Artificial Intelligence In Supply Chain Management

ai for supply chain optimization

It offers a fully supported environment where ML models may be developed, trained, and tested quickly before being deployed in a real-world setting. In this case, the goal is to predict whether delivery will be late or on time based on a set of inputs, such as past delivery history or traffic data. This approach allows using one simple, fast model that “scans” all orders for potential delays.

ai for supply chain optimization

Most supply chains experienced a new level of resilience testing during COVID-19 as they were challenged to handle increasingly complicated jobs (Zouari et al., 2021) . Customers in the modern corporate world want supply chains to provide both customized solutions and reliability. With the use of AI, a system has been designed to detect client profiles and provide individualized products without compromising security or privacy.

Disadvantages of AI in supply chain and logistics management

The ongoing supply chain crisis has taken a profound toll on businesses, workers, and consumers alike. AI technologies are proving highly beneficial across all stages of the supply chain. They optimize inventory management, enhance warehousing and storage and support process automation — all to spur efficiency and productivity, prevent human error, and protect the supply chain from future crises. C3 AI is a machine-learning software company specializing in tools that use predictive analysis for inventory management.

ai for supply chain optimization

That’s why Quantic outperforms both Harvard and INSEAD in terms of student satisfaction with a 61 on the NPS scale. Walmart is using AI to optimize its transportation network, which has saved the company billions of dollars. AI is still a relatively new technology, and it may take time for your company and your employees to accept it with open arms. Another significant challenge impacting the supply chain is the necessity of ensuring not only that materials reach their intended destination in a timely manner, but that supplies are in optimal condition when they get there. Supply chain management comes with a great deal of detail-oriented analysis, including how shipments and goods are loaded and unloaded from the shipping containers.

The Important Role of AI in Supply Chain Management & Logistics

AI algorithms can analyze data to predict how much and what product will be in demand. If a supply chain is running inefficiently, it could cause serious problems throughout the supply chain. AI can help automate different parts of their warehouses through inventory management, which can save both time and money if used correctly. Applying artificial intelligence (AI) is one way supply chain professionals are solving key issues and improving global operations.

  • The Client, a leading supplier to auto and electric utility industries, experienced inventory management and factory traffic challenges while producing automotive parts on low margins.
  • CV models trained via deep learning have shown to be as good or better than humans at certain tasks; they reduce labor costs with greater efficiency and less variability.
  • Not only will this prepare you for an AI-driven future, but it’ll also teach you the skills to understand why it matters.
  • Often, most of the company’s data is collected for compliance purposes or used during audits.
  • AI enables companies to automate tasks, analyze data, and make data-driven decisions, resulting in increased efficiency and reduced costs.
  • Efficient transportation and logistics management are critical components of a well-functioning supply chain.

Additionally, natural language processing (NLP) in Dataiku can help with contract analysis and invoice matching to help teams get a global view on spending in order to optimize negotiations and the bottom line. Companies are increasingly turning to Dataiku as the go-to platform for developing predictive analytics systems that help them avoid issues that will cost money and time. ChatGPT can also be a valuable tool for supply chain professionals who use Microsoft Excel extensively in their day-to-day operations. ChatGPT can assist in understanding and using Excel formulas by explaining and providing examples of how to use them. Supply chain professionals can save time and increase their productivity by creating macros that can be run with a simple command.

Convenience Store Client Maximizes Profit and Improves Customer Service

However, this technology, and the automated smart contracts built on top of it, can optimize supply chain processes. For example, blockchain oracles, programs that feed real-world data to a blockchain, can inform AI-driven smart contracts when a contractor completes a job. Natural Language Processing (NLP) technology can monitor internal and external data in real time. For example, a company using a social media-monitoring NLP tool could monitor external trends, such as traffic accidents or wildfires, that may impact its transportation operations. These tools can also reduce friction caused by language barriers, as they can be trained to collect and analyze data in various languages. As an AI tool is fed supply chain data, it learns more about the company’s operations.

  • Here’s where AI driven supply chain planning tools, with their ability to handle mass data, can prove to be highly effective.
  • Through this, potential improvements can be identified and recommended, providing a valuable resource for optimizing supply chain operations.
  • The objective is to strike a balance between supply and demand to provide the best service level at the lowest cost.
  • By identifying anomalies and patterns in the data, Generative AI models can predict when maintenance is required, enabling organizations to schedule repairs or replacements proactively.
  • AI gives supply chain automation technologies such as digital workers, warehouse robots, autonomous vehicles, RPA, etc., the ability to perform repetitive, error-prone tasks automatically.
  • Over the past decade, the use of artificial intelligence in supply chains has increased dramatically.

These AIs provide accurate forecasts of future trends in consumer behavior and seasonality thanks to their complex algorithms. Solutions include supply chain planning, procure-to-pay automation, supply chain finance, supply management, supply chain visibility, transportation management and warehouse management. Predictive analytics has grown significantly in the past few years and will continue to do so in the future.


One of the most underrated aspects of the supply chain is the fleet management process. Fleet managers orchestrate the vital link between the supplier and the consumer and are responsible for the uninterrupted flow of commerce. Along with rising fuel costs and labor shortages, fleet managers constantly face data overload issues. Managing a large fleet can easily seem like a daunting task more akin to an air traffic controller. If you can’t find the information you need quickly, or properly utilize the data you collect, you may find your data pool quickly turning into an unproductive swamp. One of the biggest challenges faced by supply chain companies is maintaining optimum stock levels to avoid ‘stock-out’ issues.

Before implementing AI in supply chain management, organizations might have to spend considerable time and effort breaking down silos, which often are intertwined with company culture and deeply embedded business processes. At this stage, it can be useful to establish new KPIs to measure the impact of integrating AI in supply chain management. At a more granular level, professionals should understand how AI and automation will contribute to specific company operations. Digital transformation doesn’t occur in a vacuum —existing personnel and processes across the organization will be impacted, even if the implementation is on a relatively small scale. The global furniture brand Ikea has also developed a demand forecasting tool based on AI, which uses historic and new data to provide accurate demand forecasts.

Inventory Optimization

Both are vital to taking the subsequent steps to build the foundation that enables a company to realize short- and long-term value from AI and, importantly, to get C-level buy-in to fund such a mega-investment. When trying to scale AI, many organizations know they need and are focused on hiring highly technical employees like data scientists. But this technical expertise needs to be paired with knowledge of the business and strategy. Collaboration between these two “worlds” and having a strategy for talent development is necessary for AI to have significant impact.

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Accessible via a mobile app, the recommendations provide guidance on what parts to haul, where to pick them, and what path to follow to avoid congestion and ensure operational efficiency. Organizations in manufacturing, construction, food processing, oil and gas industries utilize heavy machinery and complex assembly lines to transform goods and materials into products. Optimizing a variety of these disjointed production processes is often challenging due to poor facility layout, redundant operations, and worker reluctance to follow the recommendations.

Optimize your supply chain

Today, the boundaries of analytics are being thrust forward by the application of Data Science and Artificial Intelligence. Deep Learning and other algorithmic methods are opening up new possibilities and disrupting the current status quo, allowing for new and exciting problems to be solved for businesses of all sizes and verticals. Artificial intelligence (AI) integration has revolutionised various industries in recent years, and the supply chain sector is no exception. One of the most promising advancements in AI is the emergence of Generative AI that can transform traditional supply chain operations.

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What are the problems with AI in supply chain?

Challenges of Implementing AI in Supply Chain Management

High implementation costs: Developing and integrating AI solutions into existing supply chain systems can be time-consuming and expensive. Companies must invest in infrastructure, training, and ongoing maintenance to fully realize the potential benefits of AI.

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