Artificial intelligence, or AI, is rapidly transforming how we live and work, leading to unprecedented changes across virtually all industries. The global supply chain is no exception, and as AI tools become more advanced and integrated, businesses in the supply chain are taking advantage of this groundbreaking technology. Today, AI is already helping businesses in the supply chain handle complex challenges, and is increasing their efficiency, accuracy, and resilience. But what does the future of AI in supply chains look like?
Artificial intelligence is essential for supply chain businesses looking to stay ahead of the competition, meet customer expectations, and pivot at the pace of modern business. But because this technology is rapidly changing, it’s important to understand where it is today and monitor where it’s heading.
Here’s what you need to know about the current state of artificial intelligence and the future of AI in supply chains.
AI in the Workforce Today
You might not realize it, but we’re in the throes of the Fourth Industrial Revolution. While previous industrial revolutions were shaped by the steam engine and machinery, this era of industrial change is marked by “connectivity, advanced analytics, automation,” and other next-generation technologies, including artificial intelligence. AI is so transformative, that the World Economic Forum estimates that up to 40% of the workforce might need to be reskilled in the next three years as a result of advancements in AI.
What are some of the implications of AI in the workforce? One of the most significant contributions of AI is its ability to automate mundane and repetitive tasks, such as data entry, scheduling, or managing basic inquiries. AI also drives enhanced decision-making, due to its ability to analyze vast amounts of data in real-time.
The future of the workplace is fueled by AI. And it has particularly useful implications for more agile, responsive supply chains.
Current Role of AI in Supply Chain Management
Before we dive into the future of AI in supply chains, it’s important to discuss where we are today. AI is already making a significant impact in supply chain management by enhancing efficiency, accuracy, and agility. This technology has many benefits: research shows that AI-driven supply chain management can reduce costs by up to 20%, while further data shows that it can significantly enhance service levels and inventory levels.
Here are some of the specific areas where AI is already being used in supply chain management:
1. Demand forecasting
AI-driven predictive analytics is revolutionizing demand forecasting. Traditional forecasting methods often rely on historical sales data and general market trends but were fairly inflexible, and failed to take other factors into account. In contrast, AI tools analyze multiple data sources in real time, such as consumer behavior, inventory levels, and even weather patterns. This results in highly accurate forecasts which allow companies to better align inventory with actual demand, minimizing stockouts and overstocking.
2. Inventory analysis and management
Inventory analysis and management is another area where AI excels. AI systems can automate and optimize inventory tracking, helping businesses maintain optimal stock levels (even across multiple locations). AI and machine learning algorithms can also monitor demand patterns and notify you when it’s time to restock, reducing waste and storage costs. It can even optimize warehouse automation, improving efficiency in processes such as picking, packing, and shipping.
3. Logistics and route optimization
AI plays a crucial role in logistics by optimizing routes and improving delivery efficiency. For example, AI-powered platforms can analyze data such as traffic patterns, fuel costs, and delivery windows, to determine the most efficient routes for shipments. This can reduce transportation costs and delivery times.
4. Supplier relationship management
AI enhances supplier relationships by providing you with insights into supplier performance. These tools can analyze supplier data, track performance metrics, and give you instant insights into what your suppliers are doing. This allows you to make smart decisions when it comes to selecting suppliers and negotiating contracts.
5. Predictive maintenance
Artificial intelligence is also being used to enhance equipment maintenance within supply chains. AI systems can identify defects or anomalies in products, and can even predict when maintenance will be required, reducing downtime and unnecessary repairs.
AI is already playing a pivotal role in supply chain management by improving forecasts, optimizing inventory, enhancing logistics, and managing supplier relationships. And this is only the beginning: where will AI in supply chains go from here?
Trends to Watch in the Future of AI in the Supply Chain
As AI continues to evolve, we can expect its influence on supply chain management to grow substantially. Keep in mind that the artificial intelligence supply chain market is projected to grow at a CAGR of more than 38% from 2024 to 2030.
Here are some key trends to watch in the future of AI in supply chains.
1. Bigger strides in automation
While AI is already leading to significant improvements in automation, we can expect this space to expand. For example, it’s likely that “hyper-automation” will lead to the full integration of advanced AI technologies, robotics, and machine learning, to automate entire supply chain processes from end -to end.
2. Enhanced use of prescriptive analytics
Predictive analytics plays a significant role in the supply chain today, where future demand and supply are “predicted” based on historical data. The next phase of this will likely involve prescriptive analytics, where AI not only predicts future outcomes but also suggests the best next course of action. We can expect AI systems to soon provide real-time recommendations on everything from adjusting inventory levels to rerouting shipments in response to sudden disruptions.
3. AI-enables sustainability initiatives
As companies face increasing pressure to prioritize sustainability, AI will likely play a key role in building more sustainable supply chains. For example, AI-powered tools might optimize energy usage, reduce waste, and track carbon footprints at every stage of the supply chain. AI systems might even be able to monitor compliance with environmental regulations and keep decision-makers up-to-speed with instant notifications.
4. AI in supply chain risk management
AI will likely play an even larger role in supply chain risk management as businesses seek to improve their resilience. For example, artificial intelligence might become better at predicting risks related to ongoing geopolitical issues, climate change, and supplier instability, by analyzing vast sources of real-time data. These advanced AI algorithms might be able to provide you with early warning signs, allowing you to make decisions that mitigate the risks.
The future of AI in supply chains is filled with exciting possibilities. From end-to-end automation to real-time decision-making, AI is set to continue revolutionizing the way supply chains operate. As businesses continue to embrace these trends, supply chains will become more efficient, resilient, and adaptable.
StockIQ: Your Partner in AI-Driven Supply Chain Management
Cutting-edge supply chain businesses need cutting-edge technology, which embraces the future of AI. And if you’re ready to take your supply chain management tech to the next level, StockIQ is here to help. StockIQ is a supply chain planning suite that allows you to control inventory, simplify ordering, and improve forecasting, and it leverages powerful AI algorithms to give you key insights and answers.
Find out how StockIQ’s AI-driven tools can enhance your supply chain management practices by contacting us today or requesting a StockIQ demo.
