Application of Machine Learning Techniqu

IRJMST Vol 10 Issue 6 [Year 2019] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)
Application of Machine Learning Techniques in Supply Chain Management

Anshul Agarwal1, Arvind Jayant2*
1
Department of Mechanical Engineering, Sant Longowal Institute of Engineering & Technology,
Longowal, Sangrur, Punjab -148106, India; anshul.cri15@gmail.com
2
Department of Mechanical Engineering, Sant Longowal Institute of Engineering & Technology,
Longowal, Sangrur, Punjab -148106, India; arvindjayant@gmail.com
Abstract:
Background: Supply Chain Management is very crucial for any business organization. Many times
people involved in business activities have to take decisions regarding various aspects of supply
chain like planning, procurement, production, inventory management, transportation, distribution and
customer relationship management. The prospects of any company depends on these decisions.
These decisions are taken on the basis of predictions and forecasting models developed for various
areas of supply chain mentioned above. These models and framework developed for decision-
making should be accurate and precise as company’s revenue depends on this. Methods: Generally,
the models are formulated using traditional methods but in recent trends latest methods are used such
as Machine learning and Natural Language Processing. Findings: This paper presents a
comprehensive review of all machine learning algorithms as well as NLP techniques applied to
develop such models and frameworks. There is vast application of these algorithms and techniques in
all areas of supply chain management. Finally, a list of potential work for future research directions
are recommended.
Keywords: Support Vector Machines, Artificial neural networks, Sentiment Analysis,
Reinforcement Learning, regression, clustering algorithms.
1. Introduction
Multiple authors in their own ways have defined supply chain. For instance, Mentzer, John T., et
al. define the supply chain as “ a set of three or more entities (organizations or individuals)
directly involved in the upstream and downstream flows of products, services, finances, and/or
information from a source to a customer”, addressing the necessity of at least three entities, and
the many types of flows among them. Secondly, reference2 state that “a supply chain is the set of
entities that are involved in the design of new products and services, procuring raw materials,
transforming them into semi-finished and finished products, and delivering them to the end
customers”. Therefore, we can define supply chain as a set of three or more entities – customers,
retailers, warehouses, distributors, manufacturers, suppliers etc. – through which upstream and
downstream flow of information, finances and materials occurs with the ultimate goal of meeting
the customer’s need. Each entity within the supply chain involves activities such as
transformation of raw materials into semi-finished/finished products, logistic operations, customer
service, and distribution etc.3 as shown in figure 1.
International Research Journal of Management Science & Technology

http://www.irjmst.com Page 29
Figure. 1. Supply Chain Management

In today’s world where everything is, so competitive supply chain management also needs to
upgrade itself to match up with the ever-rising competition. There is demand for more and more
profit with lowest investment. In this scenario, supply chain management becomes a serious area
that requires some significant research, as there is always a challenge for companies for finding
ways to meet ever-increasing customer expectations at a manageable cost. This could be achieved
by identifying parts of supply chain processes that are not aggressive, finding customer needs that
are unfulfilled, making continuous improvements, and implementing them4.
Earlier manufacturers used to control the supply chain by deciding the volume of production,
pace of production and distribution. Now in present world the situation has changed, the customer
has the power to control the supply chain and be in charge. Manufacturers are striving to meet
customers’ expectations. Manufacturers have to adapt themselves according to customer’s choice
be it options, styles, features. Customers have fluctuating demands, they want quick order
fulfilment, and fast deliveries and accordingly manufacturers have to align their production
activities.
In modern times, there is lot of uncertainties; huge supply risk, and ever-increasing
competition, the excellence of supply chain depends on the organizations ability to efficiently
manage all activities from procuring raw materials, making them into useful products and
providing them to customers. Such ability can only be possible when there is no lag in
information flow and existence of real time communication among all entities involved in supply
chain. Therefore, companies are trying to make supply chain information intensive and focus has
been shifted towards sharing real time information with assets (e.g. transportation, warehouses,
inventory). Realising the importance of information sharing supply chain managers have explored
many ways to leverage this to make business decisions. Out of those ways one-way may be
Machine Learning that has its existence long before but not much utilised in supply chain
management.5.
Recently, organizations and researchers have paid lots of attention to social media. Natural
Language Processing is a technique that helps in analysing social media texts for example tweets
on Twitter, posts on Facebook etc. Social media is an important aspect of modern generation.
People express their opinions, choices and their views on social media. Research communities are
exploring the possible use of data coming from social media platforms to produce new insights in
various area like supply chain management, information diffusion and public opinions, public
relations, brand management, crisis management and humanitarian relief, election predictions,

early event monitoring, prevention of epidemics, stock price predictions6. As supply chain is,
mostly customer centric so social media has an important role in supply chain management.
Social media help to provide honest views of customers and could change the customer’s
perception. In this, a review is provided on the research work done related to application of NLP
in supply chain management.
2. Need for Machine Learning and Natural Language Processing in Supply Chain
Management
If supply chain operations are not properly managed then it may lead to poor customer service,
increasing costs, potential revenue losses and most importantly loss of customer trust which
causes loss of profits.
Supply Chain process have many uncertainties such as:
 Inventory shortage to meet the demands
 Uncertainty in logistics and shortage in supply
 Increase in order backlog
 Fluctuations in demand
 No proper communication among stakeholders
 Quality of inventory levels may vary
It is very difficult to forecast with pre-set rules as the reasons for these variations change on
daily bases, therefore machine learning algorithms could help in reducing these uncertainties and
predict precisely.
 Machine learning algorithms help in better understanding of these challenges and allow
real time analysis and forecasting in advance.
 As there is lot of data involved in these predictions, so ML algorithm help in processing
large volumes of data, which is not possible manually.
 Models developed using machine learning help in reducing operational inefficiencies,
minimizing loss in revenue and ensures on time delivery, which improves level of
customer satisfaction.
 Methodology developed by ML are equipped to handle huge data and work in real time
and can provide solutions proactively rather than after the problem occurs.
Thus, Machine Learning is an asset for supply chain management since they help reduce
uncertainties thereby increasing profits and minimizing losses.
Social Media are transforming the ways of communication, collaboration and creation. They
represent one of the most altering impact of information technology on business. Social media
have reformed the ways companies relate to the society and markets, providing new challenges
and generating many possibilities in all areas of the organisations, from human resource
management and finance to operations and marketing. Knowledge of recent trends and market
demands could be known through social media. Industrial organizations have delve into many
possible applications of social media as means of education, sales forecasting, recruitment,
customer engagement and marketing.7
3. Machine Learning Techniques
In general, Machine Learning is like learning from experience that comes naturally to animals and
humans. Machine learning algorithms works without depending on the fixed model or equation
rather they work by learning directly from data. The performance of the algorithm improves as the
data available for learning increases.
“More Data, More Questions, Better Answers”

Machine Learning algorithms helps in making better predictions and decisions by generating
useful insights from data by finding patterns in the data. These algorithms are frequently used to
make significant decisions in energy load forecasting, stock trading, medical diagnosis etc.
Machine Learning is of two types: Supervised Learning and Unsupervised Learning. In
supervised learning the model is trained from input and output data which is already known and
after training the model, the same model can be used to predict future outputs through the data
that is unknown. In unsupervised learning the algorithm finds hidden pattern in the data as the
data is unknown and it make predictions based on those intrinsic pattern found in input data as
shown in figure 2.
Figure. 2. Machine Leaning Techniques

In Supervised Learning models are developed for prediction using two techniques which are as
follows:
 Classification techniques predicts categorical data such as whether a cancer is malignant

or benign and email is spam or genuine etc. Models developed using this technique work
on discrete responses and classify data into categories. Some applications are credit
scoring, speech recognition, medical imaging etc.
 Regression techniques work on data which are continuous such as price rise of houses in a
particular area or fluctuation in temperature or changes in power demand. Some
application of this technique are algorithmic trading, electricity load forecasting etc.
Unsupervised learning algorithms work on data which are not labeled. The algorithm finds
hidden pattern and based on these patterns useful insights or inferences are drawn from the data.
Most common technique used in unsupervised learning is Clustering. It is used for analyzing data
and grouping them into sections based on their intrinsic structure. Some applications of
unsupervised learning are object recognition, market research, gene sequence analysis etc.
4. Natural Language Processing
Natural language processing (NLP) is a technique that works on text data and speech as well as
with different types of engineering data for the development of intelligent systems.
Raw human language data could be acquired from various sources such as social media, web
data, audio signals, databases and documents having important information like maintenance
reports, operational data, public sentiment on various topics and voice commands. Natural
Language processing can be applied to transform these data into meaningful information with
insights that can be visualized, to simplify abundant data, machine learning classifiers and topic
models.

Two main techniques that helps in understanding natural language are Semantic Analysis
(Semantic) and Syntactic Analysis (Syntax). Semantic Analysis is a technique which helps in
understanding words, signs, sentence structure and interpreting the meaning from them. Syntactic
Analysis or Syntax Analysis also known as Parsing is a technique to analyze natural language and
making them complying with the rules of formal grammar.
There are some techniques to understand and analysing texts as shown in figure 3:
 Parsing is the process of visualizing the syntactic relation of a sentence from their analysis
by a computer into its constituents and this can be applied for further understanding and
processing.
 Stemming is the process, which is applied for efficiency purposes and pre-processing, and
this is achieved from information retrieval and morphology.
 Text Segmentation is a technique in which different topics, sentences, words and
underlying intent in the text form can be transformed into meaningful units.
 Named Entity Recognition (NER) is a process of locating and classifying items in a text
into pre-defined categories ranging from names of organizations, persons, monetary
values, percentages and locations.
 Relationship Extraction is a process of identifying the semantic relationships between the
named entities of "Named Entity Recognition".
 Sentiment Analysis is used to determine the attitude or sentiment that a text string wants to
convey.
Figure. 3. NLP techniques for Social Media data analytics
5. Research Methodology
First of all the keywords were identified related to machine learning, natural language processing
and supply chain to combine them into search string that can be used to find journals and articles
pertaining to this review.
The search string: (machine learning OR neural network OR deep learning OR data mining
OR support vector machine OR reinforcement learning OR data analytics OR social media OR
Natural Language Processing) AND (supply chain OR supply chain management OR logistics).
This search string was then used on various journals database, on the abstract, on the
keywords and on the title of articles published. Out of all the articles fetched by the search string
around 32 journals were selected for the review purpose.

6. Taxonomy of the Machine Learning Literature

Various Machine Learning algorithms are used to optimize different processes of supply chain
management. Each algorithm has its own advantage in predicting the outcome of the process or
optimizing the process in which that particular algorithm is applied.
6.1 Machine Learning Algorithms:
A) Decision Trees: A decision tree algorithm works like a decision support tool in which a graph
or model is developed which resembles like a tree. These models are used for making decisions
and their utility, resource costs, possible outcomes also including chance-event outcomes. This
decision tree is a classification-based technique that are used for developing data mining models
which can forecast the performance of markets within global organizations (Gordini, Niccolò,
and Valerio Veglio). Prediction and identification of customers who have tendency to churn is
done using this algorithm (Qureshi, Saad Ahmed, et al.).
B) Naive Bayes Classification: Naive Bayes classifiers are based on Bayes theorem and it is a
collection of simple probabilistic classifiers with strong (naive) independence assumptions among
the features. (Kartal, Hasan, et al) used this algorithm for the prediction of classes for initially
determined stock items. This algorithm is applied to improve forecasting accuracy by extracting
sentiment index from the text of online reviews and integrating it into Bass/Norton model (Fan,
Zhi-Ping et al).
C) Ordinary Least Squares Regression: Ordinary Least Squares (OLS) is a type of linear
regression in which line is drawn among the data points and then the square of the distance
between each data point and the line is minimized. (Beutel Anna-Lena et al) used this algorithm
to develop a model for prediction of safety stock levels when demand is uncertain and depends on
many external factors.
D) Logistic Regression: Logistic Regression is a classification technique in which models are
based on sigmoid function where output varies between two points. It is used for developing
frameworks where target variable is categorical. A model for prediction of customer churn was
developed using this algorithm (Gordini, Niccolò, and Valerio Veglio). (Sluis, Stephan, and
Pietro De Giovanni) used it for making a framework for selection of contracts in supply chain.
E) Support Vector Machines: It is an algorithm in which each data item is represented by a
point in N dimensional space and then a hyperplane is built to separate these points which acts as
a classifier. This algorithm could be used to develop a model for estimating the order quantity of
perishable products (Huang, Jia-Yen, and Po-Chien Tsai) and for estimating cost for
manufacturing airframe structures (Deng, Shigan, and Tsung-Han Yeh). This algorithm is used
for analysis of ABC inventory policy (Kartal, Hasan Basri, and Ferhan Cebi) and multi-criteria
ABC analysis (Yu, Min-Chun)
F) Ensemble Methods: These methods are used to develop classifiers and then classify data
items by assigning some weights to their predictions. In this, latest algorithms include boosting
and bagging. These methods are used for building a framework for customer purchase prediction
(Martínez, Andrés, et al). This is used for development of estimating model for jet engine
components manufacturing cost (Loyer, Jean-Loup, et al).
G) K-means: It is an algorithm, which finds pattern in the data by dividing the data items into K
clusters and then the group sum of errors are minimized. It was used by Gupta, Rajan, and
Chaitanya Pathak for predicting purchase by online customers. It was also used for clustering of
inventory control systems by Balugani, E., et al
H) Clustering Algorithms: It is a method in which pattern is find in the data through dividing
them into the groups known as clusters. Blackhurst, Jennifer, et al used these clustering
algorithms for supply chain vulnerability assessment.

I) Reinforcement Learning: In this, algorithm works by trial and error. It performs an action and
if the action is, favourable it gets reward and if unfavourable, it gets penalty. Thus, the algorithm
tries to maximize the reward and minimize the penalty thereby getting the desired outcome. Sui,
Zheng et al used this for inventory replenishment for vendor-managed inventory. Rana, Rupal
et al used it for optimal pricing of perishable interdependent products. Waschneck, Bernd, et al
used it for optimizing global production scheduling.
J) Artificial Neural Network: They are artificially developed neural networks that work just
human brain and is activated when received required stimuli. It consists of an input layer and an
output layer and all processing is done in hidden layers between the input and output layer.
Ghorbani, Mazaher et al used this for distributor selection problem. Amirkolaii, K. Nemati, et al
used this for demand forecasting for irregular demands. Liu, Chunxia, et al developed prediction
model for transportation disruptions using grey neural network. Fasli, Maria et al used this
approach for developing successful seller strategies. Mercier, Samuel used neural networks for
predicting temperatures of perishable food items in a supply chain.
Below is a pie chart showing in figure. 4 the number of articles applying different Machine
Learning Algorithm.
Figure 4. Machine Learning Algorithms applied in number of articles.
7. Machine Learning Applications in different areas of Supply Chain Management
7.1 Planning: It is a very essential part of supply chain management as lots of planning is
required for successfully managing a supply chain. Demand forecasting, price estimation are
all part of planning in SCM.
Below are some literature reviewed for planning in SCM:
Table 1. Articles based on ML algorithms in SCM: Planning

Title Author(s)/ Algorithm Contribution
Year Applied
A machine learning Martínez, Ensemble “A dynamic data driven framework was
framework for customer Andrés, et Methods established to predict purchase by a customer
purchase prediction in the al, 2018 within a certain period at the company in near
non-contractual setting. future.”
A Machine Learning Gupta, K-means, “A framework is developed to enhance right price
Framework for Predicting Rajan et al, logistic purchase (not cheapest price) by customers on e-
Purchase by online 2014 regression commerce platform. The study focuses on
customers based on customer segments for predicting purchase rather
Dynamic Pricing. than on individual buyers.”

Application of machine Carbonneau, Support A model is developed to forecast distorted demand

learning techniques for Real et al, Vector at the end of a supply chain (bullwhip effect) and
supply chain demand 2008 Machine then a comparison is made with traditional
forecasting. methods of forecasting.
Machine learning-Based Carbonneau, SVM, “The purpose of this work has been to investigate
Demand forecasting in Real et al, Artificial the applicability and benefits of machine learning
supply chains. 2007 Neural techniques in forecasting distorted demand signal
Network with a high noise in the context of supply chains.”
Taiwanese export trade Kuo, R. J et K-means, “Three stage forecasting model is developed for
forecasting using firefly al, 2016 Support Taiwanese export trade. These stages are wavelet
algorithm based K-means vector transform, firefly algorithm-based K-means
algorithm and SVR with regression. algorithms and firefly algorithm-based support
wavelet transform. vector regression (SVR).”
Dynamic pricing policies Rana, Rupal Q- “The main contribution of this article is to use
for interdependent et al, 2015 Learning reinforcement learning to model the optimal
perishable products or pricing of perishable interdependent products when
services using demand is stochastic and its functional form
reinforcement learning. unknown.”
Dynamic cost forecasting Ou, Tsung- Extreme “It focuses on integration of Grey Relation
model based on extreme Yin, et al., Learning Analysis (GRA) with a hybrid forecasting model to
learning machine - A case 2016 Machine. forecast the cost of iron ore and coking coal that
study in steel plant. are majorly used in steel plants.”
A support vector machine Villegas, SVM “This study proposes a new model selection
for model selection in Marco A. et approach that combines different criteria using a
demand forecasting al, 2018 support vector machine (SVM) for demand
applications. forecasting.”
Product sales forecasting Fan, Zhi- Naïve “A sentiment analysis method, the Naive Bayes
using online reviews and Ping, et al, Bayes algorithm, is used to extract the sentiment index
historical sales data: A 2017 Algorithm from the content of each online review and
method combining the integrate it into the imitation coefficient of the
Bass model and sentiment Bass/ Norton model to improve the forecasting
analysis. accuracy.”
Control and Kocamaz, ANN “This paper presents the control of chaotic supply
synchronization of chaotic Uğur Erkin, chain with Artificial Neural Network based
supply chains using et al., 2016 controllers and the synchronization of two identical
intelligent approaches. chaotic supply chains that have different initial
conditions with Adaptive Neuro-Fuzzy Inference
System (ANFIS) based controllers.”
Learning approaches for Fasli, Neural “This paper addresses the problem of predicting
developing successful
Maria, Networks customer order prices and choosing the selling
seller strategies in dynamic
Yevgeniya strategy, which can lead to a greater profit in the
supply chain management. Kovalchuk. context of supply chain management (SCM).”
2011
Supply chain vulnerability Blackhurst, Clustering “This paper presents an approach to quickly
assessment: A network Jennifer, et Algorithms visualize a supply chain, map out the propagation
based visualization and al, 2018 path of disruptive events from the supply side to
clustering analysis the end customer and understand potential
approach. weaknesses in the supply chain design; taking into
account the structure, connectivity, and
dependence within the supply chain.”

An improved demand Jaipuria, ANN “In this study, an integrated approach of Discrete
forecasting method to Sanjita et al, wavelet transforms (DWT) analysis and artificial
reduce bullwhip effect in 2014 neural network (ANN) denoted as DWT-ANN is
supply chains. proposed for demand forecasting.”
7.2 Procurement and Supply Management: In this area of supply chain such as supplier
selection and selection of various contracts can be successfully done by applying Machine
Learning algorithms.
Some literature reviewed relevant to this area are given below:
Table 2. Articles based on ML algorithms in SCM: Procurement
Year Applied
Comparison on neural Guosheng, Support “A model is developed with better explanatory
networks and support Hu, et al, Vector power to select ideal supplier partners.”
vector machines in 2008 Machine
suppliers’ selection
The selection of contracts Sluis, Logistic “This paper seeks to empirically identify the key
in supply chains: An Stephan et Regression drivers for firms in selecting a contract in a supply
empirical analysis al, 2016 chain by investigating their performance, supply
chain orientation, and supply chain integration.”
Improving Supply Chain Silva, ANN “This paper addresses the challenges by relying on
Visibility With Artificial Nathalie, et the use of artificial neural networks to predict the
Neural Networks al, 2017 capacity of a simulated supply chain to fulfil
incoming orders and to anticipate which supply
chain nodes will receive an order for the next
period.”
Integration of artificial Kuo, ANN “This study intends to develop a green supplier
neural network and Renjieh J. et selection model, which integrates artificial neural
MADA methods for green al, 2010 network (ANN), and two multi-attribute decision
supplier selection. analysis (MADA) methods: data envelopment
analysis (DEA) and analytic network process
(ANP).”
7.3 Production: To avoid customer deliverables delay it is very important to predict lead times
and manufacturing time of a product. Machine learning algorithms helps in this area of SCM
and optimise production scheduling.
Below are some literature reviewed in this aspect:
Table 3. Articles based on ML algorithms in SCM: Production
Year Applied
Comparison of Machine Loyer, Jean- Ensemble “This paper compares the performance of five
Learning methods applied Loup, et al, Methods statistical models on the estimation of
to the estimation of 2016 manufacturing cost of jet engine components,
manufacturing cost of jet during the early design phase and using real
engine components. industrial data.”
Using least squares Deng, Least Square “This research focussed on solving the problem
support vector machines Shigan, et Support of estimating the manufacturing cost for airframe
for the airframe structures al, 2011 Vector structural projects.”
manufacturing cost Machine.
estimation.

Reinforcement learning Li, Xueping Reinforcement “The paper investigates a problem faced by a
for joint pricing, lead- et al, 2012 Learning make-to-order (MTO) firm that has the ability to
time and scheduling reject or accept orders, and set prices and lead-
decisions in make-to- times to influence demands. The firm needs to
order systems. make decisions from the following aspects:
which orders to accept or reject, the trade-off
between price and lead-time, and the potential
for increased demand against capacity
constraints.”
Optimization of global Waschneck, Google Deep ‘This research focussed on effective production
production scheduling Bernd, et al, Mind’s Deep scheduling to achieve the Industry 4.0 vision for
with deep reinforcement 2018 Q Network production control.”
learning. (DQN) agent
algorithm for
Reinforcement
Learning.
Time Series Forecasting: Sheremetov, Feedforward “The research focusses on time series forecasting
Applications to the Leonid B., neural models in the context of petroleum engineering
Upstream Oil and Gas et al, 2013 network and the future oil production is predicted in
Supply Chain. model different scenarios in an adjustable time
window.”
Order Priority ANG, Li- Neural “A new emerging method on order production
Determination in Supply chun et al, Network priority in the supply chain, based on radial basis
Chain. 2009 function neural network model was put
forward.”
7.4 Inventory Management: Inventory is the extra stock that is kept to meet customer demands
in case of any fluctuations. It can be semi-finished goods or finished goods, which are in
buffer after manufacturing and before selling. Thus, it is also known as buffer stock. Machine
Learning algorithms can predict the amount of inventory so that it is neither in excess nor
scarce.
Some research articles reviewed related to inventory management are given below:
Table 4. Articles based on ML algorithms in SCM: Inventory Management
Year Applied
A Reinforcement Sui, Zheng. Reinforcement “In the article, a methodology is proposed which
Learning Approach for et al, 2010 Learning is rooted in the Bellman equation, to determine a
Inventory Replenishment replenishment policy in a VMI system with
in Vendor-Managed consignment inventory. Rules based on the
Inventory Systems With newsvendor rule are also proposed and the
Consignment Inventory. numerical results show that the given approach
can outperform the newsvendor.”
Determination of order Huang, Jia- Support “For perishable items, order decisions are
quantity for perishable Yen et al, Vector generally made according to point of sale (POS)
products by using the 2011 Machine. but they are not always accurate so a new system
support vector machine. is proposed in this article to improve prediction
accuracy of orders of perishable items.”
Reinforcement learning Kara, Q Learning “In this paper, two different ordering policies are
approaches for specifying Ahmet et al, and Sarsa investigated for inventory management of
ordering policies of 2018 Algorithm perishable products under the random demand
perishable inventory and deterministic lead-time in order to minimize
systems. the total cost of a retailer.”

An integrated decision Kartal, Naïve Bayes, “In this paper, appropriate class for each
analytic framework of Hasan, et al, ANN, SVM inventory item is determined by employing ABC
machine learning with 2016 analysis using three different MCDM methods
multi-criteria decision and then classes of initially determined stock
making for multi-attribute items are predicted using ML algorithms.”
inventory classification.
Designing of an Mortazavi Markov “A four-echelon supply chain is modelled by
intelligent self-adaptive et al, decision integration of an agent based simulation
model for supply chain 2015 process usingtechnique with reinforcement learning algorithm.
ordering management reinforcementThis leads to the development of a new
system Learning framework, which simulated supply chain
behaviour that faces non-stationary customer
demands.”
Modelling and optimizing Chi, Hoi- SVM “This paper demonstrates the feasibility,
a vendor managed Ming, et al, viability, and robustness of applying machine-
replenishment system 2007 learning algorithms to respectively model,
using machine learning understand, and optimize vendor managed
and genetic algorithms. replenishment system.”
Support Vector Machines Kartal et al, SVM “The ABC analysis using the Simple Additive
for Multi-Attribute ABC 2013 Weighting (SAW) method was employed to
Analysis. determine inventory classes of items held in
inventory of a large-scale automobile company
operating in Turkey.”
Multi-criteria ABC Yu, Min- SVM, K- “In this a comparison is made between artificial
analysis using artificial- Chun, 2011 nearest intelligence (AI)-based classification techniques
intelligence-based neighbour and traditional multiple discriminant analysis
classification techniques. (MDA).”
Safety stock planning Beutel et al, Least square “This paper presents two data driven framework
under causal demand 2012 method. to set safety stock levels when demand depends
forecasting. on sales prices, price changes and weather
conditions inspired by a retail inventory
management application.”
Decision trees for Lolli, Decision trees, “A multi-criteria inventory classification
supervised multi-criteria Francesco, Random forest (MCIC) approach based on supervised classifiers
inventory classification. et al, 2017 is proposed, whose training is performed on a
sample of items that has been previously
classified by exhaustively simulating a
predefined inventory control system.”
A Study Regarding the Ciupan, ANN “In this paper, two issues are addressed such as
Possibility of Optimizing Emilia, to determine when to issue a new purchase order
the Supply Batch Using 2014 and the optimal size of the batch. A model is
Artificial Neural presented to optimize the supply batch such that
Networks. the raw materials or goods are provided at the
right time, and in the right quantity required by a
production process or a resale activity, without
blocking company resources in oversized
inventory compared to demand.”
7.5 Transportation/Distribution Management: In supply chain, transportation of goods or

materials and their effective distribution is necessary for proper management. Machine
Learning algorithms helps in optimizing the routes of vehicles and timely distribution of
deliverables.
Below are some literature reviewed regarding this area of SCM:

Table 5. Articles based on ML algorithms in SCM: Transportation/Distribution

Year Applied
Global supply chain Pontrandolfo, Reinforcement “The paper focuses on coordination and
management: a Pierpaolo, et Learning integration of MNCs with the added complexity
reinforcement learning al, 2002 of a supply chain that connects several nations
approach. with different currency, import tariffs, fiscal
system, etc. It lays emphasis on logistics and the
management of production processes.”
Using an agent-based Becker, Till, Neural “This study tests whether a simplified neural
neural-network et al, 2016 Networks network computational model can make routing
computational model to decisions in a logistics facility more efficiently
improve product routing than five intelligent routing heuristics from the
in a logistics facility. logistics literature.”
Neural network models Mercier et al, Neural “In this a model is proposed for monitoring the
for predicting perishable 2018 Networks temperature of perishable food along the supply
food temperatures along chain using a limited number of temperature
the supply chain. sensors per shipment which is required for wide-
scale implementation of quality-driven
distribution.”
An improved grey Liu, ANN “In this study, an ANN based model is developed
neural network model Chunxia, et which predicts transport disruptions and thus
for predicting al, 2016 helps in successfully managing market
transportation demands.”
disruptions.
A forecasting approach Budak, ANN “This article investigates a forecasting
for truckload spot Aysenur et mechanism, which is most economical and
market pricing. al, 2017 reliable for pricing the truckload spot market in
the sphere of logistics and supply chains.”
Applying a Neural Ghorbani, Neural “In this paper, the fuzzy Adaptive Resonance
Network algorithm to Mazaher et Networks Theory (ART) is applied to categorize
Distributor selection al, 2012 distributors according to their similarity.”
problem.
7.6 Customer Relationship Management: To maintain customer relation in supply chain is

very essential. It plays a crucial role in supply chain management. For successful
management of supply chain it is important to understand customer needs and satisfy them
within a given timeframe. Machine Learning Algorithms could be applied to predict customer
churn, their purchase behaviour that is very important for any business.
Some research literature reviewed in this area are as follows:
Table 6. Articles based on ML algorithms in SCM: Customer Relationship Management

Year Applied
Customer Relationship Gordini, Decision tree “In this paper, a framework is developed to predict
Management and Data Niccolò et customer behaviour in order to take profitable
Mining: A Classification al, 2014 marketing decisions.”
Decision Tree to Predict
Customer Purchasing
Behaviour in Global
Market.

A comparison of machine Vafeiadis, Ensemble “A comparative study on the most popular machine
learning techniques for Thanasis, Methods learning methods applied to the challenging
customer churn et al, 2015 problem of customer churning prediction in the
prediction. telecommunications industry.”
Customer choice Zhu, Bing Transfer “This paper focuses on choice behaviour prediction
prediction based on et al, 2015 bagging with a small sample size by introducing the idea of
transfer learning. transfer learning and present a method that is
applicable to choice prediction.”
A hierarchical multiple Chen, Hierarchical “A novel approach is formulated for customer
kernel support vector Zhen-Yu multiple churn prediction directly using longitudinal
machine for customer et al, 2012kernel behavioural data.”
churn prediction using support
longitudinal behavioural vector
data. machine
Customers churn Gordini, Support “In this paper, a new model is developed for
prediction and marketing Niccolò et vector prediction of customer churn tailored for B2B e-
retention strategies. An al, 2017 machine commerce industry.”
application of support (SVM) based
vector machines based on on the AUC
the AUC parameter- parameter-
selection technique in selection
B2B e-commerce technique
industry.
An extended support Yu, Extended “In this, a model is developed for ecommerce
vector machine Xiaobing, support industries and this model helps in forecasting
forecasting framework for et al, 2011 vector customer churn as customer retention is very
customer churn in e- machine. important for ecommerce platforms.”
commerce.
Telecommunication Qureshi, Regression “This paper aims to present commonly used data
Subscribers’ Churn Saad analysis, mining techniques for the identification of
Prediction Model Using Ahmed, et Decision tree customers who are about to churn.”
Machine Learning. al, 2013
Modelling and predicting Günther, Logistic “In this paper, a model is developed for predicting
customer churn from an Clara- longitudinal individual customers’ risk of leaving an insurance
insurance company. Cecilie, et regression. company. This model incorporates time-dynamic
al, 2014 explanatory variables and interactions among the
variables.”
Churn prediction using Farquad et SVM, Naive “In this article, a hybrid approach is proposed for
comprehensible support al, 2014 Bayes Tree customer churn prediction in three phases. In first
vector machine: An (NB Tree) phase, feature set is reduced by elimination, in
analytical CRM second these features are used to develop a model
application. and then in last phase rules are made governing the
model.”
8. Breakdown of articles reviewed according to the scope in SCM
Below is a figure showing the percentage of articles reviewed for different areas of Supply Chain
Managements see Figure 5.

Figure 5. Breakdown of articles reviewed by scope

9. The Synthesis of Applications of Natural Language Processing in Supply Chain
Management
Natural Language Processing is used for sentiment analysis in Supply Chain Management. In
today’s world of social media, people post their views online regarding various things. Through
sentiment analysis, we can know whether the views posted by people are positive or negative.
This information is very useful for the success of any business. This helps in analysing the taste of
customers and accordingly the companies can adjust their quantity and quality of production.
Table 7. Articles based on NLP Applications in SCM

Title Author(s)/ Technique Contribution
Year Applied
Insights from hashtag Chae, Descriptive “This research contributes to the SCM
#supply chain and Bongsug analytics (DA), community by proposing a novel, analytical
Twitter Analytics: Kevin, 2015 content analytics framework (Twitter Analytics) for analysing
Considering Twitter and (CA) integrating supply chain tweets, highlighting the current
Twitter data for supply text mining and use of Twitter in supply chain contexts, and
chain practice and sentiment further developing insights in to the
research. analysis, and potential role of Twitter for supply chain
network analytics practice and research.”
(NA)
Social media data Singh, Akshit Content analysis, “This paper proposes a big-data analytics-
analytics to improve et al, 2018 Sentiment analysis based approach that considers social media
supply chain based on SVM, (Twitter) data for the identification of
management in food Word and Hashtag supply chain management issues in food
industries. analysis industries.”
Introduction to the Aral, Sinan et Social Media “This special issue focuses to stimulate
special issue- social al, 2013 Analysis innovative investigations of the relationship
media and business between social media and business
transformation: a transformation and a broad research agenda
framework for research is outlined for understanding the
relationships among social media, business,
and society.”

On social network Borgatti, Social Network “In this paper, an overview is provided for
analysis in a supply Stephen P et analysis social network analysis, covering both
chain context al, 2009 specific concepts and the generic
explanatory mechanisms that network
theorists often invoke to relate network
variables to outcomes of interest.”
An exploration of Bhattacharjya Sentiment “This study investigates the effectiveness of
logistics related customer et al, 2016 Analysis e retailers’ logistics related customer service
service provision on interactions on Twitter with a view towards
Twitter: The case of e- identifying effective and ineffective social
retailers media customer service strategies.”
Social media competitive He, Wu et al, Text mining “This paper describes an in-depth case
analysis and text mining: 2013 study, which applies text mining to analyse
A case study in the pizza unstructured text content on Facebook and
industry. Twitter sites of the three largest pizza
chains: Pizza Hut, Domino’s Pizza and Papa
John’s Pizza.”
Social media: toward an Sianipar, C. Social media “This paper aims to explore the drivers of
integrated human P. M., and G. Analysis the use of social media for tightening human
collaboration in supply- Yudoko, collaboration in the whole supply chain and
chain management 2014 to provide a framework of social media
integration in SCM.”
10. Breakdown of articles reviewed according to Journals
In below figure 6 percentage of articles reviewed that belong to some leading journals are shown.
These research articles mentions the work done by researchers related to applications of Machine
Learning and NLP in supply chain over the years.
Figure 6. Breakdown of articles reviewed by journals
Table 8 shows detailed view of number of article reviewed according to the journals. Expert
systems with applications has the highest number of articles that were reviewed followed by
European Journal of Operations research and International Journal of Production Economics.
Table 8. Breakdown of articles reviewed according to Journals

Title of journal No. of Articles Percentage

Expert Systems with Applications 7 10.61%
European Journal of Operational Research 6 9.09%
International Journal of Production Economics 5 7.58%
Computers & Industrial Engineering 5 7.58%
IFAC-PapersOnLine 3 4.55%
Procedia-Social and Behavioral Sciences 2 3.03%
Procedia Manufacturing 2 3.03%
Journal of cleaner production 2 3.03%
Journal of Business logistics 1 1.52%
International Encyclopaedia of the Social & Behavioural Sciences 1 1.52%
International Conference of Cloud Computing Technologies and Applications 1 1.52%
Journal of Studies on Manufacturing1.1 1 1.52%
International Journal of Logistics: Research and Applications 1 1.52%
Information Systems Research 1 1.52%
Business Intelligence: Concepts, Methodologies, Tools, and Applications 1 1.52%
Digital Information Management (ICDIM), 1 1.52%
Journal of Business Research 1 1.52%
Industrial Marketing Management 1 1.52%
Journal of Operations Management 1 1.52%
International Journal of Machine Learning and Computing 1 1.52%
Procedia Computer Science 1 1.52%
Journal of Purchasing and Supply Management 1 1.52%
Engineering Management Journal 1 1.52%
Procedia CIRP72 1 1.52%
Information Sciences 1 1.52%
Biosystems engineering 1 1.52%
International Journal of Intelligent Information Technologies 1 1.52%
Journal of Systems Engineering and Electronics 1 1.52%
Systems Engineering-Theory & Practice 1 1.52%
Engineering Applications of Artificial Intelligence 1 1.52%
Procedia Engineering 1 1.52%
International Journal of Production Research 1 1.52%
Transportation Research Part A: Policy and Practice 1 1.52%
Simulation Modelling Practice and Theory 1 1.52%
Journal of the Operational Research Society 1 1.52%
Scandinavian Actuarial Journal 1 1.52%
Applied Soft Computing 1 1.52%
Transportation Research Part E: Logistics and Transportation Review 1 1.52%
Journal of Supply Chain Management 1 1.52%
International Journal of Physical Distribution & Logistics Management 1 1.52%
International Journal of Information Management 1 1.52%
WIT Transactions on Information and Communication Technologies 1 1.52%
Total 66 100.00%

11. Breakdown of articles reviewed by year of publication
The concept of machine learning was there long before but due to lack of data, it was not practical
to use it supply chain management but now as there is abundance of data and many methods have
been formulated recently related to data analysis so many researchers have shifted their focus in
this application of Machine Learning in SCM. Below figure 7 shows, the number of articles
reviewed relevant to this area.
Figure 7. Breakdown of articles reviewed by year of publication
12. Conclusion and Future research directions
This paper presents a comprehensive literature survey of selected journal articles on applications
of machine learning algorithms and natural language processing in supply chain management.
This review paper focusses on different ML algorithms and NLP techniques, which could be
applied in various areas of supply chain management. The articles related to ML algorithms and
NLP techniques in SCM are shown in tabular form. In addition, we tried to cover all-important
aspects so that some useful information can be gained through this review paper. Some
conclusions can be drawn from this paper such as: Neural networks are mostly used in SCM areas
for optimizing various processes. Support Vector Machine algorithm is mostly used for making
predictions and forecasting in all areas of supply chain. For the analysis of social media platforms
mainly sentiment analysis technique is applied which helps in gaining useful insights from
customer online views.
After doing this research literature review some future research directions that are recommended
are as follows:
 Deeper predictions could be made such as identifying the customer who is going to buy a
particular product and forecasting the quantity bought by the customer.
 Hybrid models can be developed such that same model can be used to make predictions in
different types of businesses such as automobiles, property, grocery, FMCG etc.
 More features can be included in the development of prediction models such as festival
discounts, effect of substitutes, promotional schemes launched by competitors etc.

 To increase the robustness of the forecasting models, non-stationary and unknown

customer demands can be considered and that can be used to evaluate their influence on
quality of forecasting and inventory management problem for perishable items.
 Future research could be directed to exploring the impact of sharing information via
internet, e-business technologies on the accuracy of forecasting and facilitating companies
to coordinate decisions with their other partners.
 A comparison can be made using different ML algorithms and thereafter choosing the
algorithm with best result for any supply chain problem.
 Further research can be directed towards using several kernel SVMs in developing models
and their performance can be compared with other frameworks to achieve better results.
 ML algorithms can be used to determine the features/variables and information that can be
used in the development of a framework for making various predictions and to know the
most effective feature/variable.
 A framework can be developed to include ‘What-if” scenarios to test the vulnerability of
SCM under various circumstances.
 Future research can be done to track real time data and apply NLP techniques to analyse
customer data such as purchase, sales, behavioural, and demographic data. This helps in
providing personalised service to customers and acquire better competitive intelligence.
 A new social media platform can be developed dedicated to supply chain management
where all the stakeholders of supply chain can post their views/reviews so that there will
be smooth information sharing and minimizing any communication gap. This platform
could also be patented and can emerge as a new business field.
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IRJMST Vol 10 Issue 6 [Year 2019] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)

Application of Machine Learning Techniques in Supply Chain Management

International Research Journal of Management Science & Technology

Figure. 1. Supply Chain Management

International Research Journal of Management Science & Technology

International Research Journal of Management Science & Technology

Figure. 2. Machine Leaning Techniques

 Classification techniques predicts categorical data such as whether a cancer is malignant

International Research Journal of Management Science & Technology

Figure. 3. NLP techniques for Social Media data analytics

International Research Journal of Management Science & Technology

6. Taxonomy of the Machine Learning Literature

International Research Journal of Management Science & Technology

Figure 4. Machine Learning Algorithms applied in number of articles.

7. Machine Learning Applications in different areas of Supply Chain Management

Table 1. Articles based on ML algorithms in SCM: Planning

International Research Journal of Management Science & Technology

Application of machine Carbonneau, Support A model is developed to forecast distorted demand

International Research Journal of Management Science & Technology

International Research Journal of Management Science & Technology

International Research Journal of Management Science & Technology

7.5 Transportation/Distribution Management: In supply chain, transportation of goods or

International Research Journal of Management Science & Technology

Table 5. Articles based on ML algorithms in SCM: Transportation/Distribution

7.6 Customer Relationship Management: To maintain customer relation in supply chain is

Table 6. Articles based on ML algorithms in SCM: Customer Relationship Management

International Research Journal of Management Science & Technology

International Research Journal of Management Science & Technology

Figure 5. Breakdown of articles reviewed by scope

Table 7. Articles based on NLP Applications in SCM

International Research Journal of Management Science & Technology

Figure 6. Breakdown of articles reviewed by journals

International Research Journal of Management Science & Technology

Title of journal No. of Articles Percentage

International Research Journal of Management Science & Technology

11. Breakdown of articles reviewed by year of publication

Figure 7. Breakdown of articles reviewed by year of publication

12. Conclusion and Future research directions

International Research Journal of Management Science & Technology

 To increase the robustness of the forecasting models, non-stationary and unknown

International Research Journal of Management Science & Technology

International Research Journal of Management Science & Technology

International Research Journal of Management Science & Technology

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