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UNIVERSITY OF PETROLEUM AND ENERGY STUDIES

PROJECT DISSERTATION REPORT

ON

“AUTOMATION OF FUEL RETAIL OUTLET”


In partial fulfillment for the award of the degree of

Bachelor of Business Administration


(Oil and Gas Marketing)
2015-2018

UNDER THE GUIDANCE OF-

Dr. Naveen Pandey

Assistant Professor SUBMITTED BY-


CERTIFICATE

To Whomsoever It May Concern

This is to certify that dissertation report on ‘Automation of Fuel retail Outlet’ is completed and submitted to
UPES, Dehradun by ‘Harshit Agarwal’ in partial fulfillment of the requirements for the award of degree of
Bachelors of Business Administration (Oil & Gas Management) is bonafide work carried out by him under my
supervision and guidance.

To the best of my knowledge and belief the work has been based on investigation made, data collected and
analyzed by him and this work has not been submitted anywhere else for any other university or institution for the
award of any degree or diploma.
DECLARATION

I Harshit Agarwal student of BBA (Oil and Gas) Management at UPES declare that work done on Automation of
Fuel Retail Outlet is original. Any references made in this project are duly acknowledged.

The analysis of past present and future as documented in this project is thereby the copyrights of the author. This
report should not be reproduced without permission of the author.

To the best of my knowledge and belief the subject matter here is original and has not been submitted to any other
university till date.

HARSHIT AGARWAL

Roll No.: R170215026

SAP ID: 500043731

BBA (Oil & Gas)

Date:
ACKNOWLEDGEMENT

I Harshit Agarwal, sincerely acknowledge the support and guidance given by my mentors,
without whom, the project would not have taken shape in the desired direction. Every single bit
put in by my mentors is precious in its own way.

I am really thankful to my faculty Dr. Naveen Pandey Sir for his encouragement and co-operation
he took painstaking effort to make my project on the ‘Automation of Fuel Retail Outlet’, a fruitful
learning experience.

The task of Data gathering for analysis and subsequent report preparation was much eased by the
continued support from the University.

Thanking You

Harshit Agarwal
INTRODUCTION

Role Will Artificial Intelligence Play in Supply Chain Management?

Artificial Intelligence (AI) has been making its rounds in world news for the last few years. With considerable
advancements in the field, the concept of AI has garnered its share of fans and critics alike. While many believe
AI is the next step in the industrial revolution with its potential for complete automation and an error free process,
there are a few (notably Elon Musk) who believe AI advancements must be regulated to ensure that we do not risk
security and safety for comforts and profits. Like it or not, AI is slowly creeping into our day to day lives with the
devices we use. So it’s not a coincidence that the manufacturing sector has taken notice of the phenomena and
have started making investments in AI to improve business and supply chain processes.

What is Artificial Intelligence?

Artificial Intelligence is the intelligence exhibited by machines which closely resembles a human mind’s free
thought rather than procedural intelligence. Basically, when a machine makes its own decisions to achieve a set
goal, we call it artificial intelligence. AI can be classified in the fields of software programming, robotics,
transportation, and image recognition, among others.

As Gartner Analyst, Noha Tohamy, explained at the recent Gartner’s Supply Chain Executive Conference, AI is
divided into 2 categories:

 Augmentation: AI which assists humans with their day-to-day tasks, personally or commercially without
having complete control of the output. Such Artificial Intelligence is used in Virtual Assistant, Data
analysis, software solutions; where they are mainly used to reduce errors due to human bias.
 Automation: AI which works completely autonomously in any field without the need for any human
intervention. For example, robots performing key process steps in manufacturing plants.

How will AI change the traditional methods of supply chain?

Major companies like Siemens and Amazon have already begun implementing AI into their supply chain systems.
While the majority of AI is primarily in robotics, software that fully monitors the complete supply chain from
production to delivery have begun to come into play.
There are multiple advantages to using AI in the supply chain:

1. Streamlined Process:

If AI oversees the handling of the entire supply chain process, it can learn to adapt to changing scenarios.
By using historical data and trends, it will be able to streamline every aspect from demand to inventory to
supply in order to best meet the needs of the market. This would be done with minimal human input,
saving time and reducing errors due to the incomprehensibility of data. Also, due to vast memory options
available, the AI would literally be able to learn from past mistakes and ensure risk-free paths are
undertaken.

2. Near perfect Planning:

While usual supply chain planning involves sticking to certain parameters of data because of data
limitations, AI would not be hindered by this issue. By using infinite sources of information at once, it
would be able to alter the demand schedule depending on a variety of continuously varying trends such as
weather, the stock market, traffic, etc., within a minimal time and near zero error rate.

3. Market Shaping:

What can you do when you have near infinite knowledge of the past, present and future? Make the perfect
products of course. By using continuous feedback from customers alongside all possible sources of
information, AI can not only assist in the supply chain process but also be Product designers. The product
designs would be linked to various production elements such as Raw Materials quantity, lead times, and so
on, ensuring the most optimal design parameters.

[Read more: What is Blockchain Technology Worth to Your Supply Chain?]

4. Faster & Accurate Transportation:

While we’ve mainly discussed the data crunching aspect of AI, it can also be used in mechanical
processes. Apart from production machinery, AI can be used to optimize transportation as well.
Automotive and tech companies such as Tesla and Google have been delving into the concept of driverless
cars for a few years now, with impressive results. If such a technology can be come fully developed, it will
be the driving force in Product transportation and shipments. To improve accuracy, decrease lead times,
reduce transportation and human labor costs.
There are quite a lot of companies who have already explored the use of AI in supply chain. Amazon has been
investing in smart drone tech for its delivery. Siemens has developed AI robotics which allows it to run its
production factories overnight without any human intervention required.

[Read more: 5 Things to Know About Setting Up a Better Supply Chain Performance Measurement System]
Artificial Intelligence is truly taking over the business and manufacturing world, and it’s probably the right time to
take a closer look at how AI can affect your supply chain. Arkieva’s keeping an eye out for you, just in case. Do
you think there are any disadvantages to using AI in the supply chain? Comment, share and as always, watch this
space!

6 Applications of Artificial Intelligence for your Supply Chain.

Once thought to be a concept only sci-fi movies could produce, Artificial Intelligence (AI) has become a topic of
our mainstreams and everydays.

The potential of AI enhancing everyday business activities and strategies hasn’t just sparked the interest of people
and organizations globally, but has initiated rapid implementation.

Artificial Intelligence is an intelligence displayed by machines, in which, learning and action-based capabilities
mimic autonomy rather than process-oriented intelligence.

The simplest way to understand the potential application of AI is to clearly define it’s potential value-added.

Introduced by Gartner Analyst, Noha Tohamy, at Gartner’s Supply Chain Executive Conference, AI was broken
down into two categories:
 “Augmentation: AI, which assists humans with their day-to-day tasks, personally or commercially without
having complete control of the output. Such Artificial Intelligence is used in Virtual Assistant, Data
analysis, software solutions; where they are mainly used to reduce errors due to human bias.

 Automation: AI, which works completely autonomously in any field without the need for any human
intervention. For example, robots performing key process steps in manufacturing plants” (arkieva.com
2017).
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Enhancing Productivity and Profits.

Understanding these two categories of AI capacities is important for future implementation of AI into business
work tools. In particular, the application of AI into Supply Chain related-tasks holds high potential for boosting
top-line and bottom-line value.

Previous studies, by the Tungsten Network, have suggested that valuable time and money is wasted on trivial
supply chain related-tasks that are conducted operationally by humans.

“Businesses estimate they spend on average per week around 55 hours doing manual, paper-based processes and
checks; 39 hours chasing invoice exceptions, discrepancies and errors and 23 hours responding to supplier
inquiries” (mhlnews.com 2017).

This loss- has been equated to around 6500 hours, during the work year, that businesses are throwing away by
processing papers, fixing purchase orders and replying to suppliers.

Imagine if a business could automate such tasks that are (more or less) ‘wasting time’.
Well… There’s not really any need to imagine anymore. Companies, even at that enterprise level, have already
begun the implementation of AI tech into every day supply chain tasks. Tech vendors such as IBM, Google, and
Amazon have released products that utilize artificial intelligence.
“McKinsey estimated that tech giants such as Google and Baidu spent some $20 billion to $30 billion on AI last year,
of which 90% was on research and development and the rest on acquisitions of intellectual properties or companies”
(asq.org 2017).

The graphic below shows a breakdown of the applications of AI in 835 different companies in the past year.

Source: HBR

While the potential for AI application and implementation is quickly visualized in this graph, it lacks a percentage
designated to supply chain management (SCM). That’s because, of the companies surveyed, application of AI into
SCM related activities hasn’t been actualized on a wide-scale.
“Only 2% are using artificial intelligence to monitor internal legal compliance, and only 3% to detect procurement
fraud (e.g., bribes and kickbacks). […] Only 7% of manufacturing and service companies are using AI to automate
production activities. Similarly, only 8% are using AI to allocate budgets across the company. Just 6% are using AI
in pricing” (hbr.org 2017).

How can AI be applied within SCM activities?

1.Chatbots for Operational Procurement:

Streamlining procurement related tasks through the automation and augmentation of Chabot capability requires
access to robust and intelligent data sets, in which, the ‘procuebot’ would be able to access as a frame of reference;
or it’s ‘brains’

As for daily tasks, Chatbots could be utilized to:

· Speak to suppliers during trivial conversations.

· Set and send actions to suppliers regarding governance and compliance materials.

· Place purchasing requests.

· Research and answer internal questions regarding procurement functionalities or a supplier/supplier set.

· Receiving/filing/documentation of invoices and payments/order requests (Smith 2016).


2. Machine Learning (ML) for Supply Chain Planning (SCP)

Supply chain planning is a crucial activity within SCM strategy. Having intelligent work tools for building concrete
plans is a must in today’s business world.

ML, applied within SCP could help with forecasting within inventory, demand and supply. If applied correctly
through SCM work tools, ML could revolutionize the agility and optimization of supply chain decision-making.

By utilizing ML technology, SCM professionals — responsible for SCP — would be giving best possible scenarios
based upon intelligent algorithms and machine-to-machine analysis of big data sets. This kind of capability could
optimize the delivery of goods while balancing supply and demand, and wouldn’t require human analysis, but
rather action setting for parameters of success.

3. Machine Learning for Warehouse Management

Taking a closer look at the domain of SCP, its success is heavily reliant on proper warehouse and inventory-based
management. Regardless of demand forecasting, supply flaws (overstocking or under stocking) can be a disaster for
just about any consumer-based company/retailer.

“A forecasting engine with machine learning, just keeps looking to see which combinations of algorithms and data
streams have the most predictive power for the different forecasting hierarchies” (forbes.com 2017).

ML provides an endless loop of forecasting, which bears a constantly self-improving output. This kind of
capabilities could reshape warehouse management as we know today.

4. Autonomous Vehicles for Logistics and Shipping


Intelligence in logistics and shipping has become a center-stage kind of focus within supply chain management in
the recent years. Faster and more accurate shipping reduces lead times and transportation expenses, adds elements
of environmental friendly operations, reduces labor costs, and — most important of all — widens the gap between
competitors.

If autonomous vehicles were developed to the potential — that certain business analysts and tech gurus have
hypothesized — the impact on logistics optimization would be astronomical.
“Where drivers are restricted by law from driving more than 11 hours per day without taking an 8-hour break, a
driverless truck can drive nearly 24 hours per day. That means the technology would effectively double the output
of the U.S. transportation network at 25 percent of the cost” (techcrunch.com 2016).

5. Natural Language Processing (NLP) for Data Cleansing and Building Data Robustness

NLP is an element of AI and Machine Learning, which has staggering potential for deciphering large amounts of
foreign language data in a streamlined manner.

NLP, applied through the correct work took, could build data sets regarding suppliers, and decipher untapped
information, due to language barrier. From a CSR or Sustainability & Governance perspective, NLP technology
could streamline auditing and compliance actions previously unable because of existing language barriers between
buyer-supplier bodies (greenbiz 2017).
6. ML and Predictive Analytics for Supplier Selection and Supplier Relationship Management (SRM)

Supplier selection and sourcing from the right suppliers is an increasing concern for enhancing supply chain
sustainability, CSR and supply chain ethics. Supplier related risks have become the ball and chain for globally
visible brands. One slip-up in the operations of a supplier body, and bad PR is heading right towards your
company.

But, what if you had the best possible scenario for supplier selection and risk management, during every single
supplier interaction?

Data sets, generated from SRM actions, such as supplier assessments, audits, and credit scoring provide an
important basis for further decisions regarding a supplier.

With the help of Machine Learning and intelligible algorithms, this (otherwise) passive data gathering could be
made active.

Supplier selection would be more predictive and intelligible than ever before; creating a platform for success from
the very first collaborations. All of this information would be easily available for human inspections but generated
through machine-to-machine automation; providing multiple ‘best supplier scenarios’ based on whatever
parameters, in which, the user desires.

What’s the catch?

One could hypothesize that SCM is a part of the value chain that would be heavily impacted by AI implementation,
for the better and the worst. Of course, augmentation and automation raise security and safety concerns for IT
infrastructure and human life.
But, something that is potentially even more threatening to business: AI implementation will begin replacing jobs.

Source: EPS News

“Four years ago, an Oxford University study predicted 47% of jobs could be automated by 2033. Even the near-term
outlook has been quite negative: A 2016 report by the Organization for Economic Cooperation and Development
(OECD) said 9% of jobs in the 21 countries that make up its membership could be automated. And in January
2017, McKinsey’s research arm estimated AI-driven job losses at 5%”

8 Fundamentals for Achieving AI Success in the Supply Chain

There’s a lot of buzz and hype about artificial intelligence (AI) in supply chain management (SCM). That’s
understandable given its potential. AI can offer a huge benefit to supply chain managers, but only if it is based on
solid fundamentals that take into account the diverse and dynamic nature of today’s modern supply chains. More
importantly, it needs to consider the availability of the timely and accurate data needed to make smart decisions.

Before addressing what AI can do, it is critical to first understand what it is. In the simplest terms, AI is
intelligence exhibited by machines, or when machines mimic or can replace intelligent human behavior, such as
problem solving or learning. In essence, AI is machines making decisions whether that is deciding which chess
piece to move where, or how to adjust an order forecast based on changing demand.

Despite its benefits, when looked at through the lens of a supply chain executive, AI is relatively useless unless
it’s able to add value to support better decision-making.

Why AI Hasn’t Delivered in SCM

In the race to use AI, many companies have made attempts to implement it, but the results have been
disappointing. This is because typical SCM systems today:

 Require armies of expensive planners


 Run complex engines at each step in the process and at each node in the supply network
 Are usually in conflict with other functions and/or partners
 Miss huge opportunities hidden in the network because they are locally sub optimized
 Work on stale data and thus promote bad decisions
 /Use dumbed-down, over-simplified problem models that do not relate to the real world

These SCM limitations have severely suppressed return on AI investments. For example, typical Retail/CPG
supply chains still carry 60-75 days of inventory. The average service level in the store is about 96 percent, with
promoted item service levels much lower at the 80 percent range. The Casual Dining segment on the other hand,
carries around 12 – 15 days of inventory with relatively high waste and high cost-of-goods-sold. So, unless AI can
make a significant impact on these metrics, it’s simply not delivering.

Key Requirements for AI in Supply Chain Management

Having worked with hundreds of supply chain executives, on dozens of software implementations, I’ve studied
the AI issue a lot. What I have found is there are eight criteria that are required for a successful AI
implementation. Miss one of these and you’ll be lucky to achieve mediocre outcomes, but when you meet them
all, you can indeed achieve world class results. For the AI solution to offer optimal value in supply chain, it
important to ensure the following:

1. Access to Real-Time Data


To improve on traditional enterprise systems with older batch planning systems, new AI systems must eliminate
the stale data problem. Most supply chains today attempt to execute plans using data that is days old, but this
results in poor decision-making that sub-optimizes the supply chain, or requires manual user intervention to
address. Without real-time information, an AI tool is just making bad decisions faster.

2. Access to Community (Multi-Party) Data


The ability to access data outside of the enterprise or, more importantly, receive permission to see the data that is
relevant to your trading community, must be made available to any type of AI, Deep Learning or Machine
Learning algorithms.

Unless the AI tool can see the forward-most demand and downstream supply, and all relevant constraints and
capacities in the supply chain, the results will be no better than that of a traditional planning system.
Unfortunately, this lack of visibility and access to real-time, community data is the norm in over 99 percent of all
supply chains. Needless to say, this must change for an AI tool to be successful.

3. Support for Network-Wide Objective Functions


The objective function, or primary goal, of the AI engine must be consumer service level at lowest possible cost.
This is because the end-consumer is the only consumer of true finished goods products. If we ignore this fact,
trading partners will not get the full value that comes from optimizing service levels and cost to serve, which is
obviously important as increased consumer sell-through drives value for everyone.
A further enrichment of the decision algorithm should support enterprise level cross-customer allocation to
address product scarcity issues and individual enterprise business policies. Thus, AI solutions must support global
consumer-driven objectives even when faced with constraints within the supply chain.

4. Decision Process Must Be Incremental and Consider the Cost of Change


Re-planning and changing execution plans across a networked community in real time can create nervousness in
the community. Constant change without weighing the cost of the change creates more costs than savings and
reduces the ability to effectively execute. An AI tool must consider trade-offs in terms of cost of change against
incremental benefits when making decisions.

5. Decision Process Must Be Continuous, Self-Learning and Self-Monitoring


Data in a multi-party, real-time network is always changing. Variability and latency is a recurring problem, and
execution efficiency varies constantly. The AI system must be looking at the problem continuously, not just
periodically, and should learn as it goes on how to best set its own policies to fine tune its abilities. Part of the
learning process is to measure the effectiveness “analytics,” then apply what it has learned.

6. AI Engines Must Be Autonomous Decision-Making Engines


Significant value can only be achieved if the algorithm can not only make intelligent decisions but can also
execute them. Furthermore, they need to execute not just within the enterprise but where appropriate, across
trading partners. This requires your AI system and the underlying execution system to support multi-party
execution workflows.

7. AI Engines Must Be Highly Scalable


For the supply chain to be optimized across an entire networked community of consumers to suppliers, the system
must be able to process huge volumes of data very quickly. Large community supply chains can have millions if
not hundreds of millions of stocking locations. AI solutions must be able to make smart decisions, fast, and on a
massive scale.

8. Must Have a Way for Users to Engage with the System


AI should not operate in a “black box.” The UI must give users visibility to decision criteria, propagation impact,
and enable them to understand issues that the AI system cannot solve. The users, regardless of type, must to be
able to monitor and provide additional input to override AI decisions when necessary. However, the AI system
must drive the system itself and only engage the user on an exception basis, or allow the user to add new
information the AI may not know at the request of the user.

AI in the Real World Today

Sounds good in theory, but how does it work out in practice? Now that we have addressed the key fundamentals,
let’s look at how some actual companies have achieved applying these criteria.

For instance, one of the major problems in Casual Dining is anticipating and meeting demand for the restaurants,
corporate owned or franchised. This is especially important during Limited Time Offers (LTOs). Using the eight
criteria outlined above, a global, casual dining company connected to a real-time, multi-party network, and was
able to rapidly achieve their objective function - excellent customer service at the lowest cost.

The company constantly monitors Point-of-Sale (POS) data, and is using AI agents to recognize and predict
consumption patterns of consumers. In addition, intelligent AI agents create the demand forecast and then
compare it to the actual demand in real-time. When there is significant deviation, the agents make the decision to
adjust the forecast, and additional agents adjust replenishments. They then propagate those adjustments across the
supply chain to trading partners in real time at all times considering the cost of change and the propagation
impact.

This drove a remarkable improvement in forecast accuracy. During promotions, the company achieved over 85
percent forecast accuracy at the store level and even higher at the DC level. This represents at least a 25 percent
improvement over traditional approaches.

Intelligent agents also optimize restaurant orders autonomously by recognizing the impact of projected restaurant
traffic trends and impact on LTOs and therefore the orders. The system runs on an exception basis but allows the
managers to review the decision criteria and override orders where the managers may have local information such
as inventory issues or local store traffic issues. This has resulted in much faster order placement and order
accuracy of over 82 percent, which reduces both inventory and waste dramatically while increasing service levels
to the consumer. This is a significant improvement to all other known implementations in the marketplace.

Because the algorithms are highly scalable, they are processing over 15 million stocking locations continuously
throughout the day.

Prior to the AI-based, multi-party execution system, restaurant managers had to interact with nine different
ordering systems and manually create their own orders based on general guidelines, rules of thumb, and
spreadsheet-based or manual calculations.

With AI implemented on a sound foundation, this company can now anticipate, manage, and serve demand at the
lowest possible cost. During LTO’s, when demand fluctuations would overwhelm a restaurant manager,
intelligent agents monitor demand in real time, and autonomously orchestrate the supply chain to align supply
with demand. Thus, the company can meet its goal and maintain high service levels while reducing cost to serve.

These are not isolated results. Also in the food marketplace, another CPG-Retail implementation achieved 99
percent in-stock, in-store, with 25 days of supply (DOS) across the supply chain. The inventory results are less
than half the standard DOS in this marketplace and 3 percent points higher in in-store in-stocks
AI-based solutions are being deployed at two large automotive tier one suppliers with results ranging from 16 – 40
percent reductions in inventory as well as significant reductions in expedited freight costs.

AI Delivers Value in SCM Today

As you can see, laying the proper groundwork for AI pays huge dividends. There’s no doubt that AI offers even
greater promise in the future, but, as these results show, there are significant benefits and dramatic results waiting
for companies that focus on the fundamentals and put AI to use today.

The beauty of AI-based solutions is that they learn and drive continuous improvement over time. They get more
precise and sophisticated as they gather more data and more experience. The sooner you start, the better the results
you’ll see in future, and the further ahead you will be. With the right AI solution in place, you can outpace your
competitors today, and be well positioned for reaping even bigger rewards of AI’s promise tomorrow.
USING ARTIFICIAL INTELLIGENCE TO SOLVE COMPLEX SUPPLY CHAIN
MANAGEMENT SYSTEM

ompanies are starting to apply artificial intelligence across global supply chain management to improve efficiency,
speed and decision-making in areas such as supply chain planning, warehouse automation, and logistics.
The SCM World 2016 Future of Supply Chain Survey found that the importance of artificial intelligence has
grown rapidly, with 47 percent of supply chain leaders believing the technology is disruptive to global supply
chain management strategies.1 Market-research firm IDC predicts that by 2020, 50 percent of mature supply
chains will use AI and advanced analytics for planning, and to eliminate sole reliance on short-term demand
forecasts.2
AI for Global Supply Chain Management Planning
Supply chain planning and optimization, including demand forecasting, are among the key areas where AI is
already beginning to be deployed. Experts say that global supply chains have become so complex, and are affected
by so many variables, that AI may be essential to help identify and predict problems and potential solutions.3
“Supply chain managers must take into account more data than any person can possibly process,” Nucleus
Research analyst Seth Lippincott told EBN.4 As IDC analyst Simon Ellis (writing on an IBM blog) put it: “Most
companies simply do not understand the full depth and breadth of their supply chain risks, and are therefore not
prepared to respond efficiently or effectively to the many potential disruptions.”5 The inherent complexity of
global supply chains, along with the dramatically increased volume of data, make it almost impossible to extract
all the necessary insights and make informed business decisions. And the volume of data continues to increase, in
part due to the trend to connect supply chain management devices to the Internet, according to DHL’s
2016 Logistics Trends Radar report.6
Accordingly, companies are already applying AI-based machine learning to automatically analyze vast amounts of
supply-chain management data, identify trends, and generate predictive analytics — the ability to predict
problems and outcomes. Lippincott says that the benefits in global supply chain management include reductions in
forecasting errors. “Software solutions are beginning to apply machine learning capabilities that can automatically
detect errors and make course corrections, while processing real-time data streams,” he says. “With companies
collecting mountains of data that can be used to train algorithms to learn where things went wrong, we’re at the tip
of the iceberg of how much companies will leverage these capabilities.”7
For example, some supply chain management solutions use AI to gather and correlate external data from many
sources, including social media, newsfeeds, weather forecasts and historical data.8
One major food manufacturer used an AI-based demand forecasting solution to tackle a common problem:
meeting customer demand while minimizing inventory. The challenge was complex, involving around 10,000
different products, each subject to variation in demand. By applying predictive analytics, the company was able to
more accurately anticipate customer behavior by integrating the impact of promotions and other special offers into
its statistical models.9
In a 2016 survey of 1,100 supply chain and manufacturing companies by Deloitte and MHI, only 17 percent of
companies were using predictive analytics; but that number is expected to jump to 79 percent over the next three
to five years.10
Anticipating Orders Before they are Placed
Predictive algorithms may also enable “anticipatory logistics” — the ability to shorten delivery times and improve
efficiency by predicting demand before a request or order is even placed, as global logistics provider DHL
described in Logistics Trends Radar. For example, global supply chain managers could use AI systems to detect
risks in trade shipping lanes and, using shock-detecting sensors, potential damages to cargo; they could then take
corrective action and minimize operational delays.11
Supply chain managers who have analyzed their customers’ purchasing behaviors might move goods to
distribution centers that are closer to the customer, allowing faster delivery. Within warehouses, machine learning
systems may be able to recognize common scenarios and trends, and link these to specific customers and orders;
anticipating the content of an order, these systems would then pre-pick-and-pack without first waiting for orders to
be placed, according to the DHL report.
Robots and Self-Driving Vehicles
Autonomous vehicles, which rely on AI to sense their surroundings and make decisions, have already made
inroads into logistics, although large-scale adoption may be several years away, according to DHL. Self-driving
vehicles have been gradually adopted in controlled environments such as warehouses and yards; DHL predicts
that warehouses of the future will deploy the next generation of self-driving vehicles, such as autonomous
forklifts, carts and pallet movers, which will be able to navigate without the aid of magnetic strips or other guides.
The use of goods-delivery drones and other vehicles in public spaces is farther from mainstream adoption, the
company notes. Robots are also being used by big online retailers and logistics companies to quickly help pick
and stack goods.12,13
The Takeaway
Artificial intelligence is starting to be used in global supply chain management to help companies analyze and act
on global supply chains’ vast data. However, while experts consider machine learning and other AI technologies
important and disruptive, they note challenges such as the technology skills required, the need to integrate
multiple data sources, and regulatory hurdles that may need to be overcome to enable widespread adoption.
LITERATURE REVIEW

In the last few years there has been an influx of software that utilize elements of Artificial Intelligence (AI).
Subfields of AI such as Machine Learning, Natural Language Processing, Image Processing, and Data
Mining have become important for many of today’s tech giants. Machine Learning is actively being used in
Google’s predictive search bar, in the Gmail spam filter, in Netflix’s show suggestions, and in the Cleverbot
chat website. Natural Language Processing exists in Apple’s Siri and Google Voice. Image Processing is
necessary for Facebook’s facial recognition tagging software and in Google’s self-driving cars. Data Mining
has become a “buzz word” in the software industry due to the mass amounts of data being collected
everyday. Companies like Facebook and Google collect large amounts of statistics from users every second
and need a way to interpret the data they receive. Artificial Intelligence has already proven to be a useful new
tool in today’s technology heavy culture.

Almost all of these technologies that have begun to implement facets of AI have only been
around for a decade or less. Many of these aspects of AI have proven to be hugely helpful in
industry, but these are merely applications of the technologies being researched. AI has greatly
advanced in the last few years and there have been countless improvements within each subfield.

Alan Turing, the “father” of AI, wrote Computing Machinery and Intelligence [10] in 1950. He
attempted to answer the question “Can machines think?” by developing a type of “Imitation
Game” between two subjects. This game is called the Turing Test and it involves written
communication between two subjects without being able to see, hear, or otherwise sense the other
subject. The first subject, a human, will attempt to figure out if the second subject is a machine or
another human simply from written communique. If the first subject cannot tell, or chooses
incorrectly, then Turing declared that his Turing Test proved that machines can think.
However, there has been some doubt that just because a computer can respond coherently
to a user questions or statement doesn’t mean the computer can actually think. Does the computer
really understand the meaning behind the words, or is it simply regurgitating symbols? This was
somewhat addressed in Turing’s paper, but more formally covered in a paper 30 years later by
John Searle. In 1980, Searle published a thought experiment called The Chinese Room [7] that
addressed the idea that the machine in the Turing Test is simply throwing symbols together without
actually understanding the concepts. The Chinese Room uses the analogy of a native English
speaker with no knowledge of how to speak, write, or read Chinese who is given a couple of sets
of rules in English. These rules correlate input in Chinese to coherent output also in Chinese, even
though the “translator” only speaks English. This question has been the topic of various research
topics in Machine Learning and Natural Language Processing.

Complications in AI:

There are abundant complications when trying to create an intelligent system. Much of the old or
simple AI is a list of conditions for what reaction to have based on expected stimuli. But this is
arguably not intelligence, and imitating true intelligence requires an understanding of how the input
relates to the output, as well as a large interdisciplinary effort among most AI subfields along with
psychology and linguistics [12].
Many complications involve Human-Machine Interaction because of the complexity of
human interaction. A lot of the communication that happens between humans cannot be coded
facts a machine could simply recite. There are hundreds of subtle ways that humans interact with
each other that affect communication. Intonations in voices, body language, responses to various
stimuli, emotions, popular culture facts, and slang all affect how two people might communicate.
This is hard to model in a machine that does not have a basic common sense model already in
place that can learn or make inferences.
Fuzzy Logic, which is modeled after humans’ excellent ability of making approximations
without any real values, poses many complications [11]. Computation, by definition, require
numbers and not words or concepts.
Complications arise when trying to imitate human intuition or common sense. The amount
of background information that is taken for granted by humans is immense and hard to replicate in
machines [3].
There is difficulty in trying to imitate human emotion because of how complex and
subjective they can be, especially when multiple emotions are expressed [1][12]. When using a
Machine Learning approach, the system will process conversations that have been labeled by
humans, but these labels are not always consistent [1].

Image Processing also has complications with recognizing different locations from photos
on the Internet because of the variability in images. Modeling the world from Internet photos is
difficult because of how much the average Internet photo varies. Generally, image processing
requires data to be somewhat consistent, but that obstacle will have to be overcome to render 3D
models of popularly photographs locations on Earth [9]. Simply detecting what an image contains
is tricky process.
Handling large amounts of inconsistent data is another complication, because inconsistent
data is inevitable but difficult to process. But being able to take in a large amount of data and
analyze the underlying concepts would be necessary to do something like summarize a novel,
which is something that is currently not possible [11].
Ethical concerns arise when building a machine that can be sent into the military that could
use lethal force [8]. Although this is a scary concept, it has a high priority for research by the
United States government [8].
Finally, using all of the subfields of AI to develop Strong AI (Artificial Intelligence equal
or better than human intelligence) is incredibly complicated. Developing a system that has sentient
thought would require us to fully understand how the brain and consciousness work, which we do
not.
There are a multitude of difficult complications within AI research. AI is a complex field,
but much progress has been made in the last few years.

Generalizations of Research:

There is endless exciting new research in the field of AI; this review is far from a global summary
of the progress made in the last ten years. There are also scores of subfields within AI, but the only
topics covered here will be Machine Learning, Natural Language Processing, Knowledge
Management and Fuzzy Logic, Human-Machine Interaction, and Image Processing and Computer
Vision. These fields overlap and research in one field is not possible without research in another
channel of AI.
Much of the research covered in this review could be applicable to developing Strong AI,
but is not direct research for Strong AI. Some of the research indirectly attempts to solve Searle’s
Chinese Room problem. Creating a machine capable of understanding the concepts behind words
is important because it allows for more humanlike conversations as well as improved translation
between human languages [5]. Havasi’s ConceptNet research [3] is important to the future of AI
because it provides great improvements in Machine Learning, Natural Language Processing, and
Fuzzy Logic by developing a type of artificial “common sense”. This graph of linked concepts
allows for new information to be inferred. Research into an idea called Computing with Words
[11] is exciting because it attempts to imitate humans’ innate ability to make approximations
without real values. This has never been possible in machines because, by definition, computing
involves crisp numbers not fuzzy approximations. There is also fascinating research into
“rediscovering” basic formulas by simply observing physical models [6], research into detecting
human emotion through audio and visual cues [1][12], and research into reliably removing
wanted background data from the subject in video surveillance using Machine Learning [4].

Review:

Machine Learning:
Possessing the ability to learn new information or create new relationships between known
concepts is a crucial part of Artificial Intelligence. Hard coding an accurate response for every
possible stimuli a machine will ever receive is nearly impossible when trying to create a machine
that might indistinguishably mimic how humans interact. Because of this, there is a vast amount of
research in creating efficient methods for learning from data.
Devillers is using Machine Learning techniques with audio data from call centers to detect
complex human emotion [1]. Most conversations studied until this point were from recorded actors
attempting to express emotion from a script [12]. The algorithm gained precision as more
conversations were processed and labeled, but because of the subjective nature of emotions and
inconsistent labeling the algorithm was unable to always report meaningful results [1]. It also could
not detect blended emotions.
Machine Learning is also being used by Havasi to infer new information from a graph of
general concepts [3]. This graph imitates common sense by linking thousands of concepts together
with different types of linking edges. Each link contains information for the accuracy of each
relationship [3]. Through a web page connected to this network of concepts, researchers and others
on the Internet are able to see inferences being made from the existing data. Questions asked from
examining holes in the data, like “What is Paprika used for?”, provide researchers with assurance
that the graph is functioning correctly and actually learning. These questions also provide
additional information for this artificial common sense mechanism [3].
Aside from research into creating machines with more anthropomorphic characteristics for
ecognizing emotions and gaining common sense, Machine Learning is being used to “rediscover”

natural laws [6]. Schmidt set up a machine to simply observe physical models such as a swinging
pendulum, a double pendulum, and harmonic oscillators. It would capture position data and would
analyze the data without any prior knowledge of geometry or physics. The algorithm would take
all of the data, derive equations that would match the data at each point, analyze which equations
became more frequently derived, and then arrive at known formulas for various physical laws.
Finding formulas that were non trivially related and showed significant relationships are difficult to
find, and even human researchers can have trouble distinguishing between coincidences and true
relation [6]. This algorithm arrived at the equation for a circle, the Law of Conservation of Angular
Momentum, and other energy conservation laws and Newtonian force laws [6].
Figure 1: This chart shows the process taken by Schmidt’s

Machine Learning algorithm. Step 1 begins with the the


physical model being observed and data being collected
and Step 6 ends with a reliable formula becoming
“discovered” to describe the data accurately.
Natural Language Processing:
Human language and conversation is complex and subjective. The current
standard forms of communication with machines involve mice and keyboards, or
a specific and basic set of verbal commands. This is dramatically different from
how humans interact, simply because the amount of variability in human
communication; red in red hair is different from red in red apple.
This fundamental problem of correctly representing concepts with
symbols, or words, is greatly hindering the progression of Natural Language
Processing [5]. If these challenges are overcome, systems with Natural Language
Processing would have the capabilities to express beliefs they have acquired,
translate languages at human translator levels, understand the difference between
a red apple and red hair, and process commands like “hand me that purple thing
down there” into physical action [5].
Current Natural Language Processing techniques can recognize words
spoken and even do basic levels of translations. Yet, this is still primitive in terms
of fully understanding the complexities of human conversation. Machines are
currently unable to summarize novels [11] or perform other tasks that require
moderate conceptual knowledge. Devillers’ research into detecting emotions
from audio conversations [1] provides another element of understanding the
meaning behind words. Havasi’s Open Mind Common Sense (OMCS) Project
also provides more assistance to understanding the fundamental concepts that
words represent [3]. The issue raised in Searle’s Chinese Room is a valid concern
that has yet to be fully solved.
RESEARCH METHODOLOGY
FRAMING OF PROBLEM
The problem here in this study is associated with the Application of Artificial Intelligence
used in SCM.

Motivated employees are a great asset to any organization. It is because the motivation and Job
satisfaction is clearly linked. Hence this study is focusing on the Supply chain Management in
the organisation. The research problem is formulated as follows:

“What are the factors which help to motivate the employees?

RESEARCH DESIGN

Research is a systematic method of finding solutions to problems. It is essentially


an investigation, a recording and an analysis of evidence for the purpose of gaining knowledge.

According to Clifford woody, “research comprises of defining and redefining


problem, formulating hypothesis or suggested solutions, collecting, organizing and evaluating
data, reaching conclusions, testing conclusions to determine whether they fit the
formulated hypothesis”

SAMPLING DESIGN.

A sample design is a finite plan for obtaining a sample from a given population. Simple

random sampling is used for this study.

UNIVERSE

The universe chooses for the research study is the Artificial Intelligence
SAMPLE SIZE

Number of the sampling units selected from the population is called the size of the sample.
Sample of 50 respondents were obtained from the population.

SAMPLING PROCEDURE

The procedure adopted in the present study is probability sampling, which is also known as
chance sampling. Under this sampling design, every item of the frame has an equal chance of
inclusion in the sample.

METHODS OF DATA COLLECTION

The data’s were collected through Primary and secondary sources.

PRIMARY SOURCES

Primary data are in the form of “raw material” to which statistical methods are applied for the
purpose of analysis and interpretations .The primary sources are discussion with employees,
data’s collected through questionnaire.

SECONDARY SOURCES

Secondary data’s are in the form of finished products as they have already been treated

statistically in some form or other.The secondary data mainly consists of data and
information collected from records, company websites and also discussion with the
management of the organization. Secondary data was also collected from journals, magazines
and books.

NATURE OF RESEARCH

Descriptive research, also known as statistical research, describes data and characteristics
about the population or phenomenon being studied. Descriptive research answers the
questions who, what, where, when and how. Although the data description is factual,
accurate and systematic, the research cannot describe what caused a situation. Thus,
descriptive research cannot be used to create a causal relationship, where one variable affects
another. In other words, descriptive research can be said to have a low requirement for internal
validity.

QUESTIONNAIRE

A well defined questionnaire that is used effectively can gather information on both overall
performance of the test system as well as information on specific components of the system. A
defeated questionnaire was carefully prepared and specially numbered. The questions were
arranged in proper order, in accordance with the relevance.

NATURE OF QUESTIONS ASKED.

The questionnaire consists of open ended, dichotomous, rating and ranking questions.

PRE-TESTING

A pre-testing of questionnaire was conducted with 10 questionnaires, which were distributed and
all of them were collected back as completed questionnaire. On the basis of doubts raised by the
respondents the questionnaire was redialed to its present form.

SAMPLE

A finite subset of population, selected from it with the objective of investigating


its properties called a sample. A sample is a representative part of the population. A sample of 50
respondents in total has been randomly selected. The response to various elements under each
questions were totaled for the purpose of various statistical testing.

VARIABLES OF THE STUDY


The direct variable of the study is the supply chain risk management at Automotive sector
variables are the incentives, interpersonal relations, career development opportunities
and performance appraisal system.

PRESENTATION OF DATA.

The data are presented through charts and tables.

TOOLS AND TECHNIQUES FOR ANALYSIS

Correlation is used to test the hypothesis and draw inferences.


Artificial Intelligence and Future Supply Chains
Fast forward 60 years and artificial intelligence – or machine learning as many call it – is
emerging as the next big technology. 2016 has seen a race for artificial intelligence, with a
number of acquisitions and large technology vendors – of the likes of IBM, Google
and Amazon – launching new artificial intelligence-enabled products.
In SCM World’s 2016 Future of Supply Chain Survey, we found big jumps in importance for a
series of disruptive technologies with respect to supply chain strategies, some of which were
considered largely irrelevant just a couple of years ago.
One of these is machine learning, which in 2016 cemented its place in the technology
mainstream. 47% of supply chain leaders from our larger community believe that artificial
intelligence is disruptive and important with respect to supply chain strategies. The technology
grew so rapidly in importance over the last couple of years that in 2014 it wasn’t even included
in the research!

What’s Artificial Intelligence?


Artificial intelligence can be defined as the use of computers to simulate human intelligence,
specifically including learning – the acquisition and classification of information, and reasoning
– finding insights into the data. At the core of artificial intelligence is the ability to recognize
patterns across the 3Vs of big data (volume, velocity and variety) and find correlations among
diverse data.
Today, the term artificial intelligence encompasses everything from speech recognition to
machine vision and from chatbots to collaborative robotics. The benefits of this technology lie in
speed and accuracy beyond the reach of human capabilities, which is also feeding a debate about
its implications in the future of work.
Business activities that require to collect and analyze lots of structured and unstructured data can
benefit from artificial intelligence and its ability to support faster and smarter decision making.
Supply chain is therefore a natural fit for artificial intelligence.
Artificial Intelligence and Supply Chain
An interesting 2010 research paper from Dr. Hokey Min from the College of Business at
Bowling Green State University, predicted a number of applications of artificial intelligence in
supply chain management. These include setting inventory safety levels, transportation network
design, purchasing and supply management, and demand planning and forecasting.
Today’s artificial intelligence is mature enough to make some of those applications possible:
 Capitalizing on the machine-learning capabilities of IBM’s Watson, IBM has recently
launched Watson Supply Chainaimed at creating supply chain visibility and gaining
supply risk insights. The system uses cognitive technology to track and predict supply
chain disruptions based on gathering and correlating external data from disparate sources
such as social media, newsfeeds, weather forecasts and historical data.
 ToolsGroup’s supply chain optimization software is rooted in machine-learning
technology. One area of application is new product introduction. The software begins
with creating a baseline forecast for the new product. As the algorithm learns from early
sell-in and sell-out demand signals, it layers this output to determine more accurate
demand behavior, which feeds through to optimized inventory levels and replenishment
plans.
 The machine-learning technology of TransVoyant is able to collect and analyze one
trillion events each day from sensors, satellites, radar, video cameras and smartphones. In
logistics applications, its algorithm tracks the real-time movement of shipments and
calculates their estimated time of arrival, factoring the impact of weather conditions, port
congestion and natural disasters.
 The technology firm Sentient uses machine learning to deliver purchasing
recommendations to e-commerce shoppers based on image recognition. Rather than only
using text searches and attributes like color or brand, the software find visual correlations
with the items that the shopper is currently browsing through visual pattern matching.
 At the core of Rethink Robotics’ collaborative robots is an artificial intelligent software
that allows the robot to perceive the environment around it and behave in a way that’s
safe, smart and collaborative for humans working alongside production lines.
The awareness and ability to make fact-based decisions that artificial intelligence makes possible
is completely new to supply chain management. This technology is expected to create the
sentient supply chain of the future – able to feel, perceive and react to situations at an
extraordinarily granular level.

Supply Chain Managers Can Use Artificial Intelligence to Their Advantage

Driverless cars are chauffeuring themselves through Pittsburgh’s roads, robots dominate the
activity within Amazon’s warehouses, and increasingly sophisticated algorithms for demand
planning and design have gone digital. Personalization and machine learning continue to
improve customers’ experiences and open countless doors for the tech industry—and the supply
chain space lies right in the middle of many of these changes.

According to a study by Gartner, supply chain organizations expect the level of machine
automation in their processes to double in the next five years. Today’s computing capacity and
big data sets empower supply chain leaders to make smarter decisions. So, what could the future
hold for supply chain managers?

TRAILBLAZERS
As machine learning grows increasingly complex, tools may eventually make better decisions
than even the best supply chain managers. Predictive analytic capabilities allow machines to
automatically place orders based on a customer’s order pattern, minimizing delivery time—
which means next-day delivery will become too slow for some customers. Key players in tech
and supply chain, such as Amazon, Oracle, Salesforce, and GE, are already positioning
themselves to take advantage of these benefits.
Amazon is a clear leader in supply chain sophistication, and is rumored to have 1,000 employees
working in AI. On top of that, the e-commerce giant is also bringing AI to the masses through
Amazon Machine Learning and Amazon Echo, changing the lines of communication between
consumers and suppliers. The data it collects helps sense demand on a precise, individual
shopper level.

Similarly, Oracle’s Adaptive Intelligent Applications leverage insights generated from its Data
Cloud to learn from more than 5 billion business and consumer profiles. Its enterprise
applications can automatically find the best options to distribute goods across specific
geographic locations, bringing down costs for shippers.

At Dreamforce, Salesforce revealed details about its newest AI service, Einstein, which could
push Salesforce into the demand tracking arena. The new service collects and processes data
from customers’ email, social media accounts, calendar, and devices—providing Salesforce with
a wealth of information to enhance their machine learning algorithms. Einstein has the potential
to shake up supply chain management by boosting Salesforce’s power-player status into the
predictive demand market.

GE Predix is also becoming a power player in the AI market as it brings industrial automation to
the cloud. As of July 2016, GE had nearly 12,000 developers working on Predix. The company
acquired ShipXpress in August 2016, and plans to combine its cloud-based collaboration and
rail-shipment reporting software with Predix’s data analytics capabilities to effectively monitor
industrial assets. Predix links supply chain, distribution, manufacturing, and engineering services
into a single intelligent system. The new software will have significant impacts on rail, truck, and
intermodal shipping.

PEERING INTO THE FUTURE


With more and more companies hopping on the AI bandwagon, how will it affect supply chain
planning across industries? Retailers and their consumers will be the top beneficiaries from this
new technology as this industry has the most to gain from demand data for supply chain
management. Aside from retail, AI could affect virtually any manufacturing and distribution
business. In the next decade, it is expected that AI will transform healthcare and finance markets,
and there is no reason to think it will not eventually trickle into most industries over time.

Technology has long been both a disruptor and differentiator for supply chains. The AI race is
on, and companies are competing to provide the quickest and most personalized service. Across
industries, supply chain managers should consider AI’s impact on their demand algorithms,
product design, transportation fleet, manufacturing floor, and warehouse operations. It is difficult
to forecast exactly where AI will take supply chains in the distant future, but for now it is clear
supply chain managers must consider how AI can improve their own operations—or risk losing
ground to their competition
CONCLUSION

Artificial intelligence (AI) is awakening fear and enthusiasm in equal measures. Some have
likened the advances in AI to “summoning the devil” and there are concerns that AI threatens
to end humanity. AI can scare people, perhaps due to the science fiction notion that
machines will take all of our jobs; ‘wake up’ and do unintended things. However, where
some see danger, others see opportunity!

This article pulls together information from a series of articles on AI and machine learning,
its’ impact on the future world of work, and implications for occupational safety and health
(OSH).

It’s likely that the upwards trend in capabilities of AI systems will continue; that systems
will eventually become capable of solving a wide range of tasks (rather than a new system
having to be built for each new problem), and that the adoption of AI within many industries
will continue. Evidence suggests AI is currently unable to reproduce human behaviour or
surpass human thinking; it’s likely to stay a complementary workforce tool for a very long
time to come. However, steady gradual improvements in AI could reach a point where AI
exceeds current expectations. The continued development of AI will depend on moral public
opinion regarding the benefits and acceptability of it, on businesses continuing to gain
competitive advantage from using it, and continued funding for research and development of
it.

It is difficult to determine where this technology might create new jobs in the future, yet
easier to see which tasks AI might take from humans. It’s likely that any routine, repetitive
task will be automated. This shift to automation has happened for centuries, but what is
different today is that it affects many more industries. It’s likely that we will adapt to
technological changes by inventing entirely new types of work, and by taking advantage of
our uniquely human capabilities.

Historically, automating a task has made it quicker and cheaper, which has increased demand
for humans to carry out tasks around those which can’t be automated. In addition, rather
than replacing jobs altogether, technology has changed the nature of some jobs, along with
the skills required to do them. As the workplace, jobs and tasks change, knowledge will
need to be updated, and skills will need to adapt. ‘Soft’ skills, such as collaboration,
flexibility and resilience, will become increasingly important. The challenge will be to
develop our skills as quickly as the technological advancements are being made. Therefore,
we may need to ask ourselves, what the health and safety risks might be if the technology
advances faster than skills required for working with it?

In the future, if over-reliance is placed on technology people could become disconnected


from the process. They may cease to understand how things work (become de-skilled) or fail
to appreciate how bad things are when they go wrong. Whilst an AI system can present data
and recommendations, the decisions on what action to take is one for humans. However, if
humans blindly follow automated instructions, without knowing how to question them, this
could have negative implications for OSH.

Greater numbers of workers will be ‘new’ to their roles and tasks (with resulting implications
for risk management). Therefore ongoing workforce training and re-learning will be
increasingly important in the future.

In a future where benefits and risks are ‘incalculable’, it will be how humans choose to use
the technology that decides whether it’s good or bad. To harness the power and benefits of
machine learning we need to decide what we want machines to ‘learn’ and/or do, and what
questions we want them to answer. It is clearly important that controls and goals for AI are
set, and that a lot more empirical work needs to be done to gain a better understanding of
how goal systems (in AI) should be built, and what values the machines should have. Once
this is done, it will provide an idea of what sort of things should be put in a regulatory
framework, or whether existing regulatory frameworks are robust enough.

If AI is seen to contribute to business success via enabling a better understanding of


customers, along with a more rapid response to their needs, then its uptake within the world
of work is likely to continue. In the future, many tasks will have the opportunity of input
from AI. However, rather than replacing humans, it is the combination of AI and humans
that is likely to bring the greatest benefits to the working world. Therefore, we might
conclude that it will be how AI ‘interacts’ with humans that will influence its role in the
future world of work. If human values are carefully articulated and embedded into AI
systems then socially unacceptable outcomes might be prevented.

So, does AI present opportunity or danger? Will machines take all the jobs or create more
than they destroy? Opinions on this are divided, and the reality is likely to be somewhere in
between the two extremes. AI will continue to change the world of work, and workers will
need to engage in life-long learning, developing their skills and changing jobs more often
than they did in the past.
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