AI in Supply Chain Management: How AI used in Supply Chain?

The current techy world is rolling in the AI role. The usage of artificial intelligence in the supply chain is here to stay and will make massive waves in the upcoming years. This creates speed in making decisions, speed in reducing the cycle times, speed in setting functionalities and operations, and speed in continuous enhancement. 

Considering that businesses are adopting well-established artificial intelligence (AI) technologies to overcome challenges and better manage their supply chain. The combination of AI in supply chain management assists in the reduction of costs, increased operational efficiency, improved supply chain performance, and better customer experience. 

Here we explore how Artificial Intelligence (AI) for the Supply Chain impacts businesses, its benefits, and the future. Let’s dive right in.,

Artificial Intelligence – A Primer

Artificial Intelligence simply called AI is the term that is used to illustrate a tool or machine being provided with the capabilities which is typically associated with the cognitive human mind. It covers a wide range of tasks and applications, used to analyze data to make predictions instantly. 

Many types of AI are used for various roles they are.,

- Machine Learning (ML)

- Natural Language Processing (NLP)

- Robotic Process Automation (RPA)

AI in Supply Chain 

AI in the supply chain can provide the robust optimization capabilities needed for enhanced capacity planning, enhanced demand forecasting, reinforced productivity, lower supply chain costs, and better output, all while raising safer working conditions. 

The application of artificial intelligence in the supply chain has a plethora of benefits. Areas that impact within the realm of both supply chain and logistics include operational procurement using intelligence data and chatbots, supply chain planning to demand forecasting and supply, warehouse management to stock optimization, fast shipping to reduce lead times and transportation costs, optimal supplier decision through the usage of real-time data. 

Generative AI in Supply Chain Management

Everyone has heard about ChatGPT. If yes! Then you heard about generative AI. It is a form of artificial intelligence that refers to algorithms that “generate” new data and content such as blogs and programming code. 

One such example of Generative AI in the supply chain is demand forecasting. Also, it is applied to automate clerical work, anticipate operational results, and factor tariffs into functional costs.

Another real-time example is Echo Global Logistics. This company utilizes generative AI to lessen shipping rates, acquire transportation, and automate carrier management. 

Application of Artificial Intelligence in Supply Chain Management

Supply chain managers are always seeking opportunities to enhance business processes. So let’s introduce the current trend of Artificial Intelligence that can lead to supply chain optimization and improvement.

Need for AI in Supply Chain Management

AI in supply chains is rapidly evolving, and the potential for enhanced efficiency, less human error, and improved forecasting is essential for staying competitive. Increasing efficiency in supply chain systems even the smallest margins can enhance lucrative profits.

Example:

UPS

With the help of an AI-powered navigation system, UPS has initiated to execute and update the drive’s route automatically and creates the most effective route for users. AI has the potential to reduce the high cost of business and maximize the ROI by eradicating human error. 

Use Cases of AI in Supply Chain

Nowadays, Artificial Intelligence is used to enrich supply chain management systems all over the world. It permits us to copy what works and understand what doesn’t. The most common applications of artificial intelligence are,

1. Automated Warehousing

2. Intelligent Transportation

3. Demand Forecasting

Example:

Walmart

This organization uses AI-driven automation for its warehouses that assist them in optimizing their inventory levels by reordering stock automatically. 

Amazon

It utilizes a forecasting algorithm that takes into account customer information, sales trends, and other aspects to predict future demands accurately.

Benefits of AI in Supply Chain Management

Increased Efficiency and Cost-savings

AI can assist logistics organizations in determining the most economical and effective method for completing any task. Let's take a look at some repetitive tasks - Transportation Routing and Inventorying. It can take individuals several hours a day to perform. 

However, AI can complete the task in a matter of seconds. As a result, human labor can focus on tasks that are unique to humans. This enhances both ROI and worker's at the same time.

Increased Visibility and Transparency

When a supply chain covers the entire world it's easy for things can get lost in the shuffle. Deliveries can get lost, or delayed by natural factors, and sometimes the wrong shipping is put on the wrong container. It is a typical challenge in global supply chains and logistics.

Artificial Intelligence assists in resolving this issue by collecting a huge set of logistics information and understanding like a human. That includes shipping times, inventory location, predicted shortages and delays of the product, and more., 

Enhanced Customer Satisfaction 

When comes to customer satisfaction, AI assists logistics companies in meeting that expectation. AI-based customer service chatbots provide quick answers, sparing customers from lengthy hold times and overwhelmed representatives.

Future of AI in Supply Chain

As technology advances, the usage of artificial intelligence in supply chain management has drastically become more prevalent still it continues. As massive technologies like IoT and Blockchain become adopted widely, AI-driven predictive analytics will become even more crucial for managing supply chains.

Let’s see some futuristic predictions by Gartner that were expected over the next few years:

(i) 75% of Massive Firms will adopt “Intro-logistics Smart Robots” in their warehouse by 2026.

(ii) More than 75% of commercial SCM application merchants will deliver AI solutions embedded in their apps by 2026.

(iii) 50% of Supply Chain organizations will invest in AI-supported Apps.

The above-mentioned predictions are just short-term predictions, but the potential appears virtually limitless. Moreover, AI has the potential to reduce operational costs, identify inefficiencies, and elevate overall customer responsiveness. As AI becomes an integral part of supply chain and logistics operations, it holds the promise of improving efficiency, decreasing waste, and better responding to the evolving demands of the ever-changing market.