BCG Henderson Institute

By the middle of January 2020, AGCO Corp.—the $9 billion American agricultural machinery manufacturer whose brands include Massey Ferguson, Challenger, Fendt, and Valtra—had begun hearing from its suppliers and customers in China about a possible health crisis. That crisis would evolve to become the COVID-19 pandemic. Immediately, AGCO, which has 41 factories, 37 distribution facilities, and thousands of suppliers around the world, turned to an artificial intelligence–based supply chain risk-management system that it had installed in 2015.

The system provides a composite view of AGCO’s global supply chain, across supplier tiers, in real time. By ceaselessly monitoring data on all the risks it has identified, and by continuously analyzing data from hundreds of thousands of online sources and social media, AGCO’s A.I. system is able to flag any vendor that, for any reason, may not be able to deliver components on time.

Using the latest data, the A.I.-based system predicted—three days before the government announced it—that South Korea would start restricting activity. AGCO was able to accelerate component shipments from that nation before the restrictions took effect. Similarly, the A.I. system forecast Italy’s lockdown seven days before the event, which helped AGCO expedite shipments from its suppliers in northern Italy before they, too, shut down. The A.I. system’s predictions were granular, allowing the company to assign different priorities to suppliers located as close as 50 kilometers from each other. By March 2020, the system’s ability to learn and better forecast worsening conditions and rolling lockdowns helped AGCO tackle the crisis in Switzerland, Spain, and Sweden.

A year later, as the pandemic begins to ebb across the world, AGCO may be better prepared than its rivals to return to normal because of the A.I. system. It can help find stockpiles of critical parts, position personal protective equipment (PPE), and identify where the company should focus to expedite the production of critical components. The key issue, though, is whether companies like AGCO will continue using A.I. systems to manage the post-pandemic peace as they did during the war on COVID-19—or whether business will return to viewing the technology as interesting but not essential.

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