The modern value chain is vast, complex, and can contain thousands of suppliers.
These supply chains have evolved over the past decade, setting aside simpler, more linear structures in favour of complex ecosystems spread across multiple continents. Putting a single product in a customer’s hands can rely on the movement of goods across disparate geographies, between hundreds of companies, along vulnerable trade routes.
Recent geopolitical and climate-related disruptions are driving a return to simpler, more regional supply chain models. However, organisations are nevertheless still managing highly complex, fast moving supply chains in an increasingly complicated and dangerous world. From the US-China trade war and COVID-19 pandemic, to the ongoing Houthi attacks in the Red Sea and increasingly common extreme weather events, supply chains face a landscape where disruption has become the norm rather than the exception.
More than ever, supply chain managers are looking for ways to make their operations more agile and resilient. Some believe that artificial intelligence (AI) is the answer.
Can AI deliver supply chain resilience and agility?
Many supply chains have undergone radical transformations driven by the intersection of AI, machine learning, and increasingly cheap computing resources. “The culmination of those three things have revolutionised how we look at supply chain processes, all the way from demand forecasting to understanding at a granular level what customer needs are,” said Parvez Musani, SVP of End-to-End Fulfilment as Walmart in an interview with PYMNTS. “The integration of AI, ML, and vast computing power, coupled with an abundance of data, has transformed our approach to demand forecasting, inventory flow, and cost optimisation.”
AI’s ability to analyse vast data sets makes the technology ideally suited to generating the kinds of insights supply chain managers need based on broad market data. Not only that, but the technology’s ability to examine large amounts of unstructured information makes it very good at flagging risks before they develop into full-fledged disruptions.
Accurately forecasting demand is critical for retailers like Walmart. By effectively managing inventory levels, supply chain and logistics managers can minimise the likelihood of stockouts or overstocking. AI algorithms’ ability to rapidly comb through weather events, local news, historical sales data, market trends, and other contextual effects in real time allows the technology to generate accurate demand forecasts. Both Walmart and Amazon use AI tools to estimate and predict product demand in order to maintain the right inventory levels.
- AI in Supply Chain
- Digital Supply Chain
