Manufacturing sector has a bright and highly profitable future. But the high cost of raw materials is number one concern seeking a solid solution. Leading manufacturers in steel, chemical and other verticals are the early adopters of AI for reducing cost of raw materials.
The high cost of raw materials is not associated with new players in industry but established brands are equally reeling under it. Inability to smartly forecast demand of raw materials has forced companies to rethink and reorganise their development model.
Scenario One – Lack of Artificial Intelligence
The surge in demand for products is not the same all the time. Now, the raw material demand is estimated to be either unnecessarily more or significantly less than exact amount. Therefore, production is more than required or not sufficient to cater to the current demand.
Hence, the extra produce is fit to be sold at a huge discount. The amount of cost associated with manual labor, storage, and shipping makes it a big enough cost that cannot be overlooked. Moreover, it ends up compromising the ROI.
If your raw material demand production was incapable to serve the requirement then you lose sales to your competitors and not to mention the bad reputation it will fetch will hamper your brand image.
Unfortunately, odds are not favourable for reduced cost in both situations. But AI will take care of it!
Scenario Two – Empower Raw Material Cost Reduction With AI
An AI based solution is capable of optimising raw material cost. How does it happen? AI solutions analyse the historical data to compare it with external data to generate value driven insights. These insights help in predicting the right amount of raw material required. This way, manufacturers are able to save a significant amount of time and cost.
Raw material cost optimisation is one of the many benefits that AI enabled solutions bring to the table. It is equally capable of optimising cost associated with supply chains, production, design and quality control.
AI algorithms can notify manufacturing units about upcoming faults in the production process. Now, there is no need to find and fix the issue until product processing is completed. Therefore, knowing the cause in early stages means the product quality is not compromised and customers won’t send it back due to fault.
If high cost of raw materials is your top concern? Talk to AI expert
Summing It Up
Artificial intelligence is a revolutionary technology and contains lots of potential for creation of a sustainable ecosystem for the manufacturing industry and to pace up productivity level. The role of AI in reducing cost of raw materials helps in ensuring raw material is neither in excess or in shortage. Therefore, it also results in the emergence of an efficient production process.