On October 15, Hitachi, Ltd. announced that it had introduced a system that uses AI to optimize supply chain planning operations to Nichirei Ice, a company within the Nichirei Foods Group.
<System Overview>
The system is offered as Hitachi's Lumada solution "Planning System Optimization Service," which utilizes mathematical optimization technology. By using AI, it takes into account more than 40 constraints, including production capacity, and formulates a plan that optimizes approximately 10 conflicting KPIs. It has been confirmed that this reduces the time required for planning the production, inventory, and transportation of Nichirei Ice's packaged ice, whose demand is greatly affected by seasonal fluctuations, by approximately 70%.
Furthermore, it enables the visualization of KPIs such as costs, which were previously difficult to analyze in detail. In addition, plans can be revised simply by reviewing the data entered into the system, allowing for more flexible and rapid responses to rapidly changing supply and demand. This simplifies planning work, reduces reliance on individual expertise, and enables the creation of optimal supply chain plans that take into account constraints and interdependencies that are often overlooked by humans, thereby contributing to improved planning quality.
Specifically, this involves optimizing "when, where, what, and how much" to produce, transport, and store (inventory) to meet sales forecasts and inventory standards, while taking actual inventory levels into consideration. In production planning, production volumes and timings are planned to meet sales and inventory standards, taking inventory levels into account.
In transportation planning, products are transported to the right location at the right time to meet inventory standards and sales forecasts for each location, such as logistics centers, enabling maximum loading efficiency and minimum number of trucks. In inventory planning, appropriate inventory placement is formulated considering inventory standards and sales forecasts for each location. Furthermore, by combining this with anomaly detection functions such as stockout alerts and production shortage alerts, operational efficiency at the site is enhanced.
Hitachi plans to expand the scope of this system's application at Nichirei Foods and Nichirei Ice, and is considering enhancing its capabilities to include long-term planning and plan adjustments in the event of problems.
Furthermore, Hitachi will expand its services to the manufacturing industry, and, including integration with delivery planning solutions and production management solutions, will use Hitachi's domain knowledge and AI to transform data into value, aiming to solve customer and societal challenges as Lumada 3.0 evolves, ultimately leading to the integration of the entire supply chain in the manufacturing industry.
This will address social issues such as labor shortages and contribute to strengthening corporate competitiveness and solving social problems by building a sustainable and efficient supply system.
