Information management & technology

Are chatbots taking over S&OP and IBP consultancy?

By Freek Aertsen | March 2, 2023 | 4 min read
On a nice Monday morning a freshly graduated new colleague entered our New York office. Having studied at one of the most prestigious universities he immediately started to challenge the status quo. After some initial talks our new colleague asked why S&OP and IBP consultancy would remain relevant now that AI and machines are taking over the world? Let’s answer this question by putting the currently trending chatbot ChatGPT to the test.  

S&OP and IBP knowledge 

S&OP (sales and operation planning) and IBP (integrated business planning) have become important tools for companies to balance demand and supply, improve forecasting accuracy, and increase efficiency in their operations. The tools are both demand and supply planning processes. Where S&OP has a primary focus on aligning demand and supply volumes at the aggregate level, IBP extends this focus to incorporate a more comprehensive view of the business, including financial, customer, and operational aspects. It connects strategy with operations and is driven by business leaders. Furthermore, S&OP and IBP knowledge and information, education, and skills are widely available and accessible to everyone, regardless of their background or socio-economic status. 

Testing ChatGPT

To figure out if AI is actually taking over S&OP and IBP consultancy, together with Ieke le Blanc and Joost Rongen, who, like me,  have a long-standing experience in implementing S&OP and IBP processes at a wide variety of companies from different industries, I have gathered 100+ frequently asked questions that emerged during these implementations. We used these to put ChatGPT to the test. After reviewing the answers provided by ChatGPT as S&OP experts, we conclude that the answers are okay.  Some are off where others are spot-on. If we scored them like a student exam averaging the thumbs-up and thumbs-down per question, the grade would be a 7 out of 10 possible points. Not a top-level student yet, but for sure a pass.

Asking the right questions

Looking back at this study, a couple of other points stand out. Asking the right question is extremely important. The ‘machine’ must be fed with the right context. For example, “how to forecast for a retail company” instead of “how to forecast” . And even then, the context remains challenging. The answers are mostly generic but can be made more specific by adding the correct next question. The quality of the answers gradually improved after having asked several, slightly different questions on the same topic. So, the human interaction with ChatGPT improves the outcomes. This requires quite some domain knowledge. WAs experts, we can assess the quality of an answer and implement it correctly in real life. But what if a less knowledgeable person starts working with these incomplete or inapplicable answers?

ChatGPT is right, but …

In general, ChatGPT will give you the right answers but will not deliver you the right implementation approach. It gives you the steps to take, but not how to take them. This strengthened us in our belief that it is not the knowledge but, how to apply it, to really make a difference. This requires quite some human creativity, sensitivity, and compassion.

Smarter by the day

The good thing is that AI algorithms get smarter by the day. Only in 2018 researchers predicted AI will outperform humans in many activities in the next ten years, such as translating languages (by 2024), writing high-school essays (by 2026), driving a truck (by 2027), working in retail (by 2031), writing a bestselling book (by 2049), and working as a surgeon (by 2053) (Grace et al, 2018). Last week we discussed the fact that university students were already (2023) able to deliver a ChatGPT written paper to pass the exam, and a bestselling book is at our disposal 26 years ahead of schedule! 

The potential to transform

We have no doubt that AI will change our field of supply chain planning. In the words of ChatGPT: “OpenAI has the potential to transform the way supply chain planning is approached, resulting in increased efficiency, cost savings, and improved customer satisfaction. The potential applications are vast, and as the technology continues to develop, it is likely that new and innovative ways of using AI in supply chain planning will emerge.”

Balance between man and machine

Nevertheless, supply chain planning is about making choices: what customer to prioritize, making trade-offs on costs-service-inventory.  This requires holistic, subjective reasoning. So-far, ChatGPT is merely a factual engine that acts on probabilities and scores, mostly based on historical data, with no context of the implications of the information it is delivering (Kendrick and Thurai, 2022). Additionally, ChatGPT's knowledge is based on the data it was trained on, originating from 2021. Therefore it may not always provide accurate or up-to-date information. This means there will always be room for us humans! The future challenge will be striking the right balance between man and machine. April 2023 we will have a new look at ChatGPT.

More information about this study  » 

About Freek Aertsen

Freek Aertsen TIASFreek Aertsen is Adjunct Professor at TIAS and Academic Director of the Executive Master of Operations And Supply Chain Management (MOS). He contributes to several programs and published different articles, white papers and books. As co-founder and senior consultant at EyeOn Freek executes projects to improve forecasting and planning performance at companies like NokiaSiemens Networks, Alcatel-Lucent, Logitech, DSM, SuikerUnie, NXP, ASML, Damen Schelde Naval Shipbuilding and Philips. Freek Aertsen has a wide experience in the design and implementation of supply chain planning models in various industries and countries. 

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Reference

Kreuter T., Scavarda L.P., Thomé A.M.T., Hellingrath B., Seeling M.X. (2021) Empirical and theoretical perspectives in sales and operations planning. Review of Managerial Science, 16: 319-354

 

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