The potential for artificial intelligence to transform supply chain costs and performance is immense. From forecasting and procurement to customer delivery and service, it’s a sector to which the data analytics, automation, and modelling capabilities of AI are ideally suited.
But despite the potential for a perfect partnership, AI adoption in supply chains remains low. What’s more, companies implementing AI solutions often seem to be doing so without a clear value proposition. Adoption is driven by hype, not business need.
The Chief Supply Chain Officer (CSCO) should be the driving force in achieving intelligent AI implementation through the supply chain. Successful adoption will require leaders who understand where to employ AI for the most significant impacts.
Why supply chain AI adoption is lagging
Adoption of AI in the sector is being delayed by several limiting factors. Foremost is the skillset gap. From the board to the CSPO, leadership needs to improve AI fluency in order to make the right implementation decisions. Competition is also fierce across the talent market for AI and data experts, with a premium on those experienced in the operational nuance of complex supply chains.
AI continues to receive criticism for not presenting its ‘thought process’. Poorly designed supply chain systems risk becoming ‘black boxes’, making unchallengeable decisions without giving stakeholders clear rationales. While GenAI can provide reasoning narratives, full explainability remains limited, especially for deep learning or complex statistical models.
Risk accompanies the introduction of any new technology, and is multiplied when rolled out across a complex supply chain. AI implementation requires meticulous design, with an emphasis on transparency. As AI expands into warehouse operations, maintenance, and planning, critical questions must be asked around whether systems should be modular or integrated end-to-end; and where governance for autonomous decision-making lies.
A perception barrier to AI adoption also exists. By focusing on cost-cutting, and implementing point solutions to fix specific issues, organisations are overlooking AI’s strength in optimising value across the supply chain. By enhancing margins, resilience, and service levels, it can be a value creation enabler, not just an efficiency tool.
Where AI can benefit supply chain management
Overcoming these barriers presents opportunities to improve supply chain efficiencies, increase capacities, and lower costs, with use cases including:
Responding rapidly to market shifts
AI’s use of real-time data to predict, optimise, and adapt means it can prioritise inventory for high-margin products; guide dynamic pricing, allocation, and fulfilment; and circumvent bottlenecks.
Improving logistics decision-making
AI maps likely scenarios and plans responses, helping leadership to make faster, better-informed decisions. It uses learning loops to adapt, delivering smarter outcomes over time.
Bridging business and technology
GenAI improves accessibility and adds transparency by allowing users to interact directly with complex systems in natural language, making it a collaborative business partner.
Improving customer experience
By detecting patterns in customer churn, AI can drive operational improvements, while also performing sentiment analysis, aggregating high volumes of unstructured feedback to identify what issues influence customer satisfaction.
Aligning stakeholders
For supply chain stakeholders, AI offers shared visibility on cross-function activities. By integrating planning and procurement through data, organisations can gain greater resilience and commercial agility.
Meeting ESG goals
AI tools can measure emissions, evaluate ethical sourcing, and ensure regional regulatory compliance to help reach sustainability targets.
The role of the CSPO in harnessing AI
With these advances, the role of the CSPO is evolving. What was once an operational and tactical job, focused on the movement of goods and management of supplier relationships, is now a broader strategic one, designing an AI-enabled central nervous system to create competitive advantage.
To harness the potential of AI, CSCOs will need to be data-fluent: understanding how AI algorithms reason, and able to manage intelligent systems spanning automated procurement, real-time shipment routing, and inventory optimisation. They will oversee global supply chains via an AI dashboard, making fast, agile decisions based on multiple live information streams, and surfacing enterprise risk factors.
CSPOs will simultaneously have to spearhead a talent transformation, shifting teams from manual and operational roles to strategic ones where they work alongside machine intelligence. This means reskilling existing talent, creating cross-functional partnerships, and hiring data specialists who can apply their skills to supply chain challenges.
How the supply chain sector can reap the rewards of AI
The evolution of supply chains through AI is not a distant vision. It’s today’s reality, and it’s defining how organisations operate and compete. For the modern CSCO, AI is more than an efficiency tool. It is a catalyst for strategic leadership which enables smarter decisions, greater resilience, and customer engagement.
Realising the trechnology’s full potential goes beyond an adoption program. It demands thoughtful business strategy, cross-functional talent, and commitment to transparency and explainability. Companies that align AI initiatives with positive business outcomes and empower people to work with intelligent systems will unlock unprecedented value.
In an increasingly complex, volatile environment, AI-powered supply chains will be the difference-makers. The technology will turn risks into opportunities and supply chains into engines of innovation and growth.
- Camilla Gilone is a principal in Heidrick & Struggles’ London office and a member of the global Supply Chain & Operations Officers Practice, focusing on chief operations, supply chain, and procurement officer positions.
- Jorge Gouveia de Oliveira is a partner in Heidrick & Struggles’ London and Lisbon offices and a member of the Industrial Practice, specialising in the mining & metals sector, and the CEO & Board of Directors Practice.
- AI in Supply Chain