Supply chain leaders have traditionally been slower off the mark than other business stakeholders when it comes to technological adoption. However, when it comes to artificial intelligence and automation, few areas of the business see more consistently positive effects as the supply chain.
Supply chain leaders are what Noha Tohamy, distinguished VP analyst in Gartner’s supply chain practice, calls “fast followers”. As other functions in the enterprise see success, supply chains are set to follow suit rapidly.
Supply chain investment into AI, automation, etc. gathers momentum
Generative AI investment has been embraced by the supply chain sector with particular enthusiasm. A Gartner survey found that top performing supply chain organisations are investing in artificial intelligence and machine learning in order to optimise their processes at more than twice the rate of their lower performing peers.
Ken Chadwick, another VP Analyst in Gartner’s supply chain practice, noted that, rather than efficiency or cost saving, “enhancing productivity is the key factor that will drive future success” for supply chains. The key to unlocking that productivity lies in “leveraging intangible assets,” he explains. “We see this divide especially in the digital domain where the best organisations are far ahead in optimising their supply chain data with AI/ML applications to unlock value.”
However, investment into digital transformation and actually reaping the rewards of that investment are two very different things. Data gathered by McKinsey suggests that 70% of digital transformation projects fail to meet their stated goals.
Simply investing into AI, machine learning, and automation will not automatically create value in the supply chain. Thankfully, this is a lesson that supply chain leaders seem to have learned.
Digital adoption drives supply chain resilience
A new report from supply chain solutions provider Cleo paints a hopeful picture for the sector’s ongoing digital adoption.
According to their report, technology investments are increasing organisations’ ability to deliver on their supply chain commitments. This, they found, “resulted in accelerating profitability, revenue growth, competitive differentiation, and supply chain efficiency.” Perhaps most interestingly, the benefits of investment into technologies like AI and ML were observed very quickly.
Last year, 97% of organisations surveyed by Cleo invested into “supply chain technologies.” Cleo’s research lacks specifics on which technologies exactly were invested into the most. It also fails to denote which ones saw the most impactful return. However, holistically, 81% of companies observed that their supply chain investment delivered business improvement in less than 24 months. An impressive 35% said they felt the benefits within a year.
This year, more than half of the enterprises surveyed are planning to invest $1 million or more into further supply chain technology adoption.
At a time when disruptions are more the norm than the exception in the supply chain, organisations are prizing resilience more highly. “By leveraging technology to build greater resilience to supply chain disruptions, a company is better able to take control of its supply chain commitments and deliver on their promises – resulting in stronger relationships and trust with their ecosystem,” says Tushar Patel, CMO at Cleo. He added that, in order to uphold their commitments, supply chain operators “need to consistently invest in their supply chain technology, otherwise they stand to take a hit to their relationships – impacting their bottom line.”
- AI in Supply Chain
- Digital Supply Chain
