From Just-in-Time to Just-in-Case: Inside Schneider Electric’s AI-Powered Supply Chain

Schneider Electric is doubling down on artificial intelligence (AI), automation and digital transformation as it pushes beyond Industry 4.0 into the era of Industry 5.0 — a vision that places people and societal benefit at the heart of advanced industrial technology.

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“We’re seeing conversations around Industry 5.0 because collectively we’re moving past 4.0 to more of a holistic view,” said Gregory Tink, director of industrial digital transformation at Schneider Electric, in an interview with PYMNTS.

Tink described Industry 5.0 as the next step beyond applying technology to industry, which characterized 4.0. For 5.0, “it’s about taking advanced technology, but wrapping it and looking at it through a lens of, How does it benefit people, and how does it benefit the societies in which we live?”

Schneider Electric’s focus is on applying electrification, automation and digitization together to drive both industrial progress and sustainability. Being green is crucial to the company. This week, Time magazine named Schneider Electric as the world’s most sustainable company.

“We continue to look for ways to continuously improve with regard to sustainability and how we impact the world, in pursuing electrification, automation, and digital being that other pillar in that three-legged chair,” Tink said. “All three of those together need to be combined to really push industry forward.”

Central to this effort is the company’s transformation of its supply chain, where AI and data-driven insights are helping Schneider Electric create resilience in an era of persistent disruption. With all the volatility in the world, the company uses its data to manage demand forecasting and plan production in the “right places at the right time,” he said.

But it’s more than just-in-time manufacturing. Rather, it’s more about “just-in-case thinking,” Tink explained. “In case things happen, how can we be more resilient, more sustainable, more effective?”

AI plays a pivotal role in achieving this flexibility. “We just can’t fill that gap by hiring people anymore. We desperately need to look at technology … and do that in a very effective and efficient way,” Tink said.

A PYMNTS Intelligence report shows that tech innovations can mitigate risk in their supply chains: “While conventional risk assessment remains foundational, companies are increasingly turning to AI and machine learning to forecast disruptions before they metastasize.” Moreover, predictive analytics bolstered by real-time data from Internet of Things (IoT) devices let companies anticipate things like when equipment needs repairs.

As supply chains stretch across continents, technology becomes indispensable in managing cross-border risks as well, according to the report. “While front-line logistics and supply chain operations draw most of the attention during crises, the real battle often begins in the back office. Enterprises with rigid, antiquated systems are less able to respond swiftly to disruptions, particularly when operating across borders.”

Read more: How CFOs Can Manage for Today’s Supply Chain Choke Points

Real-Time Data Is a Game Changer

What Schneider Electric does is combine data from its disparate systems and apply real-time analytics to make adjustments. But Tink said not all data needs to be centralized before companies can act.

While data aggregation is important, “You don’t necessarily need to bring it all into a data lake before you use that data,” Tink said. For example, “You can build agents that are on the plant floor.”

This blend of centralized and distributed data management is crucial to quick decision-making. “Getting that information in real time so that you can actually react to it quicker — that makes a lot of sense,” Tink said.

“For instance, maybe produce more in one factory of the same product so we have redundancy within our supply chain. If we have an outage or some sort of downtime in one factory, we can steer production as quickly as possible to another factory so our customers don’t see any outages.”

Tink shared an example of a product his company was shipping to a client by truck. But the truck had an accident — and the client critically needed the product. Using its data, AI and flexible supply chain, “we were able to replace that product within less than 24 hours because we were able to look at the data, understand where else we were manufacturing them” see that the factory had flexibility in the schedule, and adjust.

Without these capabilities, he said, recovery “could have taken weeks.” That’s because there could plausibly be only one source for the product and it would have taken several phone calls and paperwork to get another product to the client.

Shift in Strategy

Looking back, Tink pointed out that prior to COVID-19, the company viewed its supply chain as stable.

“We sort of took it for granted that we had that availability,” Tink said. But as the pandemic and other disruptions hit, Schneider Electric had to shift its strategy to focus on resilience instead of prioritizing places that can most economically make the products.

“It’s really been driven from the fact that if we can’t get the parts to make our products in a timely fashion, that’s going to impact the products we create, which impacts our customers,” Tink added.

One example of this digital transformation at work can be seen in a 67-year-old factory in Lexington, Kentucky, where Schneider Electric introduced a visual AI-powered defect detection system for a conveyor chain. “It took away the unplanned downtime,” Tink said. “We’re able to detect defects when they’re minor and schedule maintenance when we’re able to.”

But the shift has not been without challenges. “It always comes back to people and training — getting people to understand and accept that this is a different way of doing business,” Tink said. He noted that leadership buy-in is essential to making transformation efforts succeed. “If the leadership isn’t on board, it’s not actually going to work.”

As for what’s next, Tink said Schneider Electric sees tremendous potential in AI agents.

“We need as an industry to be able to take what’s in our operators’ heads and their 20 years’ experience and then embed that experience in algorithms so that agents that we create become the experts to help steer the supply chain, the plant floors, steer the decisions that are being made,” Tink said. “What’s next is really around agentic AI.”

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