstances sooner and with greater accuracy and coordination. This helps them maintain optimal inventory levels, reducing costs as well as the risk of overstocking or stockouts. GenAI can be used to accelerate the creation of detailed emails and detailed notes for records. We assert that by 2027, almost all SCM software providers will incorporate GenAI for classifying and summarizing textual data to boost productivity and speed response times.

The company also announced the introduction of sets of AI agents which are designed to execute repetitive tasks end-to-end, enhancing responsiveness, boosting staff productivity and potentially increasing agility. For SCM, these include a customer sales agent that addresses the increasing demand for competent and personalized self-service capabilities. It provides a better experience in dealing with order queries, especially in dealing with product defects and shipping delays, as well as automating customer notifications related to their orders. Another agent handles notifications for necessary maintenance, the handling of repairs and recommended troubleshooting actions based on equipment maintenance manuals.

As they roll out initiatives, possibly the greatest challenge enterprises are likely to face in implementing AI is data. The quality, quantity and ease of use of the data needed to train models is a determining factor. An attractive element of Oracle’s SCM application is the company’s data management strategy, which incorporates several core elements to support the capabilities of its application, especially AI and GenAI.

Oracle’s Enterprise Data Management (EDM) provides a foundation to manage master data, adapt to changes and ensure data consistency. It can do this across an array of applications and data sources. Especially important these days, it supports multi-cloud and hybrid environments to enable the integration of new applications with legacy systems. Oracle offers strong data governance to promote data integrity and security, including setting permissions, enforcing policies, and auditing data changes to comply with internal and external regulations. In line with our concept of the data pantry, the systems can unify data from disparate sources.

SCM is at the early stage of a thorough transformation where AI-enabled software increasingly will boost staff productivity, enable more management by exception and in so doing make enterprises more efficient, provide more ways to differentiate products and services, and become more adaptable and agile. I recommend that supply chain executives assess their existing software infrastructure and processes and create an internal strategy and roadmap for adopting AI and GenAI. For many, this will mean moving their applications to the cloud to take advantage of AI-enabled SCM applications. When they do, I recommend they include Oracle Fusion Cloud SCM in their list of providers for consideration.

Regards,

Robert Kugel